2024 (1) TMI 817 - AT - Central Excise

Process amounting to manufacture - affixing the MRP on the containers of Adhesive solution falling under Chapter 35 of Central Excise Tariff Act, 1944 - Cenvat Credit for making adjustment against the Excise Duty on the manufactured goods - HELD THAT - The appellant treated their activity of repacking and resale of the goods as trading activity. Accordingly, under the dealer registration, they have issued dealer invoice in respect of the Cenvat Credit of CVD paid in respect of imported goods, later on when the department raised contention that this re-packing is amount to manufacture appellant admittedly paid an amount over and above the Cenvat Credit. The issue to be decided in the revenue s appeal is that whether the appellant is entitled for Cenvat Credit for making adjustment against the Excise Duty on the manufactured goods. In the present case on the same transaction the department has demanded the Excise Duty considering as manufactured goods. Therefore, obviously whatever Cenvat Credit involved with the goods needs to be adjusted against the total duty liability. The contention of the revenue is that since they have already passed credit of CVD through dealer invoice the same cannot be adjusted is absolutely incorrect for the reason that the CVD was not Passed on twice. It is the same CVD was passed on. Therefore, the contention of the revenue in this regard absolutely absurd and not acceptable. From the decision in COMMISSIONER OF CENTRAL EXCISE ST, BHAVNAGAR VERSUS GUJARAT HEAVY CHEMICALS LIMITED 2023 (5) TMI 188 - CESTAT AHMEDABAD , it can be seen that the facts are absolutely identical that in respect of the consignment sold as trading activity by passing on the credit under dealer invoice. Subsequently, when the department has sought to consider the activity as manufacture and demanded Excise Duty Cenvat Credit was allowed to be adjusted. The impugned order is upheld - Appeal is dismissed.

Summary

Issues:
The issues involved in the judgment are the classification of activity as manufacture, adjustment of Cenvat Credit against Excise Duty, and the entitlement of the appellant for Cenvat Credit.

Manufacture Activity Classification:
The appellant, a registered dealer under Central Excise, was found engaged in affixing MRP on containers of Adhesive solution, which the department contended as manufacturing activity. The appellant was issued a show cause notice for recovery of Central Excise Duty, which was adjudicated by the Adjudicating Authority. The revenue filed an appeal on the ground that Cenvat Credit should not have been adjusted against the demand of duty on repacked goods. The revenue argued that the appellant issued dealer invoice passing on Cenvat Credit, which should not have been adjusted. The respondent contended that the Adjudicating Authority rightly adjusted Cenvat Credit against Central Excise Duty, citing relevant judgments. The Tribunal found that the appellant treated the activity as trading, issued dealer invoices passing on Cenvat Credit, and paid an amount over and above the Cenvat Credit when the department raised manufacturing contentions. The Tribunal held that the Cenvat Credit involved needed to be adjusted against the total duty liability, rejecting the revenue's argument that the CVD was passed on twice. The Tribunal referred to a previous case to support its decision and upheld the impugned order, dismissing the appeal.

Adjustment of Cenvat Credit:
The revenue argued that the Cenvat Credit passed through dealer invoice should not have been adjusted against the demand of duty on repacked goods, claiming it was a manufacturing activity. The respondent contended that the adjustment was valid as the same transaction was considered by the department as clearance of manufactured goods. The Tribunal found that the Cenvat Credit involved needed to be adjusted against the total duty liability, rejecting the revenue's argument that the CVD was passed on twice. The Tribunal referred to a previous case to support its decision and upheld the impugned order, dismissing the appeal.

Entitlement for Cenvat Credit:
The appellant issued dealer invoices passing on Cenvat Credit and treated the activity as trading until the department raised manufacturing contentions. The Tribunal found that the Cenvat Credit involved needed to be adjusted against the total duty liability, rejecting the revenue's argument that the CVD was passed on twice. Referring to a previous case, the Tribunal upheld the impugned order, dismissing the appeal.