2024 (8) TMI 1398 - AT - Central Excise

Availment of credit on jumbo bags and after printing and repacking these jumbo bags cleared for export - printing of the supplier s name on the jumbo bags - process amounting to manufacture or not - Extended period of limitation - suppression of facts or not. CENVAT Credit - process amounting to manufacture or not - HELD THAT - The jumbo bags received by the appellant even after printing remains as jumbo bags and the same are marketable even without printing. Hence, printing cannot be incidental or ancillary to the completion of a manufactured product as is held in the case of BRAKES INDIA LTD. VERSUS SUPERINTENDENT OF CENTRAL EXCISE 1997 (3) TMI 120 - SUPREME COURT where the Hon ble Supreme Court clearly held that 'When adopting a particular process, if a transformation takes place, which makes the product have a character and use of its own, which it did not bear earlier, then the process would amount to manufacture within the meaning of Section 2(f) irrespective of the fact whether there has been a single process or have been several processes.' Therefore, availing cenvat credit on the jumbo bags as inputs which have been received for the purpose of printing is irregular in as much as the jumbo bags remains the same even after printing. Extended period of limitation - suppression of facts or not - HELD THAT - The revenue was aware of the irregular of availment of credit in the month of August 2008 itself. Having not issued show-cause notice during the first audit they cannot allege suppression at the time of second audit - unless there is evidence to show there is wilful suppression on the part of the appellant the demand cannot be sustained beyond the normal period. The impugned order is set aside on limitation and the appeal stands allowed.

Summary

Issues:
1. Availing cenvat credit on jumbo bags for printing and repacking.
2. Whether printing and repacking of jumbo bags amount to manufacture.
3. Time-barred demand due to alleged suppression of facts.

Analysis:

Issue 1: Availing cenvat credit on jumbo bags for printing and repacking
The appellant, engaged in manufacturing plastic articles, availed cenvat credit on jumbo bags used for printing and repacking. The Revenue alleged irregularity as jumbo bags were claimed as inputs but remained unchanged after printing. The appellant argued that printing was essential for marketability, citing circulars allowing credit on goods used for exports. The CA contended that the demand was time-barred due to no suppression of facts, as per legal precedents.

Issue 2: Printing and repacking as manufacturing activity
The question was whether printing and repacking of jumbo bags constituted manufacturing per Section 2(f) of the Central Excise Act, 1944. The Tribunal ruled that printing did not change the jumbo bags' essential nature, citing the Brakes India Ltd. case. The judgment emphasized that for a process to be manufacturing, it must change the product's utility significantly, which printing did not achieve in this case.

Issue 3: Time-barred demand and alleged suppression
The Revenue argued that the appellant's failure to declare jumbo bags as final products led to mis-declaration, justifying the extended period for demanding duty. However, the Tribunal noted that the Revenue was aware of the alleged irregularity during an earlier audit, and no notice was issued then. Citing legal precedents, the Tribunal held that unless there was evidence of wilful suppression, the demand could not exceed the normal period. Therefore, the impugned order was set aside on limitation, and the appeal was allowed.

This detailed analysis highlights the Tribunal's decision on each issue, addressing the legality of availing cenvat credit, the manufacturing nature of printing and repacking, and the time-barred demand based on alleged suppression of facts.