2020 (2) TMI 35 - AT - Central Excise

CENVAT Credit - duty paid imported Reflex PVC film and aluminium rolls - subject inputs, PVC film/aluminium in rolls are subjected to process of cutting, slitting etc. to the required sizes as per the customer s requirements, cleared on payment of duty - benefit of N/N. 24/2012-CE(NT) dated 19.04.2012 - HELD THAT - This Tribunal in the cases of COMMISSIONER OF CENTRAL EXCISE VERSUS ASSOCIATED CAPSULES LTD 2014 (2) TMI 721 - CESTAT MUMBAI and COMMISSIONER OF C. EX., DAMAN VERSUS MEDLEY PHARMACEUTICALS LTD. 2012 (7) TMI 823 - CESTAT AHMEDABAD held that cenvat credit cannot be demanded on the ground that the process of cutting, slitting etc. of jumbo rolls do not result into manufacture. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Admissibility of cenvat credit on imported PVC film/aluminium rolls subjected to cutting and slitting process
- Interpretation of Notification No. 24/2012-CE(NT) dated 19.04.2012
- Liability of director under Rule 15(1) of the Cenvat Credit Rules, 2004

Analysis:
1. Admissibility of Cenvat Credit: The appellants contended that they availed cenvat credit on imported films in roll forms, which were later slitted into different sizes as per customer requirements and cleared after paying excise duty. The issue was whether cenvat credit on these imported inputs was admissible. The Tribunal noted that the process of cutting and slitting did not amount to manufacture, as clarified in Notification No. 24/2012-CE(NT) dated 19.04.2012. Previous cases, including CCE, Pune-II vs. Associated Capsules Ltd., supported the view that cenvat credit on jumbo rolls need not be reversed when subjected to cutting and slitting processes. Consequently, the Tribunal found no merit in the demand for reversal of cenvat credit and allowed the appeals.

2. Interpretation of Notification No. 24/2012-CE(NT) dated 19.04.2012: The Tribunal closely examined the wording of the notification, which stated that cenvat credit on inputs used in cutting, slitting, and printing of certain products need not be reversed for goods made and cleared up to a specified date. The notification provided conditions under which non-reversal of cenvat credit was allowed, including the payment of excise duty on the final product. By applying the clear provisions of the notification and considering past precedents, the Tribunal concluded that the appellants were entitled to retain the cenvat credit on the imported inputs subjected to cutting and slitting processes.

3. Liability of Director under Rule 15(1) of the Cenvat Credit Rules, 2004: The original order imposed a personal penalty of ?25,00,000 on the Director under Rule 15(1) of the Cenvat Credit Rules, 2004. However, since the Tribunal set aside the demand for reversal of cenvat credit, the liability of the Director under the said rule would also be affected. The Tribunal's decision to allow the appeals with consequential relief, if any, as per law, would likely impact the personal penalty imposed on the Director. The judgment did not provide specific details on the implications for the Director's liability, but it can be inferred that the penalty may be affected by the overall outcome of the appeals.