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TMI Blog2014 (3) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of the final product on a technical plea of department - Following decision of Markwell Paper Plast Pvt. Ltd. vs. Commissioner of Central Excise, Noida [2012 (7) TMI 290 - CESTAT, NEW DELHI] - Decided in favour of assessee. - E/21/2009 - Final Order No. A/1040/2013-WZB/C-II(EB) - Dated:- 12-11-2013 - Shri P R Chandasekharan And Anil Choudhary, JJ. For the Appellant : Shri Prakash Shah, Adv. For the Respondent : Shri Shobha Ram, Commissioner (AR) PER : Anil Choudhary The appellant M/s. The Paper Products Ltd. holding Central Excise Registration and are engaged in manufacturing of packaging material falling under Chapter 39 and other final products, falling under Chapters 47, 48, 74, 76 and 84 of the Central Excise Tariff Act, 1985. 2. The appellant availed benefit of CENVAT Credit under Rule 3 of the Cenvat Credit Rules, 2004 of duty paid on the inputs/raw materials and capital goods used in or in relation to the manufacture of the above final products. The appellant utilized the CENVAT Credit for payment of duty at appropriate rate on the clearances of these final products. the brief manufacturing process is as follows:- Manufacturing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r film nor the BOPP film - but a new product- Laminate that has BOTH moisture and gas barrier properties. PET film by itself cannot enclose a product and seal to itself - but when combined with BOPP, it becomes sealable', the essential operation for any packaging. 2.2 The choice of the material for printing and lamination will be determined primarily by the material to be packed - its characteristics and the nature of protection to be ensured, the packing machines that are going to be used for final packing, cost of the laminate, workability and machinability etc. Similarly list of final products manufacture by them along with its tariff heading is given as under:- SR NO EXCISE CHAPTER GENERIC NAME OF EXCISE CHAPTER 1 3920.20.20 Printed or unprinted flexible film of PP Laminated, Supported or similarly combined with other materials. 2 3920.69.12 Printed or unprinted flexible film of PET. Laminated, Supported or similarly combined with other materials. 3 3920.99.92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein, should not be denied and recovered from the Appellants under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 2004; (b) respective amounts of duty and amount of Education cess as detailed in Annexure-B to the respective show-cause notices on account of CENVAT credit taken in respect of inputs used in the manufacture of goods cleared without payment of duty under Rule 19 or against CT. 1, CT.3, Annexure-1 etc. during the respective periods mentioned therein should not be denied and recovered from them under Rule 14 of the CENVAT credit Rules, 2004 read with Section 11A of the Central Excise Act, 2004; (c) interest at an appropriate rate on the amount mentioned in para (a) above should not be recovered under Rule 14 of the CENVAT credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944; (d) penalty should not be imposed on the Appellants under Rule 15(1) of the CENVAT Credit Rules, 2004; (e) respective amounts of duty and Education cess paid by the Appellants as Central Excise duty and Education Cess respectively on finished goods cleared by the Appellants, though not required to be paid and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed as packing material in the market, which is not the same as film (inputs) which cannot be used as such for packing of various articles like cosmetics and food items. But, the learned Commissioner confirmed the demand relying upon the ruling of the Hon'ble Apex Court in the case of Metlex (India) Pvt. Ltd. (supra) and also relied upon the CBE C Circular No. 93/01/2006 CX-3 dated 11.09.2007 and accordingly proposed demand of Rs. 18,74,64,804/- was confirmed on account of CENVAT Credit taken on inputs which were used in the process of manufacture and cleared on payment of duty for home consumption or export. Further, amount of Rs.10,93,85,227/- was confirmed towards CENVAT Credit taken on inputs and were finally cleared without payment of duty for export under Rule 19(1) of the Central Excise Rules, 2002 or against CT-1 and CT-3. It was further ordered that an amount of Rs. 18,74,64,804/- with Edu. Cess + HSE Cess paid by the assessee as duty on finished goods and recovered/collected from the buyers be treated as deposit with the Revenue and be transferred to Consumer Welfare Fund along with interest at appropriate rate on the above under Section 11A and Section 11DD and penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate the contentions raised by the parties, it would be useful to have a look on the relevant observations of the Supreme Court in the judgment which are reproduced thus :- 15. In this case the Appellants purchase duty paid film. They merely laminate or metallise it. The product is a film to start with and remains a film after process of lamination or metallisation. Thus there is no new distinct product which has come into existence and it would have to be concluded that there is no manufacture. 16. It was however submitted that the case has proceeded on the admitted footing that there was a manufacture. It was submitted that the matter must be remitted back to decide whether there is manufacture. It was ubmitted that this aspect will have to be decided in terms of Note 12 to Chapter 39 and after looking at the process adopted by the Appellants. It was submitted that under the present Tariff there are separate sub-heading and thus after examining the process of the Appellants it may be possible to contend that a new and distinct product has come into existence. 17. We are unable to accept this submission. The question is whether an individual and distinct pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of said printed film either in two layers or three layers with the help of adhesive or other chemical. 21 . This fact is not refuted by the department. Thus, it is clear that the appellant after purchasing the bare polyester/metalised film on payment of duty, first subject those film to printing as per the requirement of the customer and thereafter those films are laminated either in two layers or three layers. In our considered view the aforesaid process changes the character of the bare polyester film (inputs) in terms of its user as also the thickness and lamination. Therefore, this process falls within the definition of manufacture as defined under Section 2(f) of the Central Excise Act, 1944. In our aforesaid view we are supported by the judgment of the Supreme Court in the matter of Laminated Packaging (P) Ltd. (supra) wherein the Supreme Court has held that polyethylene laminated kraft paper produced out of lamination on duty paid kraft paper with polyethylene amounts to manufacture. The relevant observations of Supreme Court are reproduced thus :- 4. After this impugned Act was passed, the same was challenged 4. before the Bombay High Court by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit on the inputs used for the manufacture of the final product on such a technical plea. If such an argument is allowed to sustain it would negate the entire object of the Cenvat credit scheme which has been put in place with a view to protect the assessee from double taxation. Thus, on this count also, the impugned orders are not sustainable. 24 .In view of the above, we find ourselves unable to sustain the impugned orders which are accordingly set aside. 4.3 It was further emphasized by the appellant that as a result of production on conversion of one film into another, a new product known to the market packing materials emerges and accordingly, it is explicit that the packing materials manufactured by them amount to manufacture and accordingly prays for setting aside the impugned order and allow the appeal with consequential relief. 5. The learned Commissioner (AR) appearing for the Revenue reiterates the findings of the impugned order and relies upon the ruling of the Metlex (India) Pvt. ltd. (supra) as well as the CBE C Circular and Government of India's intimation, mentioned herein before, and prays for upholding the impugned order. 6. Having consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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