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TMI Blog2024 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in the activities of packing/ re-packing/ labelling/ re-labelling/ affixing of new MRP on the goods Clutches procured from their vendors which amount to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1994 which were cleared on payment of duty under Section 4A of the Central Excise Act, 1944. However, in respect of the goods procured from their Unit 1 from 01.04.2012 to 09.05.2012 which were not subjected to the above process as contemplated under Section 2(f)(iii) of the Central Excise Act, 1994 and as such, they could not considered as inputs and the credit taken on such items is not in accordance with the law and they are not eligible for the CENVAT credit availed to an extent of Rs.1,70,46,634/- was the stand of the Revenue for initiation of these proceedings against the Appellant. It is found that for the earlier period in the Appellant s own case, the Tribunal Chennai has passed an order in M/S. LUK INDIA PRIVATE LIMITED VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, SALEM [ 2024 (2) TMI 1018 - CESTAT CHENNAI ] allowing the Appellant s appeal. The facts being identical, the decision is squarely applicable - It was held in the said case that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 25 of Central Excise Rules, 2002. 2.2 After the due process of adjudication, the Order-in-Original No. 22/2017 (CE) dated 29.03.2017 passed by the Additional Commissioner of Central Excise, Chennai III Commissionerate had confirmed the demand of wrongly availed credit of Rs.1,70,46,634/- under Rule 14 of CCR, 2004 read with Section 11A(1) of CEA, 1944 along with interest and imposed a penalty of Rs.1,70,46,634/- under Rule 15 of CCR, 2004. The LAA also confirmed the demand of Rs.33,53,720/- which was utilized by the Appellant by adjusting the ineligible CENVAT credit for payment of duty on clearance as non-payment of duty along with interest but refrained from imposing penalty under Rule 25 of CER, 2002. 2.3 Being aggrieved by the above Order-in-Original dated 29.03.2017, the Appellant filed an appeal before the Commissioner (Appeals-I), Chennai which was taken up for adjudication by the Commissioner of GST and Central Excise (Appeals), Coimbatore, Circuit Office @Salem due to jurisdictional changes effected by the Notification No. 2/2017-CE dated 19.06.2017. The above appeal filed before the Commissioner (Appeals), Coimbatore, Circuit Office @ Salem was dismissed for non-complia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no manufacturing process undertaken by the Appellant, it would have to be treated as clearance of CENVAT credit availed inputs as such, which can be cleared on payment of duty equal to the CENVAT credit availed. ii. Rule 3(5) of CCR, 2004 provides that when the CENVAT credit availed inputs are cleared as such, an amount equal to the CENVAT credit required to be paid and in the instant case (i) an amount of Rs.1,36,92,914/- was paid/utilised for payment of duty on home clearances on the impugned goods removed as such which is equal to the CENVAT credit availed and (ii) Rs.33,53,720/- was accumulated consequent to export of goods removed as such, which has been used for payment of duty on other clearances, which is within the framework of law. iii. Further, Rule 16 of CER, 2002 permits taking credit of duty paid on the goods brought to any other reason, treating the same as inputs under CCR, 2004, and utilize this credit according to the said rules. If the activity to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken on such goods. In the instant case, assuming that the said acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of 2023. Since the current issue is for the subsequent period, Appellant had paid the pre-deposit of Rs.20,40,036/- on 10.10.2024 as mentioned above. 3.4 It has also been informed that the Tribunal for the earlier period (Sep 2010 to March 2012) has decided the issue in favour of the Appellant. In the Final Order No. 43004/2018 dated 08.10.2018, the Tribunal Chennai has set aside the ancillary demand of Rs.90,85,559/- which is like the ancillary demand of Rs.33,53,220/- in the current appeal. Further, the Tribunal has held that no reversal is required for the exports. The main demand, which was remanded, was also decided in Appellant' favour in Final Order No. FO/A/40187/2024-EX dated 21.02.2024, wherein the main demand of Rs.11,54,59,277/- was set aside, which is like the main demand of Rs.1,70,46,634/- in the current appeal. The Tribunal has held that once the Department has collected the duty on the finished products, the credit availed on the inputs cannot be denied alleging that the activity does not amount to manufacture. Verification reports of the Range Officers in the reports dated 07.08.2013 which confirmed the duty payments for both the periods were duly considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Cenvat credit availed inputs are cleared as such, an amount equal to the Cenvat credit required to be paid. Then even if the department s stand that process undertaken by the appellant does not amount to manufacture is accepted, this would have to be treated as clearance of Cenvat credit availed input as such. Since the appellant have paid duty on the printed P.P. bags the Cenvat credit availed would have to be treated as reversed. In view of this, impugned order demanding the Cenvat credit along with interest and imposed penalty on the appellant is set aside. The appeal and stay application are allowed. iii. The ratio of the above decision was also relied in the case of Ras Polytex (P) Ltd. Vs. CCE [2013 (290) ELT 244 (Tri.- Del.)] as follows: - 5. We have considered the rival submissions. In this case the appellant had taken Cenvat credit of the duty on polypropylene bags and treating these process of printing of plain bags as amounting to manufacture, had paid duty on the transaction value of the printed bags. It is not disputed that the duty paid on printed bags is more than the Cenvat credit availed in respect of inputs. Even if department s contention that the process under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant portion of the decision is as given below: - 3.1. The issue to be considered is whether the demand raised alleging that the credit availed by the appellant is ineligible for the reason that there is no manufacturing process undertaken by the appellant on goods received from Unit I and cleared by them is sustainable or not. The facts reveal that the appellant has paid duty on all goods cleared by them. The allegation of the department is that the goods received from Unit 1 are complete as to their packing and fixation of MRP. Therefore, there is no activity of manufacture undertaken by the appellant so as to packing or relabelling and there is no activity of deemed manufacture as per 2 f (iii) of Central Excise Act, 1944. The Ld. counsel has argued that they do fixation of MRP, labelling etc. and therefore the activity undertaken by the appellant amounts to manufacture. 3.2. The issue is only with regard to the eligibility of credit availed on the goods cleared from Unit 1 to Unit 2. It is an undisputed fact that the appellant has cleared all goods from unit 2 by payment of duty. When the department has collected duty on the finished products, the credit availed on the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant cleared the said imported goods after refilling on payment of duty. Therefore, if the activity does not amount to manufacture, in that case, the duty paid by the appellant shall amount to reversal of credit. Therefore, the appellant is not required to reverse the credit of CVD availed by the appellant at the time of import. 3.4. In the case of M/s. R K Packaging Vs. CCE, Mumbai 2019-TIOL-988-CESTAT, Mumbai, the issue considered was whether the credit availed has to be reversed when the activity is alleged to be not manufacture. The demand was set aside by the Tribunal following the decision of the Hon ble High Court of Bombay in Ajinkya Enterprises. The relevant para reads as under: 5. We have carefully considered the submissions advanced by both sides. The short issue involved for determination in the present case is whether the appellant is entitled to CENVAT Credit of duty paid on various inputs used in or in relation to assembly of packing kits, on which appropriate duty was paid by the appellant. The Revenue proposed to deny the credit only on the ground that the assembly of various inputs into packing kits does not amount to manufacture. However, there is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken on the raw material did not amount to manufacture , within the definition of Section 2 (f) of the Central Excise Act, 1944, hence, the appellant was not required to discharge duty, accordingly, not entitled to avail credit on the inputs. We find that the issue is no more res integra being covered by the judgement of the Hon ble Bombay High Court in the case of Ajinkya Enterprises (supra). The Lordships, after taking note of the relevant provisions of law, observed as follows:- 10. Apart from the above, in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it held that the assessee is entitled to refund of duty paid at the time of clearing the deoiled HR/CR coils. In these circumstances, the CESTAT following its decision in the case of Ashok Enterprises- 2008 (221) E.L.T. 586 (T) = 2008-TIOL-312-CESTAT-MAD. Super Forgings-2007 (217) E.L.T. 559 (T) 2007-TIOL 2040-CESTAT-MAD S.A.L.L.-2007 (220) E.L.T. 520 (T) 2009 (15) ST.R. 640 (Tribunal), M.P. Telelinks Limited - 2004 (178) E.L.T. 167 (T) = 2004-TIOL-77-CESTAT-DEL and a decision of the Gujarat High Court in the case of CCE v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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