Appeal Denied: Cenvat credit on detergent soap rejected, upheld on labeling & duty discharge

The Revenue's appeal against the Commissioner (Appeals) order regarding the denial of Cenvat credit on detergent soap supplied free with detergent powder was rejected. The case involved repacking bulk detergent into retail packs with a free detergent soap offer. The Revenue argued that detergent soap is not an eligible input for Cenvat credit, while the respondents cited relevant legal provisions and precedents. The Member upheld the Commissioner (Appeals) decision, emphasizing the correct labeling and discharge of duty on the combined product. The impugned order was upheld, and the Revenue's appeal was dismissed on 17.3.2015.

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Issues:
Appeal against Commissioner (Appeals) order regarding Cenvat credit on detergent soap supplied free with detergent powder.

Analysis:
The Revenue filed an appeal against the Commissioner (Appeals) order dated 13.4.2009. The case involved a manufacturer of Kite Detergent Powder repacking bulk detergent into retail packs along with a free offer of detergent soap. The issue was the denial of Cenvat credit on the detergent soap supplied free with the powder. The adjudicating authority confirmed the demand of Cenvat credit, interest, and penalty. The respondents appealed, and the Commissioner (Appeals) allowed the appeal, leading to the Revenue's present appeal.

The Revenue contended that detergent cake is not an input for detergent powder manufacture, thus not eligible for Cenvat credit on the free detergent soap. They argued that detergent soap is a finished product, separately marketable, and cannot be considered an input. The respondent's advocate, on the other hand, cited the amendment of Section 2(f) of the Central Excise Act, where labeling and repacking constitute "manufacture," covering soaps under Chapter 34. The goods were correctly labeled under M.R.P. and discharged duty accordingly.

The Member examined the facts and grounds of appeal. The Revenue's argument centered on the free supply of detergent soap packed inside the powder, questioning the eligibility of Cenvat credit. The lower authority extensively discussed the issue, relying on the Tribunal's decision in Lotte India Corporation Ltd. vs. CCE Pondicherry. The Member noted that the respondents correctly declared the net weight of the combi-pack, discharged duty on the powder, and fell under Section 2(f)(3) of the Central Excise Act. The Member also referenced the Gujarat High Court's decision supporting the Tribunal's view on Cenvat credit eligibility for items like toothbrushes packed with toothpaste.

Despite the Revenue's reliance on other decisions, the Member found the Gujarat High Court's judgment applicable post-amendment of Section 2(f) to the present case. Consequently, the impugned order was upheld, and the Revenue's appeal was rejected. The Member concluded the operative part of the order on 17.3.2015.

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