2015 (11) TMI 86 - AT - Central Excise

Tribunal allows Cenvat credit for packaging material, emphasizing duty paid status

M/s. Sona Udyog Versus Commissioner of Central Excise, Division Bhandara

M/s. Sona Udyog Versus Commissioner of Central Excise, Division Bhandara - 2015 (330) E.L.T. 733 (Tri. - Mumbai) Issues:1. Denial of Cenvat credit on flexible laminated film purchased by the appellant.2. Whether the lamination process amounts to manufacture under the Central Excise Act.3. Admissibility of Cenvat credit based on duty paid by the supplier.Analysis:1. The appellant, a manufacturer of Snuff of Tobacco, availed Cenvat Credit on flexible laminated film purchased from a supplier. The Central Excise authorities issued a show cause notice questioning the availed credit, leading to an appeal before the Commissioner(Appeals) where the appellant's appeal was rejected. The appellant contended that they received the laminated film with duty paying invoices, and the duty paid by the supplier should allow them to claim the credit. The appellant argued that the supplier's duty payment was accepted by the Government, making the credit admissible. The appellant also cited precedents and Tribunal judgments supporting their claim for credit based on the duty paid by the supplier.2. The Revenue argued that the lamination process did not amount to manufacture until a specific date, thus the duty paid by the supplier was not valid for claiming Cenvat credit. However, the Tribunal disagreed with the Revenue's stance, emphasizing that the lamination process was essential for packaging the final product, which aligned with a previous Tribunal judgment. The Tribunal highlighted that the duty payment by the supplier was in accordance with the Central Excise Act, making it valid for credit. The Tribunal also referenced Rule 16 of the Central Excise Rules, stating that even if the supplier's activity did not constitute manufacture, the appellant was entitled to Cenvat credit based on the duty paid by the supplier.3. The Tribunal concluded that the appellant was legally entitled to Cenvat credit for the laminated film received for packaging purposes, setting aside the impugned order and allowing the appeal. The judgment highlighted the importance of the duty paid status of the inputs and the applicability of Rule 16 in allowing the credit based on the supplier's duty payment. The decision emphasized the recipient's right to claim credit even if the supplier's activity was not classified as manufacture, as long as the duty was paid and documented correctly.This detailed analysis of the judgment showcases the legal intricacies surrounding the denial and subsequent allowance of Cenvat credit in the context of the lamination process and duty payment by the supplier, as deliberated by the Tribunal.