Cenvat credit on laminated film upheld where duty-paid goods were used for packaging and supplier's process was treated as manufacture.

Cenvat credit on laminated film used as packaging material was admissible because the goods were received under duty-paying invoices and the supplier's duty payment could not be disregarded for the recipient's credit claim. The Tribunal noted that lamination of duty-paid film could amount to manufacture under Section 2(f) of the Central Excise Act, 1944, and in any event Rule 16 of the Central Excise Rules, 2002 preserved credit availability even if the supplier's activity was not manufacture. The denial of credit was therefore unsustainable.

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Issues: Whether Cenvat credit on laminated film was admissible to the recipient when the supplier's process of lamination was alleged not to amount to manufacture.

Analysis: The laminated film was received under duty-paying invoices and was used as packaging material in the manufacture of the final product. The denial of credit rested only on the view that the supplier's activity was not manufacture prior to insertion of Chapter Note 16 in Chapter 39 of the Central Excise Tariff Act, 1985. The Tribunal held that lamination of duty-paid film used for packaging purposes could amount to manufacture under Section 2(f) of the Central Excise Act, 1944, and that the duty paid by the supplier could not be treated as non-duty for the recipient's credit claim. It further relied on Rule 16 of the Central Excise Rules, 2002 to hold that even where the supplier's activity is not manufacture, duty paid on such goods remains available as credit in the hands of the recipient.

Conclusion: Cenvat credit on the laminated film was admissible and the denial of credit was unsustainable.

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