2007 (11) TMI 67 - AT - Central Excise

Appeal allowed: cutting and slitting BOPP film not treated as manufacture, no reversal of CENVAT credit

CESTAT allowed the appeal, holding that the activity of cutting and slitting BOPP film into specified sizes did not require reversal of CENVAT credit ... Manufacture - CENVAT credit - Excise duty payable on finished goods - Recovery of erroneously availed credit - Binding precedents of TribunalManufacture - CENVAT credit - Recovery of erroneously availed credit - Binding precedents of Tribunal - Availment of CENVAT credit towards payment of duty on goods which, by virtue of precedent, did not amount to 'manufacture' and therefore were not excisable, and whether such credit could be recovered. - HELD THAT: - The Tribunal examined whether the credit of duty-paid inputs utilised to discharge excise duty on the appellants' product should be recovered on the ground that the process (cutting/slitting of BOPP film) was held not to amount to 'manufacture' by higher authority and therefore the final product was not excisable. Relying upon this Bench's earlier decision in Final Order No.938/07 dated 30.7.07 in Super Forgings and Steels Ltd. v. CCE Chennai, and on Tribunal precedents such as Syndet India v. CCE Navi Mumbai and Shivali Udyog (I) Ltd. v. CCE Raipur, the Tribunal held that where duty was in fact paid on the finished goods (albeit by utilising CENVAT credit), the Revenue could not recover the credit merely because subsequent judicial view held there was no 'manufacture' and hence no excise liability. The Tribunal noted that the Syndet India view had been accepted by the Revenue earlier and accordingly the appellants were entitled to the benefit of those decisions. Applying these binding precedents, the Tribunal concluded that denial or recovery of the credit was not permissible in the circumstances of this case. [Paras 3, 5]The demand for recovery of CENVAT credit was set aside and the appeal allowed.Final Conclusion: The appeal is allowed; pre-deposit dispensed and the impugned order confirming recovery of CENVAT credit is set aside. Issues:1. Whether the cutting and slitting of BOPP film amounts to 'manufacture' for excise duty purposes.2. Admissibility of CENVAT credit on inputs for payment of duty on final products.3. Applicability of recent decisions on similar matters to the present case.4. Validity of the Commissioner's decision confirming the demand for erroneously taken CENVAT credit.5. Relevance of past tribunal decisions and Supreme Court judgments on similar issues.Analysis:1. The appellants were involved in cutting and slitting BOPP film into specific sizes. The department contended that this process did not amount to 'manufacture' under Section 2(f) of the Central Excise Act, based on a previous apex court ruling. This led to a show-cause notice and the Commissioner's order demanding the reversal of CENVAT credit amounting to Rs.55,87,162.2. The issue of admissibility of CENVAT credit on inputs for payment of duty on final products was crucial. The Tribunal referred to a recent decision in a similar case where the question of availing input-duty credit for payment of duty on final products was addressed. The Tribunal upheld the assessee's right to take CENVAT credit even if the final product was not excisable, citing past decisions and the acceptance of such credits by the Revenue.3. The Tribunal relied on past decisions such as Super Forgings and Steels Ltd. Vs CCE Chennai to support the appellants' case. The Tribunal emphasized that once duty was paid on the final products, the CENVAT credit could not be denied, even if the final product was not excisable.4. The appellants' counsel also cited relevant decisions like Rico Auto Industries Ltd. Vs CCE New Delhi and Shivali Udyog (I) Ltd. Vs CCE Raipur to strengthen their argument. These cases highlighted instances where duty was paid on final products using CENVAT credit on inputs, leading to a favorable outcome for the assessee.5. Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned order. The decision was based on the precedents, past tribunal decisions, and the principle that once duty was paid on final products, the denial of CENVAT credit was not justified.