Cenvat credit on repacked dutiable goods cannot be denied merely because the repacking process is not manufacture.

Cenvat credit on packing material and packing machinery used to repack sugar from bulk packs into smaller packs was held admissible where the smaller packs were cleared on payment of duty. The Tribunal noted that the packs were entered as manufactured quantity in the stock register and cleared under invoices using Cenvat credit. It rejected the Revenue's denial based solely on the view that repacking did not amount to manufacture, applying the principle that credit on inputs used in dutiable final products cannot be denied merely because the underlying process is said not to be manufacture.

---

---

Issues: Whether Cenvat credit on packing material and packing machinery used for repacking sugar from bulk packs into smaller packs could be denied on the ground that the repacking activity did not amount to manufacture, even though the smaller packs were cleared on payment of duty.

Analysis: The smaller packs were entered in the stock register as manufactured quantity and were cleared against invoices on payment of duty by utilising Cenvat credit. The only basis for denial was the Revenue's view that repacking into smaller packs was not manufacture. The Tribunal relied on earlier decisions holding that where the final products are cleared on payment of duty, Cenvat credit on inputs used therein cannot be denied merely because the activity is said not to amount to manufacture.

Conclusion: Cenvat credit was admissible and could not be denied on the ground that the repacking activity did not amount to manufacture.

Ratio Decidendi: Where goods repacked into smaller packs are cleared on payment of duty, Cenvat credit on inputs used in such goods cannot be denied merely because the underlying process is alleged not to amount to manufacture.

---