2009 (9) TMI 864

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....dit Rules, 2004, Explanation II of the Rule 6(3)(b) of the said Rules read with Section 11A of the Central Excise Act, 1944, and has imposed penalty of Rs. 40 lakhs. 3. The above demand of duty has been made on the basis that the appellants were not entitled to avail cenvat credit in relation to the inputs utilized for the final product as the final product was not dutiable in view of the decision of the Apex Court in Metlex (I) Pvt. Ltd. v. C.C.E., New Delhi reported in 2004 (165) E.L.T. 129. 4. Learned Advocate appearing for the appellants submitted that all throughout the appellants had been paying duty on the finished products manufactured by them in relation to the process of lamination and metalisation on the polyester film and ....

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....Court after taking note of the decision of the Apex Court in Empire Industries Ltd. as also the Laminated Packagings (P) Ltd. case has taken the view that lacquering/metallising of polyester film does not amount to manufacture. 7. Learned Advocate for the appellants has also brought to our notice that since 2008 onwards, Chapter Note 16 to Chapter 39 clearly states that in relation to the provision of the Headings, 3920, 3921, the process of metalization or lamination or lacquering shall amount to manufacture. The Chapter Heading 3920 refers "Other plates, sheets, film, foil and strip, of plastics, non-cellular, and not re-inforced, laminated , supported or similarly combined with other materials". Chapter Heading 3921 refers to "other p....

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....t." Obviously the said observation was made taking into consideration to the fact that decision in Metlon India was squarely based on the facts of the said case wherein there was no occasion to go into the issue as to whether the process involved was manufacture or not. As against this the Apex Court in Empire Industries Ltd. case had clearly ruled that "It is well settled that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand, it is the transformation of a matter into something else and that something else is a question of degree, whether that something else is a different commercial commodity having its distinct character, use and name and commercially known as such from that point of view is a ....