TaxTMI 
TaxTMI 
2015 (6) TMI 617
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....e customers. Printed films/paper are affixed on bottles/containers of various items such as shampoo, etc. The respondent-assessee was paying excise duty on the slitted self-adhesive film and self-adhesive paper and was availing CENVAT credit of the duty paid on the inputs. Revenue is of the view that the said process does not amount to manufacture in terms of Section 2(f) of the Central Excise Act, 1944 and hence the final products are not dutiable and therefore, the respondent-assessee is not eligible to avail CENVAT credit on inputs and capital goods. 3. Accordingly a demand notice dated 04/10/2011 was issued proposing to recover the wrongly availed CENVAT credit amounting to Rs. 22,70,34,831/- during the period May 2007 to April 2011 under Rule 14 of CENVAT CREDIT Rules, 2004 read with proviso to Section 11A(1) of the Central Excise Act, 1944. It was also proposed to confiscate the goods on which the appellant has taken CENVAT credit which included paper, other inputs and capital goods under Rule 15(1) of the CENVAT Credit Rules. Interest was also proposed to be recovered under Rule 14 read with Section 11AB and penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read wit....
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.... requirement. These rolls undergo unwinding process under specific tension and the ends of the jumbo rolls are trimmed. The slitting is done after setting the cutting knives on the slitting machine. Before slitting, the dirt and dust particles on the paper/films are removed and during the process static electricity gets generated on the rolls. The static electricity generated is removed by a fixture in the slitting machine to enable printing on the rolls. The learned Additional Commissioner (AR) submitted all these process does not bring into existence a new commodity having distinct name, character and use. As per the criterion laid down by the Hon'ble Supreme Court for the manufacture, these cannot be considered as amounting to manufacture. It was also submitted that the Commissioner has taken a view that as per Section 2(f) any process incidental to the completion of the manufacturing process would amount to manufacture but the Commissioner has incorrectly applied the provisions of clause 2(f) read with note 6 to Section XVI of the Central Excise Tariff Act, 1985 as the commodities under dispute in the present case, does not fall under Section XVI of the First Schedule to th....
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.... and the decision of the hon'ble Supreme Court in the case of Empire Industries Ltd. vs. Union of India 1985 (20) ELT 179 which inter alia has held that whatever may be the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes such a process which will part of manufacture. It was further submitted that after considering various factors the Board has clarified that cutting and slitting of jumbo rolls of sensitised photographic paper would not amount to manufacture. In addition, the judgment of this Tribunal in the case of Rajpurohit GMP India Ltd. vs. Commissioner of Central Excise 2003 (162) ELT 431 (Tri.-Mum); Hon'ble Supreme Court's decision in the case of Printo India Graphics (P) Ltd. vs. Commissioner of Central Excise reported in 2012 (282) ELT A46 (SC) and similar case of Commissioner of Central Excise vs. Tarpaulin International 2010 (256) ELT 481 (SC) were also referred in support of the department's contention. Hon'ble Supreme Court in the case of Commissioner of Central Excise vs. Osnar Chemical Pvt. Ltd. 2012 (276) ELT 162 (SC) was also referred. 8. It was submi....
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....ularly quoted para 10 and 16 of the hon'ble Supreme Court's judgment in the case of Kores India Ltd. (supra) and also the judgment of Brakes India Ltd. (supra) to support his contention. Another contention of the learned Sr. Counsel was that CENVAT credit availed by them has been utilised for the clearance of the slitted self-adhesive tapes and films and therefore, denial of CENVAT credit on the ground that the activity not amounting to manufacture is not correct in view of the judgment of the Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise vs. Creative Enterprises 2009 (235) ELT 785 (Guj.). The said judgment has been affirmed by the Hon'ble Supreme Court as reported in 2009 (243) ELT A120 (SC). The learned Sr. Counsel also submitted that even the Hon'ble Bombay High Court in the case of Commissioner of Central Excise vs. Ajinkya Enterprises 2013 (294) ELT 203 (Bom.) has taken similar view. It was also submitted that just because the input and final products are falling under the same heading it does not imply that the said activity will not amount to manufacture as held by this Tribunal in the case of Caprihans India Ltd. vs. Collect....
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....pool form. In view of the mater it was held that the process involved amounted to manufacture. Similarly, in the case of Brakes India Ltd. (supra) the hon'ble Supreme Court has observed that by adopting a particular process if transformation takes place which makes the product have a different character and use of its own, then such a process would amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944. In the present case, we do not find like the case of Kores India Ltd. or Brakes India Ltd. that the product manufactured has a different name, character or different use. It is just that the width of jumbo rolls is cut and slitted in such a way that it is suitable for a particular product and the printing industry. If there is a printing machine which can take up the jumbo rolls then such self-adhesive films and self-adhesive tapes can straightway be printed. On the contrary, we are of the considered view that the facts in the present case are almost similar to that of S.R. Tissues Pvt. Ltd. (supra). In the said case the hon'ble Supreme Court has observed as under: 14. Applying the above tests, we hold that no new product had emerged on win....
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....erefore, Section 2(f) of the Act was also not applicable to the facts of this case. 17. In the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad reported in 1995 (76)ELT 241, this Court held that Section 3 of the Act levies duty on all excisable goods mentioned in the schedule provided they are produced and manufactured. Therefore, where the goods are specified in the schedule, they are excisable goods but whether such goods can be subjected to duty would depend on whether they were produced or manufactured by the assessee on whom duty is proposed to be levied. Consequently, it is always open to an assessee to prove that even though the goods in which he was carrying on his business were excisable as they are mentioned in the schedule, they could not be subjected to duty as they were not goods either because they were not manufactured or having been produced or manufactured, they were not marketed or capable of being marketed. 18. In the case of Union of India v. J.G. Glass Industries Ltd. reported in 1998 (97)ELT 5, this Court has succinctly drawn a distinction between manufacture vis-a-vis process and in the course of the judgment, it has been observed ....
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....on based on a process is certainly a relevant criteria to decide as to what constitutes "manufacture". Such value addition should be on account of change in the nature or characteristics of the product. In the present case, as stated above, there is no change in the nature or characteristics of the tissue paper in the jumbo roll and the nature and characteristics of the tissue paper in the table napkin, facial tissues etc. Therefore, without such change in the nature or characteristics of the tissue paper, value addition on account of transport charges, sales tax, distribution and selling expenses and trading margin cannot be an indicia to decide what is manufacture. Thus, value addition without any change in the name, character or end-use by mere cutting or slitting of jumbo rolls cannot constitute criteria to decide what is "manufacture". 22. In the case of Decorative Laminates (India) Pvt. Ltd. v. Collector of Central Excise, Bangalore reported in 1996 (86)ELT 186, this Court held that the process of application of phenol resin on duty paid plywood under 100% heat amounts to manufacture and in that connection observed that value addition and separate use are also relevant facto....