Duty paid and cenvat credit availed on process of printing & lamination of polyester film which doesn't amounts to manufacture

PJ/Case Laws/2011-12/1281

Case:A One Laminators Pvt. Ltd & Another v/s Commissioner of Central Excise

Citation:2011-TIOL-446-HC-DEL-CX

Issue:- Duty paid and cenvat credit availed on process of printing & lamination of polyester film which not amounted to manufacture – Revenue sought to deny credit – pre-deposit not required as prima facie strong case made out.

Brief Facts:- The appellants are engaged in printing and lamination of polyester film with metalized film/polyester film. These metalized films are polyester which are further converted in pouches and bags. The appellants have been treating the aforesaid activity as manufacturing activity and they have been paying excise duty thereupon. The appellants were also took Cenvat credit of duty paid on inputs.

However, show cause notices were issued to the appellants asking them to reverse the Cenvat credit on the ground that the process of lamination/metallization of polyester films undertaken by the appellants does not amount to manufacture and, therefore, the appellants were not entitled to take credit of duty paid on inputs. The appellants protested the aforesaid show cause notices submitting that they had paid the excise duty on the furnished goods and, therefore, the respondent were not justified in reversing the Cenvat credit availed by the appellants. The appellants also relied upon the judgment of the Apex Court in the case of CCE, Ahmedabad Vs. Narayn Polyplast, 2005(179) E.L.T.20 (SC)

The Adjudicating Authority confirmed the demand made in the show cause notices with interest and also imposed equal amount of penalty on the appellants

Appeals against the impugned orders before the Commission (Appeals) were dismissed. Against orders of the Commissioner (Appeals), appellants preferred further appeals before the Tribunal. Stay application was also filed. The appeals are still pending before the Tribunal. In the stay applications, the appellant were asked to pre-deposit 60% of the amount demanded.

Aggrieved by the stay order, appellants are before the High Court.

Appellant’s Contention:The submission of the appellant is that if the aforesaid process is not to be treated as manufacturing process and the appellants are not entitled to Cenvat credit on that basis, then the appellants were also not required to pay any excise duty. It is also pointed out that the excise duty paid by the appellants is much more than the Cenvat credit availed by the appellant. It is also pointed out that Cenvat credit was not claimed or paid to the appellant in cash but was utilized in payment of excise duty only

Reasoning of the Judgment:- The High Court found adequate force in the submission of the appellants. The High Court was of the view that the Tribunal while passing the impugned order could not have glossed over these glaring facts which would clearly disclosed a prima facie case like this and the appellant should not be fastened with any liability of making pre-deposit, as directed.

In the aforesaid circumstances, are of the view that the appeals of the appellants should be heard without any condition of pre-deposit. Impugned direction of the Tribunal set aside.

Decision:- Appeals allowed accordingly.

Comments

PJ/Case Laws/2011-12/1281

Post a Comment

Query