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2010 (5) TMI 446 - AT - Central Excise
Waiver of pre-deposit cenvat credit - lamination of duty-paid film and printing thereon Credit denied holding non-manufacture - CENVAT credit which was sought to be denied to the assessee was lower than the amount of duty paid by them on the commodity which the department would not recognise as excisable goods - duty paid by the appellant on the laminated/printed material was said to be a deposit under Section 11D as per the impugned order - applicability of Section 11D there are two mandatory requirements firstly it can be invoked against a person who is liable to pay duty and secondly such liability should be in respect of (excisable goods) - commodity to be an (excisable product) and its manufacturer to be liable to pay duty thereon - appellant has made out prima facie case against the adjudged dues - pre-deposit waived
Issues:
1. Whether the activity of laminating and printing on duty-paid film amounts to manufacture of excisable goods.
2. Whether the CENVAT credit taken on the input-film can be denied to the appellant.
3. Whether the duty paid by the appellant on the laminated/printed material should be treated as a deposit under Section 11D of the Central Excise Act.
Issue 1: Activity of Laminating and Printing
The appellant engaged in laminating plastic films and printing on them to create packing materials for buyers. The department contended that this activity did not amount to manufacture of excisable goods, leading to the recovery of CENVAT credit taken on the input-film. The Commissioner relied on a Supreme Court judgment where a similar process was not considered as manufacture. However, the appellant argued that their case was different as the products were distinct, fit for use as packaging material, and involved printing activity. The Tribunal noted the differences from the previous case and found the appellant's argument supported by stay orders from other Benches, indicating a prima facie case against the department's view.
Issue 2: Denial of CENVAT Credit
The department sought to deny the CENVAT credit taken by the appellant on the input-film, claiming it was not used in the manufacture of excisable goods. The appellant argued that the duty paid on the laminated/printed material was with the Revenue and should not be denied as CENVAT credit. The Tribunal observed that the denied credit was lower than the duty paid by the appellant, which would be available as credit to their customers. The Tribunal found a contradiction in the Commissioner's view, as treating the duty paid as a deposit under Section 11D implied recognition of the material as an excisable product, supporting the appellant's case.
Issue 3: Treatment of Duty Paid as Deposit
The Commissioner treated the duty paid by the appellant on the laminated/printed material as a deposit under Section 11D. The Tribunal highlighted that for Section 11D to apply, the material should be excisable goods, and the person liable to pay duty. By treating the duty as a deposit, the Commissioner contradicted their own view by recognizing the material as excisable, supporting the appellant's argument. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery in favor of the appellant, considering a prima facie case against the adjudged dues.