M/S. Simplex Packaging Ltd vs C.C.E. Noida

[Arising out of Order-In-Appeal No. 186-CE/Appeal/Noida/09 dated: 20.07.2009 passed by CCE (Appeals) Noida]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Simplex Packaging Ltd. ...Appellant

Vs.

C.C.E. Noida Respondent

Appearance:

Mr. S. D. Gaur, (Advocate) for the Appellant

Mr. Devinder Singh, DR for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing/ Decision. 04.08.2015

Final Order No. 54211 /2015_

Per S K Mohanty:

Brief fact of the case are that the appellant is engaged in the manufacture of Printed Plastic Laminates, other Laminated Plastic Pouches, Printed Polypeline Labels etc., falling under Chapter Sub-heading Nos. 39202020, 39239090 and 39269026 repectively of the Central Excise Tariff Act, 1985. The appellant avails cenvat credit of Central Excise duty paid on various inputs used in or in relation of manufacture of the aforesaid final products. Taking of cenvat credit was disputed by the Central Excise Department on the ground that printed plastic laminates are not arising out of any manufacturing process, and as such, duty was not payable on the said product. Since the other products manufactured by the appellant attract payment of central excise duty, the Department entertained the belief that the appellant is required to pay an amount of 10% of the total price of exempted final product (printed plastic laminates) as provided under Clause (b) of sub-Rule (3) of the Rule 6 of the Cenvat Credit Rules, 2004. The Show Cause proceedings initiated by the Department culminated in the adjudication order dated 23.12.2008, wherein an amount of Rs. 17,80,773/- was confirmed under Rule 6(3)(b) ibid along with interest and also equal amount of penalty was imposed under Rule 15 ibid on the appellant. In appeal, the Commissioner (Appeals) vide the impugned order has upheld the order passed by the Adjudication Authority. Hence, the present appeal is before this Tribunal.

2. The Ld. Consultant Sh. SD Gaur appearing for the appellant submits that confirmation of demand under Rule 6 of the Cenvat Credit Rules is not proper inasmuch as the printed plastic laminates are not exempted from payment of Central Excise duty and also not confirming to the exempted category of goods defined in Rule 2(d) ibid. He further submits that since printed plastic laminates are not categorized as excisable goods, the provisions of Rule 6 of the said Rules will not have any application for confirmation of duty demand, in view of the fact that the said Rule deals with situation where both the dutiable as well as exempted goods are manufactured by the manufacturer.

3. The Ld. DR Sh. Devinder Singh appearing for the Revenue Respondent reiterated the findings recorded in the impugned order.

4. Heard the Ld. Counsel for both the sides and perused the records.

5. The obligation of manufacturer of dutiable and exempted goods is contained in Rule 6 of the Cenvat Credit Rules, 2004. The said Rule is applicable only when both dutiable as well as exempted goods are manufactured in the factory of the manufacturer. In the present case, printed plastic laminates manufactured by the appellant is not confirming to the definition of exempted goods as per the definition contained in Rule 2(d) of the said Rules. Since the appellant is engaged only in the manufacture of dutiable goods, I am of the view that the embargo created in Rule 6 of the said Rules regarding payment of 10% of the price of exempted goods shall not be applicable and as such, the duty demand confirmed by the authorities below are not justified. With regard to the submission of the Department that since printed plastic laminates are not arising out of any manufacturing process and thus, the appellant is required to reverse the cenvat credit on inputs commonly used in manufacture of the said goods as well as other excisable goods manufactured in the factory, I find that the said stand of the Department has no legal sanctity inasmuch as printed plastic laminates first of all is not an exempted excisable goods as per the definition provided in the said Rules.

Further, even assuming that the said goods is not arising out of any manufacturing process, since other goods i.e. other laminated plastic pouches, printed propeline labels and printed paper and paper board manufactured by the appellant are excisable goods and attract payment of duty, the input used in those excisable gods will also be available for cenvat credit, irrespective of the fact that some portion of the inputs are also used in the manufacture of printed plastic laminates. The moot question to be answered here is with regard to the applicability of Rule 6 of the Cenvat Credit Rules for payment of amount of 10% on removal of printed plastic laminates by the appellant. As observed above, since printed plastic laminates cannot be considered as exempted goods, I am of the considered view that the inputs used in or in relation to manufacture of such exempted product is eligible for the cenvat benefit and the embargo/ stipulation created in Rule 6 of the said Rules will have no application and as such, the appellant is not required to reverse 10% of the total price of printed plastic laminates removed from the factory.

6. Therefore, I do not find any merit in the impugned order in disallowing the benefit of cenvat credit to the appellant, and as such, the same is set aside and the appeal is allowed in favour of the appellant.

(Dictated and pronounced in open court)

(S. K. Mohanty) Member(Judicial)

Neha

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