Case Law Details
Modern Packaging Company Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: A recent order by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Ahmedabad addresses the eligibility of a supplier of Rotogravure Printing Cylinders to avail CENVAT credit for excise duty. The case revolved around whether the supplier had correctly paid the excise duty or not, and whether the recipient of the cylinders could claim CENVAT credit. In this article, we provide a detailed analysis of the case, including the background, arguments presented by both parties, and the tribunal’s decision.
1. Background: The appellant in this case is a manufacturer of packaging materials, and they procured printing cylinders used in their production process from Accuprint Systems, Mumbai. These printing cylinders were classified under Chapter heading No. 84425010 and were initially considered for exemption under Notification No. 49/2006-CE dated 31.12.2006. The department contended that these cylinders should be subject to either 2% duty without CENVAT or 5% with CENVAT, effective from March 1, 2011, as per Notification No. 2/2011-CE dated 01.03.2011. The appellant claimed that the supplier had paid the duty correctly and that they were entitled to CENVAT credit for the duty paid by the supplier.
2. Arguments by the Appellant: The appellant’s counsel argued that the denial of CENVAT credit was based on incorrect grounds. They presented a clarification issued by the supplier’s jurisdictional Chief Commissioner, which confirmed that the supplier had paid the duty correctly and was directed to continue paying duty without availing the benefit of Notification No. 49/2006-CE. The appellant contended that they were entitled to claim CENVAT credit as recipients of the goods. They further cited several judgments and decisions in their favor, including previous orders by the Commissioner (Appeals).
3. Arguments by the Revenue: The revenue, represented by the Superintendent (AR), reiterated the findings of the impugned order, maintaining that the appellant was not eligible for CENVAT credit due to the incorrect payment of duty by the supplier.
4. CESTAT Ahmedabad’s Decision: The tribunal reviewed the submissions from both parties and found that the primary reason for denying CENVAT credit to the appellant was the belief that the supplier should not have paid the duty, as the printing cylinders were exempted under Notification No. 49/2006-CE dated 31.12.2006 However, the tribunal noted that the department had received clarification from the supplier’s jurisdictional officers, confirming that the duty was correctly paid. The tribunal highlighted a letter dated 08.08.2013, in which the Chief Commissioner Central Excise-Mumbai Zone-II communicated that the supplier had correctly paid the duty without availing the exemption. The tribunal concluded that the supplier’s jurisdictional officers were responsible for assessing the correctness of the duty payment, and the appellant had rightfully availed CENVAT credit. Consequently, the demand for duty was found to be unsustainable, and the impugned order was set aside, allowing the appeal.
Conclusion: The case of Modern Packaging Company vs. C.C.E. & S.T. before CESTAT Ahmedabad emphasizes the importance of clarifications provided by jurisdictional officers. In this case, the tribunal found that the supplier had correctly paid the excise duty, as confirmed by the supplier’s jurisdictional officers. The appellant’s entitlement to CENVAT credit was upheld. This case underscores the significance of accurate assessments by jurisdictional officers and the need for such clarifications to prevent unwarranted disputes.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant are engaged in the manufacture of packaging material falling under Chapter heading 39 and 48 of Central Excise Tariff Act, 1985. They have procured printing cylinder falling under Chapter heading No. 84425010, required for the production of packing material from Accuprint Systems, Mumbai. The supplier-manufacturer have cleared the said cylinder on payment of duty. The department’s contention is that the printing cylinders are falling under Chapter heading No. 844250 and exempted under Notification No. 49/2006-CE dated 31.12.2006. Accordingly, they are chargeable to 2% duty without cenvat or 5% with Cenvat w.e.f. 01.03.2011 as per Notification No. 2/2011-CE dated 01.03.2011. Hence the duty paid by the supplier which was not supposed to be paid under the aforesaid Notification, the appellant is not entitled for cenvat credit of such duty.
2. Shri P.K. Shetty, learned counsel appearing on behalf of the appellant submits that the entire basis of the denial of cenvat credit that
the supplier unit was supposed to avail the Exemption Notification No. 49/2006-CE dated 31.12.2006 is incorrect on the face of clarification issued by the suppliers’ jurisdictional Chief Commissioner whereby it was clarified that the goods manufactured by the supplier manufacturer have paid the duty correctly and also directed to continue paying duty without availing benefit of Notification No. 49/2006-CE, therefore, the suppliers have paid the duty correctly and legally. Accordingly, the credit of the appellant, who being a recipient of the goods, cannot be questioned. He further submits that in the appellant’s own case for the subsequent period the cenvat credit was allowed by the learned Commissioner (Appeals) in two orders-in appeal on the same issue and the same were accepted by the
department. He placed reliance on the following judgments:
- OIA No. CCESA-SRT(APPEALS)/PS-579/2018-19 dated 27.11.2018 and CCESA-SRT(APPEALS)/PS-245/2019-20 dated 29.07.2019
- CCE vs Nahar Granites Ltd. 2014 (305) ELT 9 (Guj.)
- Agro Pack 2012 (278) ELT 359 (T- Ahd)
- BalajiMultiflex P Ltd. 2019 (370) ELT 773 (T-Ahd)
- Sarvesh Refractories P Ltd. 2002 (139) ELT 431 (T) upheld be SC in 2007 (218) ELT 488 (SC)
- CCE vs MDS Switchgear Ltd. 2008 (229) ELT 485 (SC)
3. Shri A.K. Samota, learned Superintendent (AR) appearing on behalf of the revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the records. We find that the sole ground for denial of cenvat credit to the appellant is that the supplier of printing cylinder was not supposed to pay the duty as the same were exempted under Notification No. 49/2006-CE dated 31.12.2006, therefore, the duty was wrongly paid by the supplier and consequently the appellant is not eligible for cenvat credit of such duty wrongly paid. Without going into much detail of the case, we find that the department itself is of the view that the supplier was supposed to pay the duty and on a query made by the supplier to their jurisdictional officers they have clarified vide letter F. No. V/Tal/DFA/SCN/Accuprint/08-13-14 dated 08.08.2003, the said letter wherein the matter was considered by the Chief Commissioner Central Excise-Mumbai Zone-II communicated by the Deputy Commissioner Central Excise-Taloja Division to the supplier is scanned below:
From the above clarification given to the supplier of the Rotogravure Printing Cylinder, there is no ambiguity that the supplier have correctly paid the duty without availing the Exemption Notification No. 49/2006-CE dated 31.12.2006. The entire basis for denial of the credit is on the view which was completely contrary to the clarification given in the above letter dated 08.08.2013. We find that it is the supplier’s Jurisdictional Officers who have to assess whether duty was correctly paid or otherwise and the same has been clarified by the supplier’s jurisdictional officer. The jurisdictional officer of the appellant has no jurisdiction to question the assessment or correctness of the payment of duty. Accordingly, we are of the view that the appellant have correctly availed the cenvat credit on the Rotogravure Printing Cylinder supplied by M/s Accuprints System. Hence the demand is not sustainable. Accordingly, the impugned order is set aside. Appeal is allowed.
(Pronounced in the open court on 04.10.2023)
