Sandeep Laminators Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Chandigarh)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, considered an appeal against the Commissioner’s order dated 30.04.2013, which had disallowed CENVAT credit of ₹36,58,909 availed on inputs from 12.02.2004 onwards under Rules 12/14 of the CENVAT Credit Rules, 2002/2004, ordered its recovery, directed recovery of interest under Section 11AB of the Central Excise Act, 1944, and imposed an equal penalty under Rule 15 of the CENVAT Credit Rules, 2004.
The appellant manufactures plastic laminates under Chapter Heading 3920.38 and pouches under Chapter Heading 3923.90 of the Central Excise Tariff Act, 1985. The Department’s Anti-Evasion Branch found that the appellant procured duty-paid polyester/metallised polyester film and polyethylene film, printed the polyester film, and laminated it with metallised/polyethylene film using adhesive while availing CENVAT credit on the inputs. Statements of the Production Manager and the Director were recorded. Relying on the Supreme Court’s decision in Metlex (I) Pvt. Ltd. Vs CCE, New Delhi, the Department took the view that laminating/metallising duty-paid film did not amount to manufacture as no new and distinct product emerged. Two show cause notices dated 05.01.2006 and 07.12.2006 were issued, resulting in the impugned order disallowing the CENVAT credit along with interest and penalty.
