Commissioner of Central Excise Vs Computer Graphics Limited (Madras High Court)
The Madras High Court considered a Civil Miscellaneous Appeal filed by the Revenue against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had set aside the demand of Central Excise duty raised against the respondent company. The respondent, a public limited company, was engaged in converting jumbo rolls of photographic films into rolls of different sizes through cutting and slitting, and also traded imported ready-to-use unexposed photo colour film rolls packed in individual plastic canisters. A show cause notice dated 29.08.2006 proposed to treat the activity of placing imported unexposed colour film rolls packed in plastic canisters into printed cartons bearing brand name and MRP as manufacture and demanded Central Excise duty for the period from 01.03.2003 to 31.08.2004, along with interest and penalty by invoking the extended period of limitation. The Original Authority confirmed duty of Rs.20,37,33,174 under Section 11A(2) of the Central Excise Act, imposed an equal penalty under Section 11AC and levied interest under Section 11AB.
Before the Tribunal, the respondent contended that its activity amounted only to trading and not manufacture, that the demand was revenue neutral because it was entitled to CENVAT credit on imported and indigenous inputs, and that the extended period of limitation was not invocable as it acted under a bona fide belief. The Tribunal accepted the plea of revenue neutrality, relying upon Commissioner of Central Excise & Customs, Vadodara Vs. Narmadha Chemataur Pharmaceuticals Limited, held that the demand was time-barred and that the admissible CENVAT credit exceeded the duty demand, and consequently set aside the entire demand. The Revenue challenged this decision before the High Court.
