2026-VIL-839-MAD-CE
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CENTRAL EXCISE High Court Cases

Central Excise – Manufacture, CENVAT credit of Customs Duty and Countervailing Duty paid through DEPB scrips, Plea of revenue neutrality – Excisability of process of placing imported ready-to-use film rolls in printed cartons with brand name and maximum retail price amounts to manufacture and whether the extended period of limitation is invocable - HELD - The issue of excisability of goods is intrinsically connected with the rate of duty and the question of manufacture was the primary issue raised. The Respondent-assessee having not assailed the findings of the Original Authority on the issue of manufacture and excisability and having only confined its challenge before the Tribunal to the alternate plea of revenue neutrality, thereby accepting the finding on manufacture, the excisability of goods is no longer an issue for determination - For the period upto 31.08.2004, CENVAT credit could not be availed for Customs Duty and Countervailing Duty paid through debit of DEPB scrips and unless duty was paid in cash, CENVAT credit was not available. The value of DEPB scrip, once used, gets extinguished and there would be no question of seeking CENVAT credit thereafter - Since the Respondent pleaded revenue neutrality, the burden was on the Respondent to place supporting materials to establish that CENVAT credit of Customs Duty and Countervailing Duty paid through DEPB scrips was equal to or exceeded the amount of duty demanded. The findings of the Original Authority on deliberate suppression of facts with intention to evade payment of duty and that plea of bona fide belief was not made out are based on evidence and material on record. The extended period of limitation under Section 11A of the Central Excise Act was correctly invoked - The Tribunal's finding that the demand was barred by limitation is patently unreasonable and unsustainable. Penalty and interest imposed by the Original Authority are sustainable - The order passed by the Tribunal is set aside. The Final Order of the Original Authority confirming the demand for Central Excise Duty, interest and penalty is confirmed – The Revenue appeal is allowed
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