2026-VIL-1861-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Denial of Cenvat Credit - Section 2(f) of Central Excise Act, 1944 - Appellant manufactured plastic films and printed plastic pouches and availed Cenvat credit of duty paid on raw material procured from three suppliers. The Department held that the suppliers' processes did not amount to manufacture, so no duty was payable on their final product and the Appellant was ineligible to avail Cenvat credit. The Commissioner denied the credit, ordered its recovery with interest and imposed equivalent penalty - Whether the processes undertaken by the suppliers in converting laminated or metallised sheets into packaging material amount to manufacture, and whether the Cenvat credit availed by the Appellant was liable to be denied - HELD - The issue stands settled in favour of the Appellant by the Tribunal's earlier Final Order in the suppliers' own case, which held that their processes amount to manufacture. The processes involved are not that of mere lamination. Two or more layers are glued together and left in a hot room to bond better, one layer bears the details of the product and the manufacturer, and the laminated sheet becomes a roll of packaging material which is slit and cut to desired sizes. A definite, distinct new product emerges, with a distinct name, character and use in comparison with the raw material. It ceases to be a laminate for general use and can be used only by the particular customer who ordered it. In the worst scenario, the activity is a process incidental or ancillary to the completion of a manufactured product, which is included in manufacture under Section 2(f) of the Central Excise Act, 1944. The Department had also taken opposite stands on the same issue in different cases, and had accepted an order of the FAA deciding the issue in favour of the Appellant for the same period. Since the processes amount to manufacture, the suppliers correctly paid duty on their final product and the Cenvat credit was correctly availed - The impugned order is set aside and the appeal is allowed
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