By TIOL News Service

MUMBAI, NOV 27, 2015: THIS is a Revenue appeal.

The respondent had availed CENVATcredit of the duty on aluminium foil received from M/s Associated Capsules Ltd. It is the case of the Revenue that Associated Capsules Ltd. was not manufacturing aluminium foils but was engaged in cutting/slitting jumbo rolls into smaller rolls and the said activity does not amount to manufacture and, therefore, the duty discharged by M/s Associated Capsules Ltd. is not Central Excise duty.

The adjudicating authority confirmed the demand on the ground that a SCN has been issued to M/s Associated Capsules Ltd. to hold that the amounts paid by them as duty on the slittedaluminium foil is not duty, but a deposit made to the department and it was made on their own volition.

The Commissioner (A) set aside the o-in-o holding that the authorities at the recipient end cannot re-classify nor can they deny cenvat credit by contending that the supplier has discharged duty wrongly. It is also recorded in the order-in-appealthat the SCN issued to M/s Associated Capsules Ltd. was dropped by the adjudicating authority i.e Commissioner in favour of M/s Associated Capsules Ltd.

The Bench observed -

"4. Instead of going into merits of case in details, learned Chartered Accountant submits that the department filed an appeal against the order of the Commissioner dropping the proceedings initiated against M/s Associated Capsules Ltd., before the Tribunal in appeal no. E/1281/2007 and the department's appeal was dismissed by the Tribunal as reported in 2014-TIOL-28-CESTAT-MUM and produced a copy of the same. I find that the Tribunal has upheld the duty discharged by M/s Associated Capsules Ltd. as correct and if that be so. CENVAT credit taken by the respondent in the case in hand cannot be disputed, as the fulcrum of the revenue to deny credit on the ground that Associated Capsules could not have discharged duty, is now set aside."

Holding that there is no merit in the Revenue appeal, the same was dismissed.

(See 2015-TIOL-2521-CESTAT-MUM)