Cylinders Essential Component for Printing Machine: CESTAT allows Full CENVAT Credit Claim [Read Order]

In a move impacting the manufacturing sector, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has allowed full CENVAT credit to M/s Huhtamaki PPL India Ltd. on printing cylinders, reversing a tax demand of over ₹68 lakh imposed by the Central Excise Department.

The case revolved around the eligibility of 100% CENVAT credit on copper-plated MS roll cylinders—components integral to the printing process—claimed by Huhtamaki between April 2011 and March 2014. The department had contended that the cylinders qualified as “capital goods,” allowing only 50% credit in the first year, and had demanded reversal of the remaining credit with interest and penalty.

Huhtamaki, formerly The Paper Products Ltd., manufactures flexible packaging materials, including printed/unprinted films and labels. The company maintained that the cylinders were not merely capital goods but essential components used in the manufacturing process, qualifying them as “inputs” under Rule 2(k)(C) of the CENVAT Credit Rules, 2004.

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Advocate P.K. Shetty, representing Huhtamaki, argued that the cylinders were indispensable to the functioning of the printing machines and should be treated as inputs. He further pointed out that the company had voluntarily paid interest on the disputed credit and that the CENVAT account always had a sufficient balance, making the issue revenue-neutral.

The tribunal, comprising Judicial Member Dr. Suvendu Kumar Pati and Technical Member Mr. Anil G. Shakkarwar, examined the legislative framework and factual submissions. Notably, the tribunal cited para 14.5 of the Commissioner’s own order, which acknowledged that the cylinders were essential components without which the printing machine could not function.

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“Though cylinders were treated as capital goods, they were clearly found to be integral parts of the printing machine,” the tribunal noted, adding that their use as components placed them within the definition of “input” under the amended Rule 2(k)(C). Accordingly, the tribunal concluded that full credit was justifiable and the department’s demand unsustainable.

Setting aside the Commissioner’s 2015 order, the CESTAT allowed the appeal in full, providing consequential relief to the appellant.

To Read the full text of the Order CLICK HERE

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