1992 (1) TMI 265 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 57F(2) of Central Excise Rules, 1944 regarding the classification of aluminum foil sheets as 'input' for the manufacture of 'Razor Blades'.
- Disallowance of modvat credit by Assistant Collector and subsequent appeal acceptance by the Collector (Appeals).
- Determination of whether the aluminum foil sheets qualify as packaging material or raw material for packaging material.
- Application of Board's instructions clarifying modvat credit on raw materials used in packaging materials.

Analysis:

The case involved an appeal against the order of the Collector (Appeals), New Delhi, concerning the classification of aluminum foil sheets as 'input' for the manufacture of 'Razor Blades' under Rule 57F(2) of the Central Excise Rules, 1944. The respondent sought to operate under this rule by sending the foil sheets to job workers for conversion into tucks for packing the final products. The Assistant Collector disallowed this operation, stating that the sheets did not qualify as 'input' for the blades' manufacture.

The appellant argued that the aluminum sheets were necessary for manufacturing containers in which the blades were kept, hence not qualifying as inputs for blade production. They relied on a Tribunal order in a similar case. The respondent contended that the printed aluminum sheets were used as packaging material, detailing the process involving job workers cutting the sheets into individual pieces for final packing in their factory.

The Tribunal considered both arguments and found the respondent's submissions convincing. They distinguished the case cited by the appellant, emphasizing the similarities with a previous case involving packaging material. The Tribunal noted that the aluminum sheets were printed with brand names and other particulars, connecting them directly to the respondent's product. The process of folding the sheets into tucks for packing demonstrated their use as packaging material, even though called tucks post-folding.

Furthermore, the Tribunal referenced Board instructions clarifying modvat credit on raw materials for packaging materials. They highlighted that Rule 57A allowed modvat credit for packaging materials, supporting the respondent's position. The Tribunal concluded that the Collector (Appeals) was correct in accepting the appeal, dismissing the appellant's arguments and upholding the classification of aluminum foil sheets as packaging material for the 'Razor Blades.'

In conclusion, the judgment resolved the issues by interpreting the rules, considering the nature of the aluminum foil sheets, and applying relevant instructions to determine their classification as packaging material, ultimately upholding the Collector (Appeals) decision.