2004 (9) TMI 432 - AT - Central Excise

Summary

Issues: Denial of Modvat credit on plastic jars used for packaging eclairs.

Analysis:
The issue in this case revolves around the denial of Modvat credit to the appellants concerning the plastic jars used for packaging eclairs. The denial was based on the argument that the cost of the jars was not included in the assessable value of the eclairs, thus rendering the Modvat credit on the inputs used for manufacturing the jars inapplicable.

Appellant's Argument:
The appellant, represented by Shri R.C. Gupta, contended that the eclairs fell under the Standards of Weights and Measures (Package Commodity) Rules, 1997. As per these rules, the goods were sold with the retail price inclusive of the packing material. The appellant also provided explanations, including a fax to the Superintendent (Preventive), Central Excise, clarifying that the price of the jar was indeed included in the assessable value. Additionally, a Chartered Accountant's certificate confirmed that the cost of the plastic jars was integrated into the price of the finished product. The appellant cited legal precedents to support their argument.

Revenue's Argument:
On the other hand, the Revenue, represented by Shri V. Valte, contended that the Chartered Accountant's certificate lacked detailed references to support the appellant's claims. Referring to a statement by Shri Arvind Sharma, it was suggested that the cost of the jars was absorbed in the profit margin, and the jars were supplied free of cost to customers. Consequently, the Revenue argued against allowing the Modvat credit on the inputs used for manufacturing the jars.

Judgment:
After considering the arguments from both sides, the Tribunal found that the Revenue failed to provide concrete evidence that the value of the jars was not included in the sale price of the eclairs. The Tribunal emphasized the significance of the Chartered Accountant's certificate, which clearly stated that the cost of the plastic jars was part of the eclair's price. Citing a previous ruling, the Tribunal held that in the absence of contradictory evidence from the Revenue, the Chartered Accountant's certificate must be accepted. Consequently, the Tribunal concluded that the Modvat credit on the inputs used for manufacturing the jars should not be denied to the appellants. The Tribunal criticized the Commissioner (Appeals) for a weak rationale in denying the credit and overturned the lower authorities' decisions, allowing the appeal in favor of the appellants.