2004 (1) TMI 598 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit for plastic carry bags used in the manufacture of footwears.

Analysis:
1. The appeal challenges the denial of Modvat credit for plastic carry bags used by the appellants, who are manufacturers of footwears, during specific periods. The lower authorities disallowed the credit, stating that the bags were not used in the manufacture of footwear.

2. The appellant's counsel argued that the plastic bags were essential for making the footwears marketable and thus should be considered eligible inputs under Rule 57B. They referenced relevant legal provisions and judicial decisions to support their claim. The Department's Representative, however, relied on a previous Tribunal decision to assert that the issue had already been settled against the appellants.

3. Upon careful consideration, the Judge noted a previous Tribunal decision (Liberty Shoes case) where a similar situation was evaluated. In that case, it was held that the carry bags were not used directly or indirectly in the manufacture of footwears, rendering them ineligible for input duty credit. The Judge emphasized that the plastic bags in question were not used in relation to the manufacture of footwear but rather in post-manufactural activities like the sale of the final product.

4. The Judge further analyzed Rule 57B, emphasizing that the plastic carry bags were not used in or in relation to the manufacture of footwear, as required by the rule. The inclusion of the bag's cost in the assessable value of the footwear did not change this conclusion. Additionally, the appellants had only claimed under Rule 57A at lower levels, making their Rule 57B claim invalid.

5. The Judge distinguished the cited Supreme Court judgment and the Swaraj Mazda case, highlighting that marketability does not establish a connection to input duty credit. The plastic bags in this case were deemed different from the floor mats in the Swaraj Mazda case, further weakening the appellant's argument.

6. Ultimately, the Judge found the appeal lacking merit and dismissed it based on the established legal principles and precedents, including the decision in the Liberty Shoes case.

This detailed analysis provides a comprehensive overview of the judgment, addressing the issues raised and the legal reasoning behind the decision.