2005 (12) TMI 467 - AT - Central Excise

Summary

Issues:
Challenge to denial of Modvat credit on items used in secondary packing.

Analysis:
The appellant, a biscuit manufacturer, challenged the denial of Modvat credit on inputs used in secondary packing. The Commissioner (Appeals) had held that Modvat credit was not available on items like adhesive, liquid, and tapes used in secondary packing, as their value should be excluded from the assessable value of the goods.

The appellant contended that the issue was covered by a Tribunal judgment in the case of Eveready Industries (I) Ltd. v. Commissioner of Central Excise, Allahabad. The Tribunal had held that Modvat credit should be given for duty paid on inputs used in the manufacture of final excisable goods. The appellant argued that denying Modvat credit on inputs would allow Central Excise authorities to challenge assessments made by input suppliers.

The Departmental Representative reiterated the findings of the Commissioner (Appeals), supporting the denial of Modvat credit on the mentioned items.

After careful consideration, the Tribunal found that the inputs had indeed suffered duty and were used in the manufacture of final products. Therefore, the Tribunal concluded that Modvat credit could not be denied, citing the judgment in the Eveready Industries case. The Tribunal set aside the Commissioner (Appeals) order, allowing the appeal and granting consequential relief if necessary.

The Tribunal pronounced the operative part of the order in open court on 2-12-2005, overturning the denial of Modvat credit on items used in secondary packing and emphasizing the applicability of Modvat credit for duty paid on inputs used in manufacturing final products.