1999 (6) TMI 480 - AT - Central Excise

Summary

Issues involved: Whether Modvat credit under Rule 57A of the Central Excise Rules is available for duty paid on packing and forwarding charges collected in respect of inputs.

Summary:
The appeal concerned the availability of Modvat credit under Rule 57A of the Central Excise Rules for duty paid on packing and forwarding charges related to inputs. The Appellants, a manufacturing company, claimed Modvat credit for various raw materials and capital goods. The Assistant Commissioner disallowed the credit on packing charges, stating that these charges were not considered inputs or capital goods. The Commissioner (Appeals) upheld this decision. The Appellants argued that the Modvat scheme did not authorize Central Excise officers to reassess duty on inputs received for final product manufacturing. They cited relevant case law to support their position.

Upon review, the Tribunal noted that Rule 57-A allows Modvat credit for duty paid on inputs used in manufacturing final products. The explanation to Rule 57A specifies that inputs do not include packing materials unless their cost is included in the assessable value of the final product. The Tribunal found that the Revenue did not dispute the inclusion of packaging material costs in the assessable value. The Appellants had availed Modvat credit based on duty paying documents. Citing precedent cases, the Tribunal emphasized that duty reassessment for Modvat credit purposes should occur at the supplier's end under relevant provisions of the Central Excise Act. The Tribunal concluded that Modvat credit was permissible for duty paid on packing and forwarding charges. Consequently, the appeal was allowed in favor of the Appellants.