2000 (1) TMI 983 - AT - Central Excise

Summary

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

Summary:
The appeal addressed the issue of whether Modvat credit under Rule 57-A of the Central Excise Rules is applicable to duty paid on packing and forwarding charges for inputs. The Appellants, a manufacturer of Torches/flashlights, availed Modvat credit for various raw materials and capital goods. The Assistant Commissioner disallowed the Modvat credit on packing and forwarding 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 precedents to support their position.

Upon review, it was noted that Rule 57-A allows Modvat credit for duty paid on inputs used in manufacturing final products. The explanation to Rule 57-A specifies that packing materials, if not included in the assessable value of the final product, are not considered inputs. The Revenue did not contest the inclusion of packaging material costs in the assessable value. The Tribunal held that Central Excise officers cannot reassess duty on inputs for Modvat credit purposes. Any discrepancies in duty payment should be addressed at the supplier's end. Modvat credit is permissible at the time of goods receipt based on the duty paying document. Consequently, the Appellants were granted Modvat credit for duty paid on packing and forwarding charges, leading to the allowance of their appeal.