2007 (2) TMI 98 - AT - Central Excise

Cenvat/Modvat credit - As per Commissioner (Appeal) modvat credit not allowed to appellant on the ground that the glass bottles used for packing of aerated water were not capital goods - Held the Commissioner (Appeal) not sustained and allow the appeal

Summary

Issues:
Challenge to Commissioner (Appeals) order setting aside Order-in-Original denying Modvat credit for glass bottles used in packing aerated water.

Analysis:
The appellant contested the Commissioner (Appeals) order, arguing that the cost structure evidence showed glass bottles' value was included in the final product's assessable value. The appellant cited supportive Tribunal decisions and disagreed with the Commissioner (Appeals) findings. The appellant claimed the Commissioner (Appeals) exceeded the show cause notice scope by considering a CBEC circular and wrongly concluded the glass bottles' cost was not part of the final product's value.

The Authorized Representative for the department supported the Commissioner (Appeals) findings, stating the appellant failed to prove the glass bottles' cost inclusion in the final product's costing. Referring to a Board circular, it was argued that glass bottles could be considered inputs only under specific conditions. The issue revolved around whether glass bottles as containers for aerated water qualified as "capital goods," with the department contending glass bottles did not meet the criteria for Modvat credit eligibility.

The Commissioner (Appeals) based the decision on the belief that as returnable containers, the glass bottles' cost was not part of the goods' assessable value. Despite acknowledging the Board circular allowing Modvat credit based on individual clearance facts, the Commissioner (Appeals) found no specific proof from the appellant regarding the glass bottles' cost inclusion in the final product's value. The Commissioner (Appeals) was not convinced that the bottles' cost was included in the assessable value, even if it was part of the manufacturing profit item.

The evidence revealed the appellant had submitted a cost statement to the Central Excise Superintendent, demonstrating the glass bottles' cost inclusion in the goods' assessable value. The adjudicating authority accepted the appellant's cost structure, confirmed by a declaration and maintained registers as required. The Appellate Commissioner's differing view lacked valid grounds to overturn the adjudicating authority's decision, which was based on acceptable evidence. The Appellate Commissioner's order was set aside, restoring the adjudicating authority's decision, as it was reasonable and supported by the material on record.