2011 (11) TMI 560 - AT - Central Excise

Availment of modvat credit on Paper Tubes and Spin Finish Oil, Cones, etc., used as packing materials - Held that - tariff value are fixed by the Govt. of India on the basis of relevant criteria having a nexus to the value of the goods. He has also stated that the Apex Court observed that such value may be derived with reference to wholesale price, retail price or average price at which the goods are sold by the manufacturer concerned or even by the price at which the goods are sold by any particular person or place or the average price, which the goods command in the whole country or any part thereof. Based on the observation of the Hon ble Supreme Court, he has taken a view that it is common understanding that when the price is determined on that basis, they are deemed to include all the inputs/packing cost incurred. No grounds have been put-forth in the memorandum of appeal to show why this decision is not applicable and in what manner the issue is different from the one dealt with by the Commissioner (Appeals) - Following decision in the case of Century Manufacturing Company Limited 1992 (5) TMI 19 - SUPREME COURT OF INDIA - Decided against Revenue.

Summary

Issues: Modvat credit on packing materials

Analysis:
The case involved a dispute regarding the admissibility of modvat credit on packing materials used in the manufacture of Texturised Yarn. The department contended that modvat credit was not admissible as the value of the packing materials was not included, which was a requirement for allowing the credit during the relevant period under the existing Rules.

The Commissioner (Appeals) relied on a decision of the Hon'ble Supreme Court in the case of Century Manufacturing Company Limited to support the view that tariff values set by the government are based on criteria related to the value of goods. The Commissioner stated that when prices are determined based on such criteria, they are deemed to include all inputs and packing costs incurred. The appellant failed to provide any grounds in the appeal to demonstrate why this decision was not applicable or how the issue differed from the one addressed by the Commissioner (Appeals).

In the absence of any substantive submission challenging the applicability of the Supreme Court decision and considering that the Commissioner (Appeals) correctly followed the cited decision, the Tribunal found no merit in the appeal filed by the Revenue. Consequently, the appeal was rejected, affirming the decision of the Commissioner (Appeals) regarding the admissibility of modvat credit on packing materials used in the manufacture of Texturised Yarn.