2008 (8) TMI 232 - HC - Central Excise

Credit - whether the Hanging card can be called an advertisement or a packaging material such cards are hanged in the shop - A container or a part of any cosmetic product meant for keeping on the shelves of the shop, reproducing the qualification of a product contained inside, will not get converted into the advertising material on that account itself. The only difference between a pack of a product and the hanging cards is hanged, both attract the attention of the customer- held that, hanging cards are packing materials and not advertising material credit is admissible

Summary

Issues:
Whether hanging cards are to be considered as advertising materials or packaging materials for the purpose of taking MODVAT credit.

Analysis:
The High Court of Calcutta, comprising Pinaki Chandra Ghose and Sankar Prasad Mitra, JJ., heard the case extensively. The central issue revolved around the classification of hanging cards as either advertising materials or packaging materials. The Revenue argued that hanging cards should be deemed advertising materials, making them ineligible for MODVAT credit. Conversely, the respondents contended that hanging cards are indeed packaging materials, emphasizing that they facilitate the packaging and display of products.

The appellant's counsel, Shri Mukherjee, relied on a previous Tribunal decision in the case of Ajanta Prints Arts v. Collector of Central Excise, Bombay, to support their argument that hanging cards should be considered as posters with advertising material rather than packaging materials. However, the Court found that the Ajanta Prints Arts case was not directly applicable to the present matter. The Court examined the facts and determined that the material used for the hanging cards did not qualify as advertising materials.

The Court reviewed the Tribunal's opinion, which highlighted that the hanging cards, despite containing printed designs and product information, primarily served as packaging materials. The Tribunal emphasized that the purpose of hanging cards was not solely for advertising but also for practical packaging and display in shops. Consequently, the Tribunal concluded that hanging cards should be classified as packaging materials, making them eligible for MODVAT credit under Rule 57B.

In agreement with the Tribunal's analysis, the High Court upheld the Tribunal's decision, finding no grounds for interference. The Court affirmed that the Tribunal's order was legally sound, devoid of any errors or legal issues warranting a different outcome. Therefore, the appeal was dismissed, and the Court directed the issuance of an urgent certified copy of the order to the concerned parties upon completion of formalities.