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2009 (6) TMI 10 - HC - Central ExciseCenvat / Modvat Use in or in relation to manufacture - Manufacture filed declaration under Modvat Scheme declaring the plastic dropper supplied with the bottle containing drops as an input used in or in relation to manufacture of final product namely Novamox product (Pediatric drops). However, the department objected this on the grounds that this droppers are separately kept in the cartons sealed bottle of the Pediatric drop. These droppers are neither used in the manufacture of pediatric drop nor used in relation to the manufacture of the final product HC uphold the view of tribunal in which tribunal held the plastic dropper packed in the pediatric drops and marketed at the factory gate in the condition could be construed to be an input used in or in relation to the manufacture of the final product as laid down in Rule 57A of the Central Excise Rules credit is allowable.
In the High Court BOMBAY HIGH COURT case of F. I. REBELLO and J. H. BHATIA, JJ., the respondents, manufacturers of pharmaceutical products, declared plastic droppers as an input under the Modvat Scheme used in the manufacture of Pediatric drops. The department objected, claiming the droppers were not used in the manufacturing process. A show cause notice was issued, and the Assistant Commissioner disallowed the credit of duty paid on the droppers. The Commissioner (Appeal) upheld this decision, but the Customs, Excise & Gold Control Appellate Tribunal (CEGAT) allowed the appeal. The Tribunal considered the Apex Court's decision in Eastern Paper Industries and Jay Engineering Works, along with the concept of value addition in the modvat scheme, and concluded that plastic droppers packed with pediatric drops at the factory gate could be construed as an input under Rule 57A of the Central Excise Rules, 1944. The High Court, after hearing the parties and referencing a similar case, Commissioner of Central Excise vs. M/s. Okasa Ltd., answered the reference question in the affirmative, thereby supporting the Tribunal's decision.
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