2020 (1) TMI 843 - AT - Central Excise

Valuation - printing and engraving charges - inclusion of extra charges collected by the appellant through debit notes in the assessable value - whether the appellant have availed credit in respect of manufacture of Printed Plastic Packing Bags? - Claim of benefit of exemption notifications 4/97-CE and 5/98-CE where no credit is availed - HELD THAT - The show cause notice itself admitted that the appellant have availed modvat credit on inputs such as granules used in Lay Flat Tubing. As regards other inputs, whether the credit is availed or otherwise, the same was not produced by the appellant before the Adjudicating Authority in the de-novo adjudication - if the appellant have not taken any credit on inputs used in the manufacture of Printed Plastic Packing Bags, even though the credit was availed on the inputs used in the manufacture of intermediate product Lay Flat Tubing, they are entitled to exemption notifications 4/97-CE and 5/98- CE. Since the non-availment of modvat credit on all the inputs used in Plastic Bags was not established, the matter needs to be remanded only for this limited fact to be verified - appeal allowed by way of remand.

Summary

Issues:
- Availment of Modvat credit on inputs used in the manufacture of Printed Plastic Packing Bags
- Inclusion of extra charges collected through debit notes in the assessable value
- Entitlement to exemption under Notification Nos. 4/97-CE and 5/98-CE

Analysis:
The case involved the appellant, engaged in manufacturing Printed Plastic Packing Bags, availing Modvat credit for inputs used in producing Lay Flat Tubing, an intermediate product. The appellant discharged excise duty on the tubing and cleared the bags after paying duty on the transaction value. The department contended that extra charges collected through debit notes should be included in the assessable value, leading to a differential duty demand. The Tribunal remanded the matter to consider exemption notifications 4/97-CE and 5/98-CE and verify the appellant's Modvat credit utilization.

The appellant's counsel argued that the goods were exempted under the notifications, emphasizing that Modvat credit was only availed for inputs in the Lay Flat Tubing, not the initial granules for Plastic Packing Bags. The Revenue's representative countered, claiming Modvat credit was also taken for miscellaneous goods used in manufacturing the bags. The Tribunal noted the crucial issue was whether the appellant availed credit for manufacturing the Printed Plastic Packing Bags. The show cause notice acknowledged Modvat credit for granules in Lay Flat Tubing, but evidence of credit utilization for other inputs was lacking.

The Tribunal concluded that if the appellant did not use credit for inputs in the Plastic Bags' manufacture, despite utilizing it for Lay Flat Tubing, they were eligible for the exemption notifications. As the non-availment of Modvat credit on all inputs for the bags was not proven, the matter was remanded to verify this specific fact. Consequently, the impugned order was set aside, and the case was sent back to the Adjudicating Authority for a fresh decision based on the Tribunal's observations. The appeal was allowed for a remand, emphasizing the need to confirm the Modvat credit utilization on all inputs for Printed Plastic Packing Bags.