2001 (6) TMI 121 - AT - Central Excise

Summary

Issues:
Appeals against disallowance of Modvat Credit and penalty imposition.

Analysis:
The appellants, engaged in footwear manufacturing, availed Modvat Credit on carry bags from April 1996 to November 1996, which was disallowed as per Rule 57A of the Central Excise Rules. The Assistant Commissioner disallowed the credit and imposed penalties, which were affirmed by the Commissioner (Appeals). The appellants argued that the Modvat credit was admissible under Rule 57A and Notification No. 28/95-C.E. as the carry bags were inputs. However, the authorities found that the carry bags were not used as packing material for the footwear but were provided to customers by retailers. The Tribunal noted that the bags were not used directly or indirectly in the footwear manufacturing process, thus not eligible for Modvat credit.

The Tribunal analyzed Rule 57A, which allows Modvat credit on packing material if included in the assessable value of the final product. However, the material must be proven to be packing material by the manufacturer to claim the credit. In this case, the carry bags were not used for packing the footwear but were provided to customers by retailers. The Tribunal also discussed Notification No. 28/95-C.E., stating that the bags were not used as inputs directly or indirectly in manufacturing. Referring to previous judgments, the Tribunal upheld the decision to disallow Modvat credit on carry bags for the appellants.

In conclusion, the Tribunal found no merit in the appeals and ordered their dismissal. The decision to disallow Modvat credit on carry bags was upheld based on the fact that the bags were not used in the manufacturing process of footwear and did not qualify as packing material under Rule 57A. The appellants' arguments regarding Rule 57A and Notification No. 28/95-C.E. were deemed inapplicable to the case, leading to the dismissal of the appeals.