2003 (11) TMI 265 - AT - Central Excise

Summary

Issues:
Grant of credit on paper tube used by a texturiser when duty on yarn is paid on tariff value; Eligibility of credit on 'Antistatic Oil' and 'Paper Tube' as inputs under Rule 57A.

Analysis:
The Revenue contested the grant of credit on a paper tube used by a texturiser for winding yarn when duty on yarn is paid on the tariff value fixed under Section 3(2) of the Central Excise Act, 1944. The Revenue argued that the cost of paper tubes should not be included in the value of the final product, making credit on 'Antistatic Oil' and 'Paper Tube' ineligible as inputs. Additionally, the Revenue cited Explanation (iii) to Rule 57A, which excludes packing material from eligibility as inputs due to duties not being paid on the assessable value as per Section.

Upon examination, it was noted that the tariff values under Section 3(2) are determined by the Central Government after considering all relevant factors, as established by the Supreme Court in a previous case. The Revenue failed to provide evidence that the cost of the impugned inputs was not considered while fixing the tariff values. The burden of proof lies with the Revenue, and unsubstantiated allegations are insufficient to deny credit.

Regarding the explanation under Rule 57A, it was observed that the exclusion clauses and the Revenue's lack of challenge to the inclusive clause (b) indicated no ambiguity about the exemption from duty concerning the value of the packing material. Furthermore, there was no evidence presented by the Revenue to support the claim that the cost of packaging was not included in the assessable value in the current or preceding financial year. Thus, the grounds for denial of credit based on exclusion clauses were deemed unsubstantiated and not applicable.

The Commissioner of Central Excise (Appeals) had determined that the impugned goods were used in relation to manufacture, with the paper tube considered as packing material. Therefore, the inputs were deemed eligible for credit under Rule 57A and the inclusion clause of the Explanation (b) to Rule 57A. Any exclusion based on clauses (ii) and (iii) would require substantial evidence, not mere presumptions. As no valid grounds were found to support the Revenue's appeal, it was rejected based on the findings presented.

In conclusion, the appeal was dismissed based on the lack of substantial evidence to support the Revenue's claims regarding the eligibility of credit on the paper tube and 'Antistatic Oil' as inputs under Rule 57A.