2004 (2) TMI 130 - AT - Central Excise

Summary

Issues:
Modvat credit denial on bowl and spoon supplied with 'Herbal Sikkakai Powder'.

Analysis:
The appeal was based on the denial of Modvat credit on a plastic bowl and spoon supplied with 'Herbal Sikkakai Powder'. The appellant argued that these items were necessary accessories to prevent contamination from fungus and were packed together with the powder. Citing relevant rules and notifications, the appellant contended that the bowl and spoon qualified as accessories under the law. The appellant relied on precedents such as the case of CCE, Hyderabad v. Akhil Pharma Ltd. to support their argument.

The Revenue, represented by Smt. R. Bhagya Devi, opposed the appeal, stating that the bowl and spoon were not essential inputs or accessories for the Sikkakai powder. It was argued that unlike in pharmaceutical industries where such items are crucial for maintaining accuracy and sterility, the Sikkakai powder did not require such accessories for measurement or sterilization. Therefore, the Revenue contended that the bowl and spoon did not qualify for Modvat credit.

The Tribunal found merit in the appellant's argument, acknowledging that the bowl and spoon were indeed necessary for using the Sikkakai powder to prevent contamination and ensure effective utilization. Referring to previous cases like Cheryl Laboratories Pvt. Ltd. v. CCE, Hyderabad and CCE, Hyderabad v. Akhil Pharma Ltd., where similar benefits were extended for supplying additional items, the Tribunal ruled in favor of the appellant. The Tribunal agreed with the appellant that the purpose of providing the bowl and spoon was for measured consumption and to avoid contamination, thus allowing the appeal and setting aside the original order.

In conclusion, the Tribunal held that the plastic bowl and spoon supplied with the 'Herbal Sikkakai Powder' were essential accessories for the effective use of the product, thereby qualifying for Modvat credit. The decision was based on the necessity of these items to prevent contamination and ensure proper utilization of the Sikkakai powder, aligning with the principles established in relevant precedents.