2010 (4) TMI 282 - HC - Central Excise

Wrong availment of cenvat credit tattoos / boomer tattoos - Manufacture of Cheqing Gum / Bubble Gum, Toffee and Candy containing cocoa - The revenue claimed that on physical examination, it revealed that the tattoos, in piece or roll form are stickers, made of paper/plastic having transferable printed figures and the children, by putting the tattoos on skin, are able to transfer the figure thereof on the parts of their bodies by applying hand pressure. Therefore, it was claimed that the assessee has mis-described the tattoos as inputs to avail an inadmissible cenvat credit. Held that - it is not the case of the assessee that tattoo material is used for initial packing in the real sense, rather the final product is wrapped in aluminum foils and other packing material, on which it (assessee) is claiming cenvat credit. The tattoos are additionally placed in the container of the product. Therefore, it cannot possibly be termed that the tattoo material is used as an initial packing material. In other words, the tattoo on the bubble gum is not at all required in the form of primary packing and the assessee is not entitled to claim cenvat credit in this relevant connection. - The use of tattoo material is an additional step to promote the trade and involves element of advertisement. Therefore, the assessee is not entitled for cenvat credit in this relevant direction as contemplated under Rule 2 of the Rules in the obtaining circumstances of the case. in favor of revenue

Summary

Issues:
1. Whether the appellant is entitled to claim Cenvat credit on "Boomer tattoos" used in packaging material?

Analysis:
The appellant, a chewing gum manufacturer, was availing Cenvat credit on inputs, including "Boomer tattoos" used in packaging material. The revenue contended that the tattoos were mis-described as inputs, leading to a show cause notice and subsequent disallowance of Cenvat credit, duty demand, interest, and penalty. The appellant argued that the value of tattoos was included in the final product's maximum retail price. The Commissioner disallowed the credit, and the Appellate Tribunal upheld the decision.

The core issue was whether the appellant could claim Cenvat credit on "Boomer tattoos." The court noted that the tattoos were not used in or in relation to the manufacture of final products but for promotional purposes. It was established that the primary function of the tattoos was to attract children, not as packing material. The court referred to a similar case where it was held that such tattoos were for promotional and advertising purposes, not as inputs for manufacturing.

The court emphasized that the tattoos were not primary packing material but an additional step for promotion. The authorities found no direct or indirect use of tattoos in manufacturing, confirming their identity as promotional items. The court concluded that the tattoos did not qualify as inputs under the Cenvat Credit Rules. As no legal infirmity was found in the impugned order, the appeal was dismissed.