1990 (3) TMI 172 - AT - Central Excise

Summary

Issues:
Appeal against rejection of Modvat benefit claim on duty paid on tin plates used for making containers for vegetable products. Stay petition for hearing appeal without predeposit. Interpretation of tin plates as inputs for Modvat benefit. Consideration of subsequent favorable decision by Collector (Appeals). Determination of tin plates as packaging materials eligible for Modvat benefit.

Analysis:
The judgment pertains to a case where M/s. Rasoi Ltd. filed an appeal against the rejection of their Modvat benefit claim on duty paid on tin plates used for making containers for vegetable products. The Collector of Central Excise (Appeals) had initially directed them to deposit the amount of credit under Section 35F of the Central Excises and Salt Act, 1944, which led to the rejection of their appeal upon failure to comply.

In their appeal, M/s. Rasoi Ltd. contended that the rejection was based on procedural grounds and not on merits, arguing that predeposit is required only for duty demanded or penalty imposed, not for Modvat credit disallowed. During the hearing of the Stay Petition, the Director of the appellant company pressed for the stay prayed for and handed over a copy of an Order-in-Appeal where the same Collector (Appeals) had allowed a similar appeal, supporting their stand.

The Senior Departmental Representative opposed the appeal, arguing that tin plates/tin sheets are not inputs for the final product (vegetable products) but are used solely for manufacturing containers exempt from duty. He contended that the tin plates do not qualify for Modvat benefit as they are not directly related to the vegetable products.

Upon considering the arguments from both sides, the Tribunal analyzed the definition of packaging materials as per Rule 57A and the Explanation provided. The Tribunal concluded that tin plates used for making metal containers, in which vegetable products are packed, qualify as packaging materials eligible for Modvat benefit. The Collector (Appeals) had previously allowed a similar claim, emphasizing the relationship between tin plates and the final product packaging.

The Tribunal rejected the argument that metal containers are intermediate products, stating that they are fully finished products used for packaging goods. The judgment highlighted the distinction between packaging materials and packages/containers, emphasizing that tin plates are indeed packaging materials used in relation to the manufacture of vegetable products.

Ultimately, the Tribunal allowed the appeal, stating that tin plates qualify as packaging materials eligible for Modvat benefit. The judgment was pronounced on 7-2-1990, with the appeal succeeding in favor of M/s. Rasoi Ltd.