1991 (9) TMI 213 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Appeal dated 20-2-1991 | Cross Objection filed by respondents M/s. IDL Chemicals Limited | Overlapping issues in Appeal No. E-98/91 | Modvat credit eligibility for duty paid on LDPE/HDPE granules | Jurisdiction of Assistant Collector | Interpretation of 'packaging materials' under Rule 57A | Applicability of Modvat Rules | Despatch of plastic granules to job workers | Dismissal of appeals

Analysis:
The judgment involves an appeal against an Order-in-Appeal dated 20-2-1991, with a Cross Objection filed by respondents M/s. IDL Chemicals Limited. The Tribunal decided to hear and dispose of this appeal along with another appeal, E-98/91, due to overlapping issues. The main contention revolved around the eligibility of Modvat credit for duty paid on LDPE/HDPE granules used in manufacturing blow moulded tubes and lay flat tubings for packaging slurry explosives. The appellant argued that only packaging materials, not raw materials, are eligible for credit under Modvat provisions. The issue of the Assistant Collector's jurisdiction and the need for clarification were also raised.

The respondents contended that the blow moulded tubes and lay flat tubings were not merely packaging materials but integral parts of the explosives. They argued that the Collector (Appeals) had visited their factory, observed the manufacturing process, and made a reasoned finding in their favor. The respondents also highlighted their compliance with Modvat Rules, including proper declarations under Rule 57G and permissions for despatching plastic granules to job workers under Notification No. 351/86.

The Tribunal analyzed the interpretation of 'packaging materials' under Rule 57A and rejected the appellant's argument that only packaging materials, not raw materials, are eligible for Modvat credit. The Tribunal emphasized that the credit is available for goods used in or in relation to the manufacture of final products. It clarified that the plastic granules used in manufacturing tubes and tubings for explosives were eligible for credit, even if the tubes were exempted, as they were used in the final product. The Tribunal found the Collector (Appeals)'s decision well-reasoned, considering the manufacturing process and legal provisions.

Ultimately, the Tribunal dismissed the appeals, including the Cross Objection, as they found no merit in the arguments presented. The judgment upheld the Collector (Appeals)'s decision regarding the eligibility of Modvat credit for the raw materials used in manufacturing packaging materials for explosives.