1992 (10) TMI 194 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat Credit for Printing Ink used in manufacturing Plastic Films.

Detailed Analysis:

1. Issue of Modvat Credit Eligibility:
The appeals filed by M/s. Multilayer Composites Pvt. Ltd. revolve around the admissibility of Modvat Credit for Printing Ink used in the production of Plastic Films. The first appeal challenges the Additional Collector's decision disallowing a credit of Rs. 38,301.92 taken between July 1989 to May 1990. The second appeal contests the Collector's Order-in-Appeal that set aside the Assistant Collector's grant of Modvat benefit for Printing Ink. The core question is whether Printing Ink qualifies as an eligible input under Rule 57A for Modvat benefit.

2. Appellant's Argument:
Shri K.K. Banerjee, representing the appellants, argued that Printing Ink used in manufacturing Printed Plastic Films constitutes an eligible input for Modvat benefit. He cited a Tribunal decision in Parle Products Pvt. Ltd. v. Collector of Central Excise, where Printing Ink was considered an input for packaging material. Banerjee asserted that since Printed Plastic Films serve as packaging material for customers, they should be eligible for Modvat Credit based on the Parle judgment.

3. Department's Response:
On the other hand, Shri S. Dutt Majumder, the Senior Departmental Representative, contended that Printing Ink is not an eligible input for Modvat benefit as the printing process occurs post-manufacturing of Plastic Films. He referenced previous decisions where materials used after completion of manufacturing were denied Modvat benefit. Additionally, he argued that the Bombay-I Collectorate Trade Notice, relied upon by the appellants, was inapplicable as it pertained to labels/stickers, not Printing Ink for Plastic Films.

4. Rejoinder and Final Decision:
In response, Banerjee reiterated that Printed Plastic Films fall under the relevant Tariff Heading, including both printed and non-printed films. He emphasized that Printing Ink forms an integral part of the Printed Plastic Film and should be considered an input for Modvat Credit. The Tribunal, in its analysis, agreed with Banerjee's submissions, stating that Printing Ink is essential in the manufacturing process of Printed Plastic Films. The Tribunal highlighted that the cost of Printing Ink is included in the final product's price and is present on the film itself. Relying on a previous decision regarding Printing Ink eligibility, the Tribunal allowed the appeals and overturned the earlier orders disallowing Modvat Credit for Printing Ink.

This detailed analysis outlines the legal arguments presented by both parties, the Tribunal's reasoning, and the ultimate decision regarding the admissibility of Modvat Credit for Printing Ink used in manufacturing Plastic Films.