1992 (11) TMI 187 - AT - Central Excise

Summary

Issues:
Entitlement to MODVAT credit on plain aluminium foil received as input for packing tablets and capsules under Rule 57F(2) of the MODVAT Rules.

Analysis:
The appeals involved the question of whether the appellant could claim MODVAT credit on plain aluminium foil received for packing tablets and capsules under Rule 57F(2) of the MODVAT Rules. The appellant argued that the character of the input, being a packaging material, remained unchanged even after being sent out for printing purposes. The appellant relied on various rulings, including those of the Special Bench and the Division Bench of the Madras High Court. The Division Bench of the Madras High Court, in a related case, had held that duty-paid inputs for packing material sent out for conversion by a job worker would be eligible for MODVAT credit.

The Tribunal considered the submissions and observed that the decision cited by the appellant was relevant to the issues at hand. The Tribunal noted that both the aluminium foil and the finished product were notified under Rule 57A, and the aluminium foil was ultimately used for packing the capsules and tablets in the appellant's factory. The Tribunal emphasized that there was no requirement under the law for the specified material to be exclusively used for the manufacture of the finished product. As long as an item was capable of being used as packing material, it was eligible for MODVAT credit. The Tribunal rejected the Revenue's argument that printing the product made it a new finished product, stating that goods used in relation to the manufacture of a finished product until they were fit for marketing should be considered as inputs.

In light of the above analysis and considering the Division Bench ruling of the Madras High Court, the Tribunal held that the appellant was entitled to take MODVAT credit and benefit under Rule 57F(2) for the inputs in question. Consequently, the impugned order was set aside, and the appeals were allowed. Member (T) also agreed with the decision, citing his earlier observation in a related order passed while disposing of a stay application.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to claim MODVAT credit on the plain aluminium foil received as an input for packing tablets and capsules under Rule 57F(2) of the MODVAT Rules. The decision was supported by the interpretation of relevant rules, previous rulings, and the principle that inputs used in or in relation to the manufacture of a finished product should be eligible for credit.