1992 (3) TMI 226 - AT - Central Excise

Summary

Issues:
- Admissibility of proforma credit of duty paid on wrapping paper as raw material or component part for the manufacture of paper.
- Interpretation of Rule 56A of the Central Excise Rules, 1944 regarding the benefit of proforma credit.
- Application of the Supreme Court's decision in Collector of Central Excise v. Eastend Paper Indus. Ltd. to determine the status of wrapping paper in the manufacturing process.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the admissibility of proforma credit of duty paid on wrapping paper brought from outside for use as wrapping of finished paper reams. The Assistant Collector initially ruled that wrapping paper did not qualify as a component or raw material for the manufacture of paper, thus denying the benefit under Rule 56A. However, the Collector of Central Excise (Appeals) reversed this decision, holding that the proforma credit for duty paid on wrapping paper was admissible as it was deemed to have been used up in a process incidental to the completion of the manufactured product.

The Revenue contended that wrapping paper was not a raw material or component part of finished paper reams and argued that the value of such paper should be included in the assessable value of the finished paper, making it ineligible for the benefit under Rule 56A. On the other hand, the respondents relied on previous tribunal decisions and the Supreme Court's ruling in Collector of Central Excise v. Eastend Paper Indus. Ltd. to support their claim that wrapping paper could be considered a raw material or component part of the manufactured product.

The Tribunal, in line with the Supreme Court's decision, concluded that wrapping paper used for packing reams of paper should be treated as a raw material or component for the variety of paper being packed. The Tribunal emphasized that anything essential for making goods marketable must be considered part of the manufacturing process, and any material used for this purpose should be deemed a component part of the end product. Therefore, the respondents were entitled to proforma credit under Rule 56A for the wrapping paper used in the manufacturing process.

Based on the above analysis and the application of the Supreme Court's decision, the Tribunal rejected the appeal, affirming that proforma credit under Rule 56A of the Central Excise Rules, 1944 was admissible to the respondents for the wrapping paper used in packing reams of paper manufactured for sale.