1992 (10) TMI 201 - AT - Central Excise

Summary

Issues Involved:

1. Whether Aloxide Paper/Coated Abrasive, which are nothing but Tools and Appliances, will be entitled to Modvat benefit?
2. Whether Hoop tron non-essential packing materials will also be entitled to Modvat benefit?

Issue-Wise Detailed Analysis:

1. Whether Aloxide Paper/Coated Abrasive, which are nothing but Tools and Appliances, will be entitled to Modvat benefit?

The Collector of Central Excise, Calcutta II, filed a Reference Application under Section 35G of the Central Excises and Salt Act, 1944, suggesting that the Tribunal's decision regarding the Modvat benefit for Aloxide Paper/Coated Abrasive should be referred to the High Court for clarification. The Tribunal had disposed of two appeals in its Order No. A-274 and 275/CAL/1992, but only one Reference Application was filed, which was considered a procedural error. The application was treated as relating to the appeal concerning Aloxide Paper/Coated Abrasive, while the other appeal was not covered due to the lapse of the filing period.

The Departmental Representative argued that Aloxide Paper/Coated Abrasive are tools and therefore excluded from Modvat benefit under Rule 57A. The Tribunal's decision was based on the Tariff classification, which the Department contended was incorrect for Modvat purposes. The respondents argued that the question was one of fact, not law, and that the Tribunal correctly categorized the items as not tools or appliances, thus eligible for Modvat credit.

The Tribunal found that the classification under Tariff Heading 6802.00 and the Chapter Note (e) under Chapter 68, which excludes tools from Chapter 82, was relevant. The Tribunal held that Aloxide Paper/Coated Abrasive are not tools or appliances and are thus eligible for Modvat credit. This decision was consistent with previous Tribunal rulings, such as in the case of M/s. Andaman Timber Industries Ltd., where similar items were deemed eligible for Modvat benefit.

2. Whether Hoop tron non-essential packing materials will also be entitled to Modvat benefit?

The Tribunal noted that the Reference Application did not cover the appeal regarding Hoop tron non-essential packing materials due to procedural lapses. The application was only considered in respect of Aloxide Paper/Coated Abrasive, and any fresh application at this stage would be time-barred. Therefore, the issue of Hoop tron non-essential packing materials was not addressed in this judgment.

Conclusion:

The Tribunal rejected the Department's Reference Application, affirming that Aloxide Paper/Coated Abrasive are not tools or appliances and are eligible for Modvat credit. The procedural error in filing the Reference Application meant that the issue of Hoop tron non-essential packing materials was not considered. The Tribunal's decision was based on consistent legal principles and previous rulings, emphasizing that the classification under the Central Excise Tariff is relevant for determining Modvat eligibility.