1995 (8) TMI 120 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for Modvat Credit on Duplex Board used for making packaging materials.
2. Interpretation of "packaging materials" and "inputs" under Rule 57A of the Central Excise Rules, 1944.
3. Applicability of Supreme Court and High Court precedents on the issue.

Detailed Analysis:

1. Eligibility for Modvat Credit on Duplex Board used for making packaging materials:
The primary issue was whether the respondents, M/s. Geep Industrial Syndicate Limited, were entitled to avail Modvat credit on Duplex Board used to make cartons for packing torches. The Tribunal had initially allowed the credit, which was contested by the Collector of Central Excise, Allahabad, arguing that Duplex Board itself is not a packaging material but becomes one only after being converted into printed cartons. The Tribunal's decision was based on the interpretation that Duplex Board, used in making cartons for packing torches, qualifies as an input for Modvat credit purposes.

2. Interpretation of "packaging materials" and "inputs" under Rule 57A of the Central Excise Rules, 1944:
The Tribunal's interpretation of "packaging materials" and "inputs" was central to the case. The Tribunal relied on the larger Bench decision in Ashwin Vanaspati Industries and other authoritative pronouncements, including the Madras High Court and Supreme Court decisions. The Tribunal held that the term "inputs" under Rule 57A includes goods used in or in relation to the manufacture of final products, thereby justifying the Modvat credit on Duplex Board used to make cartons, which are used for packing torches.

3. Applicability of Supreme Court and High Court precedents on the issue:
The Tribunal's decision was supported by several precedents:
- Ponds India v. Collector of Central Excise: The Madras High Court held that Modvat credit is admissible for inputs used to make packaging materials, even if the packaging materials are not directly manufactured by the assessee but by job workers.
- Collector of Central Excise v. East Paper Industries Ltd. and J.K. Cotton & Spinning and Weaving Mills v. Sales Tax Officers: These cases clarified that materials used in making packaging materials qualify for Modvat credit.
- Lt. Governor Delhi v. Ganesh Flour Mills: The Supreme Court held that materials intended for packing goods, even if they undergo processing, qualify as packaging materials.

The Tribunal concluded that the Duplex Board used to make cartons, which are used for packing torches, qualifies as an input under Rule 57A. The Tribunal also noted that the respondents had complied with procedural requirements, such as declaring Duplex Board as an input and obtaining departmental permission for sending it to job workers.

Conclusion:
The Tribunal dismissed the Reference Application, holding that the issue was already settled by authoritative precedents. The Tribunal emphasized that the interpretation of "packaging materials" and "inputs" under Rule 57A supported the respondents' eligibility for Modvat credit. The Tribunal also highlighted that the application did not raise any new or disputable question of law, making a reference to the High Court unnecessary.