1996 (2) TMI 244 - AT - Central Excise

Summary

Issues:
Whether duty paid on printing ink for labeling paper bags qualifies for MODVAT Credit.

Analysis:
The appeals involved a common question of whether duty paid on printing ink used for labeling paper bags qualifies for MODVAT Credit. The appellants utilized MODVAT Credit for input printing ink under Chapter Heading 3215.00. The department issued a show cause notice challenging this utilization under Rule 57-I of Central Excise Rules, 1944.

The appellants argued that the Tribunal's judgment in the case of Parle Products Ltd. v. Collector of Central Excise was misapplied by lower authorities. They cited conflicting views and referred to a Larger Bench decision in Ashwin Vanaspati (Pvt) Ltd. v. Collector of Central Excise & Customs, which held that packing material is considered raw material. The appellants contended that printing ink is crucial for identifying the product in the market and should be eligible for MODVAT Credit.

The department, represented by the Learned DR, supported the lower authorities' findings based on the Parle Products case and argued against distinguishing it.

After considering both parties' submissions and examining the Tariff classification, the judge noted that goods are identified based on printed details on unit containers. The judge emphasized that goods are marketed and sold based on the information printed on the packaging, making printing ink a vital component in the marketing process. Citing precedents like Jay Engineering Works Ltd. and Ashwin Vanaspati Industries Pvt. Ltd., the judge concluded that printing ink qualifies as an input eligible for MODVAT Credit.

The judge rejected the department's argument that printing ink is not an input, stating that the Parle Products case is no longer valid in light of subsequent judgments. Therefore, the judge set aside the impugned orders and allowed the appeals.