1996 (1) TMI 249 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit for cello tapes used in packaging vegetable products.

Detailed Analysis:

The case involved two appeals by M/s. Kashmir Vanaspati Ltd. against an Order-in-Appeal that denied Modvat credit for cello tapes used in sealing cartons containing pouches of their final product, vegetable product. The Collector of Central Excise held that cello tape did not qualify as an input for manufacturing the final product and did not contribute to its marketability.

The appellants argued that a Tribunal decision in a similar case supported their claim for Modvat credit on cello tapes. On the other hand, the Departmental Representative contended that cello tape was only used for closing cartons and safeguarding transport, not in the manufacturing process of the vegetable product.

The Tribunal analyzed the issue by referring to the definition of 'manufacture' under the Central Excises and Salt Act, 1944, which includes processes incidental to the completion of a manufactured product. Citing the Supreme Court's interpretation in a previous case, the Tribunal concluded that packaging the final product, such as vegetable product, is an ancillary process in manufacturing. Therefore, cello tape used for packaging qualified as an input for Modvat credit.

The Tribunal ruled in favor of the appellants, allowing the appeals and setting aside the Order-in-Appeal that denied Modvat credit for cello tapes used in packaging vegetable products.