1996 (4) TMI 201 - AT - Central Excise

Summary

Issues: Whether plastic crates used for transportation of aerated waters qualify as eligible inputs under Rule 57A of the Central Excise Rules, 1944.

Detailed Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi challenged the order of the Collector dated 31-5-1994 regarding the eligibility of plastic crates used for transporting aerated waters as inputs under Rule 57A. The appellant argued that the crates were utilized not just for transportation but also in all stages of manufacturing within the factory. Citing an order-in-appeal by the Commissioner and Notification No. 36/95-C.E./ante, the appellant contended that prior to the specific exclusion in the notification, the crates qualified as inputs. The appellant also referenced judgments of the Tribunal and courts to support the argument.

On the other hand, the Revenue representative claimed that the subject notification issued in 1995 did not impact the case dated 1993, asserting that crates were not inputs in the manufacture of aerated waters but solely for carrying finished articles. The Revenue highlighted the high value of the crates compared to the finished articles and argued that allowing Modvat credit on crates would lead to increased government expenditure. The Revenue referred to the judgment in the case of Jay Engineering Works to support their position.

The Tribunal carefully considered both arguments and examined the materials presented. It noted that the term "inputs" in Rule 57A includes "packaging materials" and questioned whether fully finished articles like crates could be considered as packaging material. The Tribunal referred to a judgment of the Madras High Court in the case of Ponds India Ltd., which distinguished between packaging material and packages or containers. The Tribunal emphasized that packaging materials serve as starting points for manufacturing boxes or containers, indicating that crates, as containers for transportation, did not fall under the definition of packaging material and thus did not qualify for Modvat credit.

Moreover, the Tribunal observed that crates never qualified as inputs under Rule 57A, even before the specific exclusion in the 1995 notification. Therefore, the argument regarding the inclusion of crates as inputs prior to the notification was not valid. Ultimately, the Tribunal concluded that the appeal failed and was rejected, settling the issue of admissibility without delving into the assessment of the crate's value in determining the assessable value of aerated water.