1996 (7) TMI 323 - AT - Central Excise

Summary

Issues: Eligibility of certain chemicals and packing materials for benefit under Notification No. 201/79-C.E. as amended.

Analysis:
1. The appeal questioned the eligibility of chemicals and packing materials for benefits under Notification No. 201/79-C.E. The Assistant Collector denied the benefit, while the Collector granted it, emphasizing the wide interpretation of "used in the manufacture." The Revenue argued that fully finished watches, even without packing, do not qualify as inputs under the Notification. They also contended that chemicals used as consumables for creating parts cannot be considered inputs.

2. The ld. JDR reiterated the contentions made in the Appeal Memorandum, while the Respondents argued that chemicals could be covered under the term "inputs" based on the Chamber's 20th Century Dictionary definition. They also claimed that packing material should be considered inputs since its value is included in the assessable value.

3. The Tribunal carefully considered the submissions by the ld. JDR and the Respondents' written submissions.

4. The Notification was amended by Notification No. 105/82-C.E., changing the criteria for eligible inputs to "raw-materials or components parts." This distinction was crucial in the Collector's decision.

5. Packing materials like boxes and containers do not qualify as raw-materials or component parts and cannot be considered inputs. Other provisions like proforma credit or Modvat credit specifically address the eligibility of packing materials as inputs. The Tribunal's judgment in Union Carbide Ltd. v. Collector of Central Excise supported this interpretation.

6. Regarding chemicals, they were used for clearing watch parts and did not form part of the finished product. Raw-materials, including consumables, need not be visible in the final product to qualify as inputs. The Tribunal's decision in Collector of Central Excise v. Ballarpur Industries Ltd. established that chemicals fully consumed in the manufacturing process can be considered inputs under the notification.

7. The accuracy of watches depends on cleared parts before assembly. Therefore, chemicals used for clearing watch parts qualify as raw-materials.

8. The appeal partially succeeded, determining that boxes and cartons were not eligible inputs under Notification No. 201/79-C.E., while chemicals used for clearing watch parts during the manufacturing process were deemed eligible.