1997 (8) TMI 225 - AT - Central Excise

Summary

Issues:
1. Time bar for the demand related to Modvat credit beyond six months.
2. Merits of disallowing Modvat credit for glass bottles used in final product.

Analysis:
1. The appeal challenged an Order-in-Appeal upholding the disallowance of Modvat credit for glass bottles used in aerated waters production. The appellant argued that a significant portion of the demand was time-barred as it related to credits taken beyond six months before the show cause notice. Citing Tribunal decisions, the appellant contended that Rule 57-I required notice within six months of credit, not the RT 12 return filing date. The Tribunal accepted this argument, ruling the notice issued on 26-9-1994 for credits taken before March 1994 was time-barred.

2. On the merits, the appellant claimed that the cost of bottles was included in the product price, contrary to the allegation that it was a rental charge. The appellant provided evidence of cost recovery through price lists and cost certificates. The Department argued that packaging materials not included in the final product's value were excluded, citing Rule 57A and Section 4(4)(d)(i). However, the Tribunal found the appellant's pro rata cost inclusion for bottles satisfied the requirement, as full price inclusion for reusable containers like glass bottles was impractical. Ruling in favor of the appellant, the Tribunal set aside the impugned order, allowing the appeal.

This judgment clarifies the time limitation for Modvat credit recovery and emphasizes the importance of correctly including costs in the product price to claim such credits. The decision highlights the need for consistency in cost inclusion for packaging materials and provides insights into the interpretation of relevant rules and provisions in excise duty matters.