1997 (10) TMI 173 - AT - Central Excise

Summary

Issues:
1. Admissibility of Modvat credit on plastic crates used for transporting aerated water bottles.
2. Scope of show cause notice and adjudicating authority's jurisdiction.
3. Conflict between decisions of different benches of the Tribunal regarding Modvat credit on plastic crates.

Analysis:
1. The appellants contested the Commissioner (Appeals)'s decision upholding the Additional Commissioner's order denying Modvat credit on plastic crates used for transporting aerated water bottles. The appellants argued that plastic crates were essential for making aerated water marketable. They cited precedents like Black Diamond Beverages Ltd. to support their claim for Modvat credit. The Hon'ble Bombay High Court's decision in the case of Goa Bottling Company Private Limited was also referenced to establish the admissibility of Modvat credit on plastic crates. The appellants emphasized that the adjudicating authority exceeded the show cause notice's scope by introducing the concept of plastic crates as secondary packing.

2. The learned Consultant highlighted that the Apex Court's rulings in cases like Reckitt and Colman of India Limited, Prince Khadi Woollen Handloom Production Co-operative Industrial Society, and GTC Industries Limited emphasized the importance of adhering to the show cause notice's scope. The appellants argued that the adjudicating authority's decision to deny Modvat credit on plastic crates based on them being secondary packing was beyond the show cause notice's purview. The Tribunal noted that the adjudicating authority erred in confirming the demand despite accepting the appellants' contentions and introducing a new allegation not covered in the show cause notice.

3. The learned SDR, representing the respondent, referred to the Tribunal's decision in the case of Amritsar Beverages Private Limited, where Modvat credit on plastic crates was deemed inadmissible. However, the Tribunal's decision in the case of Black Diamond Beverages Limited, a two Member Bench, held that plastic crates qualified as packaging material under Rule 57A for Modvat credit. The Tribunal concluded that the decision in Black Diamond Beverages Limited, being a later and two Member Bench decision, prevailed over the single Member Bench decision in Amritsar Beverages Private Limited. Consequently, Modvat credit was deemed admissible on plastic crates before 17-11-1995.

In conclusion, the Tribunal allowed the appeal, stating that Modvat credit on plastic crates used for transporting aerated water bottles was admissible prior to 17-11-1995. The decision emphasized the importance of adhering to the show cause notice's scope and highlighted the precedents supporting the appellants' claim for Modvat credit on plastic crates.