2000 (1) TMI 209 - AT - Central Excise

Summary

Issues Involved:
1. Availability of Modvat credit on caustic soda, activated carbon, filter aid, and filter paper.
2. Availability of Modvat credit on old and used glass bottles lying in stock or with dealers.

Issue-wise Detailed Analysis:

1. Availability of Modvat Credit on Caustic Soda, Activated Carbon, Filter Aid, and Filter Paper:

The appellants argued that Modvat credit should be available on caustic soda, activated carbon, filter aid, and filter paper, citing previous Tribunal decisions supporting their claim. The Tribunal's analysis confirmed that the admissibility of Modvat credit on these items is well-established in law. The Tribunal referred to the cases of Black Diamond Beverages Ltd., Pure Drinks Ltd., and Residency Food & Beverages, which all support the claim for Modvat credit on these inputs. Consequently, the Tribunal held that Modvat credit is admissible on caustic soda, activated carbon, filter aid, and filter paper.

2. Availability of Modvat Credit on Old and Used Glass Bottles:

The appellants contended that Modvat credit should also be available on old and used glass bottles lying in stock within the factory and with dealers. They argued that Rule 57H of the Central Excise Rules does not specify that the inputs must be fresh and unused. The Tribunal examined the conditions under Rule 57H, which are:

(a) The inputs should be lying in stock or received in the factory on or after 25th July 1991.
(b) Such inputs are used in the manufacture of final products cleared from the factory on or after 25th July 1991.

The Tribunal noted that the term "lying in stock" does not necessarily mean lying in the factory alone but could include goods lying elsewhere, as long as they are in the possession of the assessee. The Tribunal also highlighted that the conditions (a) and (b) are independent, joined by the word 'or,' meaning satisfying either condition is sufficient for eligibility.

The Tribunal further reasoned that the government extended Modvat credit to aerated waters from 25th July 1991 without prior notification, making it impractical for manufacturers to ensure all inputs were lying in stock within the factory by that date. The Tribunal found it incongruous to deny credit on fresh bottles received shortly before the effective date while granting it on older bottles. Thus, the Tribunal concluded that both old and new bottles lying in stock or with dealers should be eligible for Modvat credit.

Conclusion:

The Tribunal allowed the appeal, holding that Modvat credit is admissible on caustic soda, activated carbon, filter aid, filter paper, and old and used glass bottles lying in stock within the factory or with dealers as of 25th July 1991. The impugned order was set aside, and the appellants were granted the consequent relief in accordance with the law.