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TMI Blog1990 (10) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... minated alumin foils on which no duty is paid. These intermediate products also cannot be said to be arising during the course of manufacture of their final product. Therefore, modvat credit in respect of the duty paid on the aforesaid products is not admissible. Another objection taken by the Department was that the inputs refined coconut oil , mono acid calcium phosphate sodium met sulphate, printing ink auxilliaries, printed cartons and thinner are not mentioned in the declaration. 10 show cause notice were issued by the Department. The issues involved as identified by the Asstt. Collector in the show cause notice dated 3-9-1987 are the following: (i) Non-filing of declaration in the prescribed proforma during the period from 4-3-1987 to 18-6-1987 and the amount of credit availed during the said period is Rs. 50,06,431.18 ; (ii) Inadmissibility of credit availed in respect of raw materials used in the manufacture of intermediate produces such as printed/laminated aluminium papers and printed/laminated aluminium foils; and (iii) non-inclusion of certain inputs in their declarations dated 4-3-1987 and 6-3-1987. 3. As regards the issue at Sr. No. (i), it was not adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were not correctly declared in the modvat declaration, the duty demand is for Rs. 45,252.86. Though the show cause notices and the Asstt. Collector s findings were to the effect that the ready to use packaging materials were intermediate products, the Collector (Appeals) had adopted a contrary stand to the effect that these were not intermediate products because they were not further processed. They were final products and these final products were exempted from duty. In the case of chemicals, the Collector (Appeals) has confirmed the order of the Asstt. Collector holding that they were not specifically mentioned in the declaration. After setting out the aforesaid factual position, he identified the following issues for determining the issues in this appeal: (i) Whether inputs such as plain aluminium foils and other materials such as printing ink and other substances used to make printed/laminated ready to use packaging materials are entitled to modvat benefit; (ii) whether the chemicals, mono acid calcium phosphate and sodium meta phosphate which are going directly in the manufacture of biscuits, can be denied the modvat credit merely because they were not declared in the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e marketed without proper packing, all the materials used for preparation of ready to use packaging materials should be construed as raw materials for the finished products. He also contended that it is not proper to treat these inputs as inputs for an intermediate product or for a different final product. They are to be construed as inputs used in the manufacture of biscuits etc. which cannot be marketed without proper packing. 6. The next argument of the learned advocate was that explanation to Rule 57A specifically includes certain articles as inputs and specifically excludes certain other articles. The specific inclusion of certain articles does not curtail the meaning of the word inputs as used in the operative part of Rule 57A(1). In this context he referred to pages 110-113 of the Principles of Statutory Interpretation. He, therefore, contended that all goods used in or in relation to the manufacture of the finished products are therefore inputs, even if they are not specifically enumerated in the Explanation unless they are specifically excluded. In this case, the inputs in respect of which modvat credit claimed is not excluded specifically. He also referred to the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtmental representative contended that printed laminated aluminium foils and paper cannot be construed as intermediate products. Intermediate product is pre-cursor to the final product and it should accrue in the product stream. It is not disputed that these goods are used only for packaging of the final product viz. biscuits and confectionery. They can be independently manufactured. It is also revealed that they are so manufactured independently outside and bought by the appellants for packaging. Hence, they can be only construed as final product used for packaging the biscuits and confectionery. These final products being exempted, no modvat credit could be availed on in respect of the duty paid on inputs used in the manufacture of such exempted final product. Hence, the question of applying Rule 57D does not arise in this case. He also referred to the judgment of the Tribunal in the case of Kusum Products Ltd. reported in 1990 (48) E.L.T. 50 (Tri.), wherein it has been held that polythene granules brought for the manufacture of bags for packaging detergent cannot be given modvat benefit. He also contended that the Supreme Court s decision in the case of Eastend Paper Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is packing, the goods cannot be marketed, and adopting the ratio of the Supreme Court s judgement, these ready to use packaging materials become a component of the final product viz. biscuits and confectionery and any material used for preparation of such components should be construed as inputs used in the manufacture of final product and accordingly modvat credit should be extended. This argument is, no doubt, very attractive. However, it would be necessary for us to approach this with a certain amount of causion required for analysing the implication of the provisions of Rule 57A, and the benefits extended under that Rule. The Supreme Court in the case cited supra dealt with the issue relating to the extension of proforma credit on wrapper paper used for packaging different varieties of paper. The question for consideration before them was whether proforma credit allowable in respect of inputs used as raw materials or components could be made available in respect of such wrapper paper. The Supreme Court held that the wrapper paper used for wrapping other varieties of paper makes the goods marketable and hence form part of the manufacture and in that view held it to be componen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component or raw material for the final product. Moreover, the scheme of Rule 57A itself lays down that we have specifically to treat packaging material as inputs. Hence any interpretation of the term inputs referred to under Rule 57A in the context of packaging materials has to be done independently. The judgment of the Supreme Court considered only the wrapper paper as a component. The Supreme Court had not gone to consider printing ink and other laminating materials as components for paper. Even taking the judgment of the Supreme Court as applicable, it can be taken to be applied only to the paper and aluminium foils, which can be construed as components of the final product in terms of the aforesaid judgment. The items like printing ink and other materials used for lamination or printing could not be construed to be components even in terms of the aforesaid judgment of the Supreme court. However, a plea was urged by the learned advocate that since these wrapping materials arc construed as components, any input used for making these wrapping materials could be construed as inputs for the final product. If this argument is accepted, we will be placed in such a situation, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m foils should be made available for utilisation towards the payment of duty on the final product. Rule 57A specifically provides for modvat credit in respect of packaging materials and these materials are identifiable as packaging materials. Hence, credit cannot be denied thereon. 10. The appellants contend that they are bringing ready to use packaging materials from outside after payment of duty on such printed/laminated materials and credit of duty paid on this ready to use packaging materials is availed of by them. Hence they plead that similar benefit should be extended, even if such ready to use packaging materials are made by themselves. We would like to look at this issue from a different angle. Rule 57A refers specifically to packaging materials. When the ready to use packaging materials are received by the appellants after printing and lamination, no-one can deny that they are not packaging materials. Hence credit has to be allowed on the duty paid on such packaging materials. However, when they receive plain aluminium foil, paper, printing ink and other chemicals for lamination, among the aforesaid items, only aluminium foil and paper could be identified and construe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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