1996 (6) TMI 203

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the appellants herein namely nylon filament yarn and polyester filament yarn are packed. The Deputy Commissioner of Central Excise, Pathankot passed three separate orders in which he disallowed the Modvat credit by holding that the nylon filament yarn and polyester filament yarn are subjected to duty at specific rates and therefore the cost of LDPE granules was not included in the assessable value of the final product and hence the material will not be an input for which the Modvat credit would be taken. He also held that the LDPE granules as such are not packing material and as such are not inputs in terms of Rule 57A and explanation thereto. The Commissioner (Appeals) overruled the findings of the Deputy Commissioner and held that the fa .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... usions of the Commissioner (Appeals) also do not find support in the decisions of the Tribunal on this question. The decision of the Tribunal in the case of Shree Cement v. CCE - 1994 (70) E.L.T. 799 was cited wherein it was held that HDPE bags used in packing cement was held to be an eligible input for Modvat. The Madras High Court in similar circumstances of packing of cement in bags held that Modvat credit was admissible as reported in the case of India Cement v. Assistant Commissioner - 1995 (75) E.L.T. 493. The learned C.A. further contended that in the Ponds India judgment of the Madras High Court it has been laid down that packing material is different from a package or a container and a container is also held to be a treatable compo .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... round that the final product is subjected to duty at specific rates and not ad valorem. The further ground taken by Commissioner (Appeals) at the appeal stage is a fresh ground not taken earlier by the department. However even this ground will not be a valid one for denying Modvat, in view of the decisions cited (supra) especially in the case of India Cement and Shree Cement as well as the Ponds India decision of the Madras High Court. The packing of the yarn first in the primary packing of plastic bags thereafter in corrugated cartons shows that the packing of the yarn in such manner is incidental and ancillary to the completion of the process of manufacture of the yarn at the hands of the appellants. The Larger Bench in Ashwin Vanaspati c .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X