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TMI Blog1997 (9) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 57A provides that inputs do not include packaging materials, the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final products under Section 4 of the Act. Section 4(4)(d)(i) provides that value in relation to any excisable goods where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee. It was, therefore, alleged by the Department that since the cost of glass bottles and plastic crates/shells is not included in the cost of the aerated water, therefore, Modvat credit under Rule 57A of the Central Excise Rules will not be admissible on the glass bottles and crates. Against this view of the lower authorities, the assessees have filed the above appeals. 3. In Appeal No. E/725/95-NB, the period for which Modvat credit has been denied is from 1-11-1993 to 31-1-1994. Show cause notice was issued on 6-4-1994. Since this is for the period prior to charging of Central Excise Duty at ad valorem basis, therefore, this appeal is being dealt with here sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to this Tribunal s decision in the case of C.C.E. v. Hindustan Gas and Industries Ltd., reported in 1989 (41) E.L.T. 663 and submitted that this Tribunal held that for purposes of valuation, packing charges recovered in instalments are excludible and that deduction of Re. 1/- per CUM of Gas representing the phased cost of the Cylinder over its total life span from the sale price of gas admissible under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. They submitted that the manufacturers know by their experience the life span of crates and glass bottles and instead of charging the total cost of bottles or crates in one lump-sum while calculating their cost of aerated waters, they take into consideration the cost of packing material in a phased manner and include it in the cost of aerated water the cost of glass bottles and plastic crates. The ld. Counsel also referred to the decision of this Tribunal in the case of C.C.E. v. Century Spinning and Manufacturing Co. Ltd., reported in 1988 (37) E.L.T. 277, in which the Tribunal held that for purpose of valuation, maintenance and service charges for durable and returnable containers are admissible deduction as part of cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 103) E.L.T. 340 (Tri.)], held that if the cost of input in its first use in a final product is fully reflected, the value of the final product in which an input is used for the first time, would be exceptionally high; whereas the final product utilizing that input on the latter s second or subsequent use would have a very low value because second or subsequent use of such an input would be without any cost inasmuch as its full cost has already been exhausted on its first use. The Tribunal further observed that the same batch of final product would have different costs/values depending upon the first use or subsequent use of an input in a batch of final products; it will create problems of segregation of inputs and many other consequential problems. The Tribunal also held that Board s Circular dated 13-9-1995 correctly interprets the provisions of Rule 57A apart from the fact that it would have been binding on the authorities below. 6. Summing up their arguments, the ld. Counsel submitted that from whatever angle the issue is looked at, Modvat credit would be admissible on glass bottles and plastic crates. 6. Countering the arguments, Shri P.K. Jain, the ld. SDR submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; thus cost is different from value for purposes of assessment on ad valorem basis. Rule 57A of the Central Excise Rules stipulates that the input does not include the cost of packing material which is not included in the assessable value of the final product under Section 4 of the Act. We note that the appellants have referred to a number of cases decided by this Tribunal in which it has specifically been held that the entire cost of packing material need not be excluded for purposes of value, but can be excluded on the basis of estimated cost of each time use of the packaging material. We note that this aspect of the issue has been dealt with by this Tribunal in the case of Black Diamond Beverages Ltd. cited and relied upon by the appellants. The relevant portion of this Tribunal s Order is reproduced below : 7.1.1 We have carefully considered the pleas advanced from both sides. We shall first deal with the effect of Section 4(4)(d)(i), if any, in view of the language of Clause (iii) of Explanation to Rule 57A. Relevant portion of that Clause during the relevant period read as follows :- `Explanation : For the purposes of this case, inputs include - (a) ......., (b) packin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at scheme is to ensure that the cost of packing forms part of price of the excisable final product so that duty is charged thereon, while giving the manufacturer Modvat credit of duty paid on such packing, so that a double benefit does not accrue to a manufacturer. It is for this reason, that clause (iii) of the Explanation has been worded as it is. 7.1.4 For the sake of argument, even if cost of a packing is not liable to be included in the assessable value of goods in terms of Section 4, it is the option of the manufacturer to include the same in the assessable value of the final product and claim Modvat credit of duty paid on such packing in terms of Rule 57A. When Modvat scheme was brought in 1986, Section 4 was already in existence. It was clear from Section 4 that cost of packing of durable nature and returnable to the assessee is not includible or is not liable to be included, yet clause (iii) of Explanation to Rule 57A employs the words as it does. If the intention was simply to exclude the cost of durable and returnable packing, nothing would have been simpler than to make such packing alone an exception to the exclusion clause (iii) and impliedly include all other packi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f aerated waters. 7.4 In view of the foregoing discussions, the Appeal of the Revenue is dismissed and Appeals of assessee (M/s. Black Diamond Beverages) are allowed." 9. In so far as the case law relied upon by the ld. DR is concerned, we find that both the cases of M/s. Amritsar Beverages Pvt. Limited and of Shriram Drinks, have been analysed in the decision of the Tribunal cited supra. We also note that the decision in the case of M/s. Sriram Drinks is of 23-7-1992 whereas the case of Black Diamond Beverages is that of 16-5-1996 by a Coordinate Bench. 10. We also note that the decision of the Tribunal in the case of M/s. Amritsar Beverages Pvt. Limited is by a single member bench whereas the decision in the case of M/s. Black Diamond Beverages Ltd. is by a Bench of 2 Members and, therefore, shall prevail over the decision of the Single-Member Bench. 11. Shri D.N. Mehta, the ld. Advocate appearing for the Appellants in Appeal No. E/230/96-NB, submitted that the lower authorities have added an amount of Modvat credit of Rs. 60,309.72 to Modvat credit of Rs. 31,76,092.45; that this addition is twice inasmuch as this credit of Rs. 60,309.72 has already been added to the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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