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TMI Blog1998 (9) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... iled a declaration stating that benefit of Modvat credit will be availed of the duty paid on metal containers. On receipt of the acknowledgement for the declaration, appellant started availing benefit of Modvat credit. Show cause notice dated 31-10-1988 was issued stating that Modvat benefit was not available, in view of exclusion clause (iii) of the explanation to Rule 57A of the Central Excise Rules, inasmuch as, the cost of the container had not been included during the prece- ding financial year in the assessable value of the final product (on account of the exemption available for the containers during the preceding financial year) and proposing demand of an amount of duty equal to the amount of Modvat credit availed during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the preceding financial year in the assessable value of the final products under Section 4 of the Act." Packaging materials which fall under either Clause (ii) or (iii) are excluded from the definition of inputs . The question is whether duty paid flattened tin containers used by the appellants for packing biscuits are to be regarded as packaging material . It is submitted that Clause (iii) will be attracted, inasmuch as, during the preceding financial year, the cost of such containers had not been included in the assessable value of the final product under Section 4 of the Act. It appears that Clause (ii) would more appropriately apply, since the containers used during the preceding financial year enjoyed benefit of full exemption. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4)(d)(i) of the Act and the exclusion Clauses (ii) and (iii) of the Explanation to Rule 57A of Central Excise Rules. According to the appellant, the purpose of using expression packaging material" is to make it clear that what is being dealt with in the clauses of inclusion and exclusion is only raw material from which package or container could be made and not package or container itself. 6. According to the department, the expression packaging material has been used in a wide sense to comprehend not only ready made packages or containers but also raw materials from out of which readymade packages or containers are made. 7. Both sides have adverted to the decision of the High Court of Madras in the case of Ponds (India) Ltd. v. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Western Bench of the Tribunal in the case of FDC Limited. The High Court in Paragraph 19 of the judgment relied on the observation of the Supreme Court in the case of Hospital Mazdoor Sabha reported in AIR 1960 SC 610 to the effect that the words used in an inclusive definition denote extension and cannot be treated as restricted in any sense and while dealing with an inclusive definition, it would be inappropriate to put a restrictive interpretation upon terms of wider denotation. The High Court held that plastic granules are comprehended within the meaning of the expression packaging materials . This finding was arrived at in reversal of the view taken by the Madras Bench of the Tribunal that plastic granules could not be packaging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished containers but also raw materials from which finished containers are made. This appears to be the purpose sought to be achieved by the inclusive definition. The expression packaging material is certainly capable of such wider interpretation; that being so, the wider interpretation has to be accepted. 11. In the above view, the expression packaging materials used in the exclusion Clauses (ii) and (iii) of the Explanation to Rule 57A of the Central Excise Rules also includes readymade containers received and used by the appellant in packing biscuits. It is admitted that the containers used by the appellant during the preceding financial year enjoyed the benefit of exemption from payment of duty. Therefore, exclusion Clause (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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