Customs, Excise and Gold Tribunal - Delhi
(1) & (2) M/S. Liberty Shoes Ltd. And (3) ... vs Cce, New Delhi on 13 June, 2001
ORDER
P.S. Bajaj
1. These three appeals have been filed by the appellants against the common impugned order in appeal dated 24.5.2000 passed by the Commissioner(Appeals) vide which he had affirmed the order in original dated 30.9.97 of the Assistant Commissioner disallowing modvat credit and imposing penalty also on them.
2. The facts giving rise to these appeals may briefly be stated as under:
3. The appellants were engaged in the manufacture of footwear.They availed modvat credit on the carry bags during the period April 1996 to November 1996 of the amounts; i.e. Rs.2,78,252/- (appellants no.1), appellant no.(2), Rs.4,45,750/- and appellant no.(2) and Rs.4,94,488/- (appellant n,3). But the modvat credit was not admissible to them on that item under Rule 57-A of Central Excise Rules being not inputs as per the Explanation (b) to Rule 57-A of the Rules.They were accordingly served with show cause notices for the recovery of the amounts and penalty was also proposed to be imposed on them for availing the modvat credit illegally.Those notices were contested by them.In their reply they avered that the modvat credit was admissible to them under Rule 57-A of the Rules on the carry bags being the inputs.They also relied upon Notification of "input" through this notification, stood widened so as to make all the inputs eligible for modvat whether used directly or indirectly in the manufacture of the final product by the manufacturer.They also avered that the cost of the carry beg was include by them in the assessable value of footwear under Section 4(4)(d)(i) of the Central Excise Act.The Assistant Commissioner, however, did not accept this version of the appellants and confirmed the demands of the amounts as detailed above and also imposed penalty of Rs.5000/- each on the appellants through order in original dated 30.9.97. This order, however, was challenged by the appellants but Commissioner(Appeals)through the impugned, affirmed the same.
4. We have heard both the sides and gone through the record.
5. The facts are not much in dispute.The appellants were engaged in the manufacture of the footwear and parts thereof. The footwear were packed by them in a cardboard box and in each box they had been placing one carry bag also for the convenience of the customers in carry in the cardboard box at the time o purchase from their retailer's shop. The carry bags were virtually used by the retailers at the time of sale of the footwear to the consumers so as to enable them to carry the cardboard box conveniently.
6. The question which falls for consideration is a s to whether the carry bags in these circumstances, can be held to be packing material under Rule 57-A of the Rules or not.
7. Rule 57-A of the Rules, no doubt, permits the assessees to claim the modvat credit on packing material if the cost of said material was included in the assessable value of the final product, but the material has to be proved to be packing material by the manufacturer for taking benefit of this rule.By merely including the cost of the material in assessable value would itself not entitle the manufacturer to claim modvat credit under this rule if that material otherwise could not be held to be packing material. In the instant case, footwear are packed by the appellants in the cardboard boxes and then those boxes are packed in the big cartons for transportation/ delivery to their retailers. These carry bags are at all used by them for the packing of the cardboard boxes or of the footwear. These bags are only placed by them in each cardboard box alongwith pair of footwear and as such these are not used even indirectly much less directly for the packing of the footwear. The benefit of Notification No.28/95-CE dated 29.6.95 relied upon by the appellants cannot be also extended to them. Under that notification the modvat credit had been made eligible not only on those inputs which are used only directly but also indirectly in the manufacture of the final product. But such is not the position here.The carry bags are not being used as inputs directly or indirectly by the appellants in the manufacture of the footwear. These bags are in fact utilised by the retailers at the time of the sale of the footwear to the consumers as they supply these bags to enable them to carry footwear cardboard box to home conveniently.
8. In the light of the discussion made above, the appellants are not entitled to the modvat credit on the carry bags under Rule 57-A of the Rules. The ratio of the law laid down in Eureka Forbes Ltd. V s. CCE Meerut, 1999(81) ECR 303(Tribunal), Paper Products Ltd. Vs. CCE Bombay-111 1999(81) ECR 307(Tribunal), CCE Pune Vs. Universal Luggage Mfg. Co. LTD. 1999(35) RLT 643(CEGAT), CCE Mumbai vs. Shefali Arts 1999(35) RLT 644(CEGAT), CCE Indore Vs. Banmore Exectricals P. Ltd., 1998(97) ELT 367 (Tribunal), Railway Equipment Engg. Works vs. CCE Kanpur 1998(97) ELT 368(Tribunal), CCE Ahmdeabad Vs. Paras Pharmaceutical Pvt. Ltd. 1999(108) ELT 589(Tribunal), CCE & Vs. Maharasthra Scooters Ltd. 1999(112) ELT 1060(Tribunal) relied upon by the counsel, is not applicable to the facts of the present case in view of what has been discussed above. Both the authorities ie.e Assistant Commissioner and Commissioner (Appeals) have rightly disallowed the modvat credit to the appellants on the carry bags. Therefore, the impugned order of the Commissioner(Appeals) does not suffer from any infirmity and it upheld.
9. Consequently, there is no merit in the appeal-s filed by the appellants and the same are ordered to be dismissed.