Customs, Excise and Gold Tribunal - Delhi
Jayco India Pvt. Ltd. vs Cce on 7 April, 2006
Equivalent citations: 2006(110)ECC45, 2006ECR45(TRI.-DELHI)
ORDER
S.S. Kang, Vice President
1. Heard both sides. Since a common issue is involved in these appeals, they are taken together.
2. The Appellants have also filed Misc. application for hearing of the appeal by a particular Bench. We find that the appellants have no right to choose the Bench. Accordingly, the Misc. application is dismissed.
3. The appellants are engaged in the manufacture of chewing gum/bubble gum and were availing the benefit of CENVAT Credit in respect of inputs used in or in relation to the manufacture of bubble gum including packing material. The appellants availed Credit on the goods known as Boomer tattoo or printed transfers. Show cause notices were issued to the appellants denying Credit in respect of Boomer tattoo on the ground that these are not inputs used in or in relation to the manufacture of their final product i.e. chewing gum/bubble gum. The adjudicating authority disallowed the credit and confirmed the demand. The Commissioner (Appeals) also upheld the orders passed by the adjudicating authority.
4. The contention of the appellants is that as per Central Excise Rules the manufacturer can avail the Credit in respect of inputs including packing material. Tattoos in question are used as packing material in respect of bubble gum manufactured by them. Tattoos are special purpose stickers, which are made up of wax paper. They are in the nature of transfers in that the contents are transferable onto human skin by pressing the tattoo to the skin and applying water. These tattoos are thus of considerable interest to children who are the consumers of the bubble gum in question. The special wax paper, which is used for preparation of the tattoos, is used for the initial packing of the naked bubble gum. The bubble gum wrapped in the tattoo is subsequently wrapped in the outer packaging of printed aluminium foil.
5. The appellants also admitted the fact that in some cases bubble gums are not first wrapped in tattoos but straightway packed in printed wrapper and put in plastic jars and tattoos also put in jars. Revenue is not denying credit in respect of jars. The contention is that as the tattoos are used as primary packing of the bubble gum, the appellants are entitled for credit in respect of these tattoos. The appellants relied upon the expert opinion obtained from Indian Council of Agricultural Research to submit that "by wrapping the bubble gum in tattoos will enhance the shelf life. The appellants also relied upon the decision of the Hon'ble Calcutta High Court in the case of Singh Alloys and Steel Ltd. v. A.C.C.E. reported as to submit that the refractory material which is used in the furnace in the manufacture of ingots is entitled for the benefit of Credit. The appellants also relied upon in the case of Harbans Lal Malhotra and Sons Ltd. v. CCE Calcutta-III reported as 2002 (149) ELT 691 (Tri.-Kilkata) to submit that Hanging Cards on which are razor blades are fitted are entitled for the benefit of credit. In the case of CCE, Ahmedabad v. Paras Pharmaceutical Pvt. Ltd. reported as the Tribunal held that Aristocrat suit cases used as secondary packing are entitled for the credit. In the case of HLL v. CCE, Calcutta-II reported as the Tribunal allowed the credit in respect of Cellophane tapes used for sealing cardboard boxes. The appellants heavily to submit that the Hon'ble Supreme Court held that the wrapping printing paper used in wrapping of paper is entitled for exemption under notification. The appellants also relied upon the decision of the Hon'ble Madras High Court in the case of India Cements Ltd. v. ACCE, Tirunelveli reported as whereby the Hon'ble High Court allowed the benefit of credit in respect of bags which are used for packing of cement.
6. The appellants also relied upon the adjudication order passed in their favour for the intervening period.
7. The appellants' contention is that in view of the above decisions denial of credit in respect of tattoos which are used as primary packing material is not sustainable.
8. The contention of the Revenue is that the appellants are also manufacturing bubble gum which are packed directly into the printed aluminium foil without tattoo. In view of this tattoos are not essential for packing of the bubble gum. The tattoo. However, only 40% to 60% of the bubble gum is being wrapped in the tattoo. The contention is that tattoo is additional and promotional material which is put along with bubble gum in the packing. The Revenue also pointed out that the sample produced now by the appellants shows the writing on packing that inside free tattoo. The Revenue relied upon the decision of the Tribunal in the case of Liberty Shoes Ltd. v. CCE, New Delhi reported as 2001 (135) ELT 1103 (Tri.-Del.) to submit that the carry bags which are placed in card board boxes along with pair of footwear, utilized by retailers at time of sale to consumers to enable them to carry footwear cardboard box conveniently was held to be not entitled for the credit as these cannot be said to be used even indirectly for packaging card board boxes or footwear. The Revenue also relied upon in the case of G.S. Enterprises v. CCE, Jaipur reported as to submit that in this case credit in respect of blades which are disposable twin blade razor as blade in question is not compatible with the razor. The appeal filed by M/s. G.S. Enterprises was dismissed by the Hon'ble Supreme Court as reported in 2003 (151) ELT A297.
9. The Revenue also relied upon the decision in the case of CCE, Raipur v. Hira Cement, to submit that mere non-filing of appeal is not the ground to consider the matter on merit.
10. The short issue before us is whether the appellants are entitled for the benefit of Credit in respect tattoos which are supplied along with bubble gum. The appellants' claimed credit as primary packing material. No doubt packing material is entitled for the benefit of credit as inputs as per the provisions of credit rules. On a specific inquiry by the Bench the appellants admitted that 50% of bubble gums are cleared without tattoos. In those cases bubble gums are put in plastic jars and the same number of tattoos are put in the plastic jars cases 60% and in some cases only 40% bubble gum is covered. Further we find that tattoos are being put along with bubble gum in the printed aluminium foils and it was specifically mentioned on the packing that "free tattoo inside". The appellants relied upon the decision of the Madras High Court in the case of Indian Cements (supra) wherein the Hon'ble High Court held that in order to determine whether a packaging material is used in or in relation to the manufacture, what is to be seen is as to how the goods are generally sold. Hon'ble High Court after noticing the fact that cement is generally sold in bags allowed the benefit of credit. In the present case as almost 50% of bubble gums manufactured by the appellants are sold without putting tattoos inside packing, hence it cannot be said that bubble gums are generally sold by using tattoos as primary packing. From the facts of present case it is clear that tattoo is not used as packing material. Further, we find that the Tribunal in the where duty paid razors are packed with GPI razor the Tribunal disallowed the credit in respect of blades on the ground that blades are not even accessories of disposable razors. The ratio of decision relied upon by the appellants are not applicable in the facts of present case.
11. In the present case we find that tattoos, simply put with bubble gums in the packing, are not packing material, therefore, are not entitled for credit as inputs. The appeals are, accordingly, dismissed.
(Dictated and pronounced in the Open Court.)