Karnataka High Court
The Union Of India vs M/S Kwality Biscuits Ltd on 4 March, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
' Ballgaidife.
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 4TH DAY OF MARCH, 2010,
: PRESENT :
THE HON'BLE'. MR. JUSTICE K. L.
en
TI-IE HON'BLE MRS. JUSTICE B.V. Z
C.E.A.NO.75 Of'{12.CV)t)'E":)'A:. '1' ' ' V V
BETWEEN: é 1
The Union of India _
Represented by the Corn1nis_s'i9_n'e;f
Of Central Excise .__ s_B.N'o. _ ' ~. A .%
Queerfs Road, * \_ _ ,
Bangalore-- 560 001. * '
[By N ndfincate)
AND I V 4
M/e.Kwe:ity. Biecfuits Ltd.,
' Myesofe' Road,
Respondent
(Byisri :~ Advocate)
*$$*
_ V. This cm is filed U/s.35G (2) of the Central Excise Act,
ti-944, against the order dated 15/ 12 /2005 passed in Final
(jreer No.2o8o/2005.
y,
This CEA coming on for hearing, this day,
Nagarathna J., delivered the following
JUDGMENT
The revenue has filed this 'appeal, R" 'V order dated 1591 December 2005.' rriaiie No.2080/2005 by the Customs a.':t'1d.V: ExelilseA"«:.Ap~pe'l1ate R "
Tribunal, Bangalore, ;_r.aising_...txhe_ 'fo1_1o\2eif1'gv..sul3star1tia1 questions of law.
1] El/iiethef the'~§E"ibunal correct in coming to a"eoI1.elu$*:ion that 'sinee the inputs havei'siif;f'ered'--»._ciuiy--.i have gone into the manujtiehtuire of final products the credit has t(J"l:$e"eeail.owéid' although._ it goes against the ci«€I°U1iiion"'z;f=.finpuis" appearing in Rule 57- a of the Cenifal'E;\:C'i;3e.-Rules, 1944?
V. _ R42,' ll/Vhelthehfs it was correct for the ,,._%.fi'Frii;=unal to. grant MODVAT credit in spite of "the: explicit legal provision contains in Rule it A * --. _V V the Central Excise Rules, 1944?
_ 'C"_~3]"g;['Whether Tribunal could pass an order fuiithout examining the issue involved, "folloiving the ratio of a case involving dissimilar facts? /4- /4*
2. The respondent is engaged in the manufacture of Biscuits and it claimed MODVAT credit with regard to Liquid Adhesives, BOPP Tapes and such other used as secondary packing for the said extent of Rs.l,'74,934/-- on the,"'ground,A goods are used as secondary packing materialv and the", value of the SEUTIC is includTe'd in 'of the Biscuits. T he appellant notices to the respondent on the.'/i;t;:»c.ou1d not have availed of the credit und'er"the..p:rovisions of Rule 5'7--A 1944, in response to which, respondent was that the said jtznateriais. were used for selling the cartons in which "hacked and hence. it was entitled to The Deputy Commissioner, after hearing, 'passed an order, stating that, the said goods mwere part of the secondary packing material and j__'that°the deduction claimed for the said material as T "inputs could not be allowed under Rule 57 --A of the said 1;:
Rules. Accordingly he disallowed the credit to an extent of Rs.}.,7'4,934/--.. Against the order of the':
Commissioner, an appeal was preferred by -the ,asVs'e'ssee' before the Commissioner, which:ai;'1't'i1ority c_onfir_med7th.e; order of the Deputy Commissioner.
the said order, the respondent preferred:.'.=thielflappeal it before the Tribunal- The reversed the order of the the relief to the responder1t't««Al.Tl1e vw3'..1i1.:l:cha1ler1ge in this appeal, questions of law. llll H V. W 'V V H by We ' learned counsel for the appellant counsel for the respondent. f1't,_is contended on behalf of the appellant that .f'.f'in:stant case, the product involved is Bisc4uits_"ap_ti' that the said goods are packed in cartons ::"and_.it is only for affixing labels on the cartons by way 'Adhesive Tapes that MODVAT credit has been ~c§'airned, Which, the respondent is not entitled to. fix Keeping in mind the provisions of Rule 57--A of the Rules, he submits that the Deputy Comrnissiong-r___and the Commissioner were justified in disallowing" credit. But the Tribunal was not right in relief by an interpretation of Rule'57é'A and therefore, the order of the:4'Trib_unal.p'V_r;ugvh't reversed in this appeal.
5. Per contrav,it.é_is loehalf of the respondent that consideringlhilthte product and the fact that"itffrequiresilto be in a particular manner itswcguality, MODVAT credit with regard to packing materials was claimed whichis inluter1ans.'ofthe..'said Rule 57--A of the Rules and lidthpat justified in allowing the said ' ari'dtVpl'tl1.Tere'fore, there is no merit in this appeal.
' Having heard learned counsel on both sides and onperusal of the material, it is not in dispute that _ the respondent assessee is a manufacturer of Biscuits. order to see as to whether it is entitled to the benefit )2 ,/'$* of MODVAT credit under Rule 5'7--A of the Rules," it is necessary to keep in mind, the nature of produ.ot;:'f«4_Til'l:ie product is such an eatable, which would ' its quality and taste, if not p_rese1fvedN'fiy--A:'.'adequate., if packaging. Therefore, it requires"-a p'aiticular--natuif"e._,of packing in order to preserv'e:""'its cA1iL1alit3I,: if material in respect of credit-is-claimed, is a necessary item the scope of provisions of Therefore, the Tribunal that the assessee would credit on the value of the that the Tribunal was justified. in the'; relief by considering the fact .f'that'i'thé7product infffduestion is such that, it requires to be ppackedu._infa.-"pa1ticuIar manner for its preservation ' _ and"'t.herelore,f the order passed by the Tribunal which in this appeal is wholly on account of the of the said product and therefore, the T respondent is entitled to claim MODVAT credit with fir.
regard to the secondary packing materials. We also observe that as a matter of right, it is not that all packing material could be considered for the "st MODVAT credit as an input and we clarify _ in mind the nature of the prod1,{c'tVir1«th--e i.e. Biscuits, the relief granted t0:4the"--respon_'rient ' Tribunal, is iust and proper.
For the aforesaid Vvstthstantiai questions of law are the appeiiant. Appeal is acccirdtijnugigr "