Customs, Excise and Gold Tribunal - Delhi
Parle Biscuits Ltd. vs Collector Of Central Excise on 13 January, 1995
Equivalent citations: 1995(78)ELT38(TRI-DEL)
ORDER
1. As to whether this Hon'ble Tribunal is correct in law in holding that Modvat credit under Rule 57A read with Rule 57G is not available on the inputs like printing ink, HR media, Ethyl/Butyl Acetate, Wax Cello Solve, Poly Granules, etc. on the ground that these are inputs for packaging material and are not inputs for final product i.e. biscuits.
2. The inputs on which modvat credit has been disallowed are necessary and are inextricably connected with the final product because the final product cannot be sold without the packaging material bearing the trade name and other particulars required by various statutory provisions. Whether this Hon'ble Tribunal is correct in law in holding that the said inputs are not the inputs of the final product i.e. biscuits.
3. As to whether this Hon'ble Tribunal correctly held that the principle laid down by the Hon'ble Supreme Court in East End Papers Industries Ltd. and Collector of Central Excise v. Ponds India Ltd. (supra) is not applicable to the case of the applicants herein....
4. As to whether this Hon'ble Tribunal is correct in law in excluding inputs like printing ink etc. used in packaging material, when printed packaging material has been held to be eligible for modvat benefit.
5. As to whether this Hon'ble Tribunal is correct in interpreting the Modvat Rule 57A read with Rule 57G in a manner ignoring the main object of the Rules i.e. the prevention of cascading effect of the duties of excise paid on the inputs on the value of the final product.
2. Accordingly this statement of case is prepared and submitted to the Hon'ble Punjab and Haryana High Court.
The facts leading up to the filing of the present applications are that applicants herein who are manufacturers of biscuits had filed declarations under Rule 57A read with 57G of the Central Excise Rules, 1944 and started availing modvat credit on the inputs mentioned therein which were used in relation to the manufacture of their final product i.e. biscuits. The benefit of modvat credit availed by the applicants on certain items such as TDL poster paper, glassine paper, printing ink, HR media, etc. was denied both by the Assistant Collector and the Collector of Central Excise (Appeals). The Tribunal while disposing of the appeals of the assessees extended the modvat credit to TDL poster paper OBL (glassine) papers and gum tape and self adhesive tape and held that modvat would not be available in the case of other materials such as printing ink, HR media, Ethyl/Butyl Acetate, poly granules, etc.
3. Shri Harbans Singh, learned Counsel for the applicant submits that the use of the ink and other materials on which modvat has been denied is necessary for putting the product in the market stream in view of the requirement of certain statutory enactments such as Food Adulteration Rules, 1955 and the Standards of Weights and Measures, 1976. Rule 32 of the Prevention of Food Adulteration Rules, 1955 lays down:
"Every package of food shall carry a label and unless otherwise provided in these rules, there shall be specified on every label :
(a) the name, trade name or description of food contained in the package;
(b) the names of ingredients used in the product in descending order of their composition by weight or volume as the case may be".
Section 39 of the Standards of Weights and Measures Act, 1976 also lay down:
"39. Quantities and origin of commodities in packaged form to be declared -
(1) No person, shall
(a) make, manufacture, pack, sell, or cause to be packed or sold; or
(b) distribute, deliver, or cause to be distributed or delivered; or
(c) offer, expose or possess for sale, any commodity in packaged form to which this part applies unless such package bears thereon or on a label securely attached thereto a definite, plain and conspicuous declaration, made in the prescribed manner, of -
(i) the identity of the commodity in the package;
(ii) the net quantity, in terms of the standard unit of weight or measure, of the commodity in the package;
(iii) where the commodity is packaged or sold by number, the accurate number of the commodity contained in the package;
(iv) the unit sale price of the commodity in the package; and (v) the sale price of the package.
Explanation : - In this sub-section, the expression "unit sale price" means the price according to such a unit of weight, measure or number as may be prescribed."
4. Learned Counsel, therefore, submits that the use of the ink and other materials is inextricably connected with the product and, therefore, are components of the product. He draws our attention to the judgment of the Hon'ble Madras High Court in the case of Ponds (India) Ltd. v. Collector of Central Excise - 1993 (63) E.L.T. 3 wherein modvat credit was allowed on plastic granules which were used in the making of the containers for cosmetics and toilet preparations. He also refers to the decision of the East Regional Bench in the case of Britannia Industries Ltd. v. Collector of Central Excise - 1993 (67) E.L.T. 980 upholding the eligibility to modvat credit on processed paper used for packing of biscuits. Lastly he submits that the decision in the case of Park Biscuits -1992 (57) E.L.T. 152 which has been relied upon in the final order of the Tribunal which forms the subject matter of the reference applications, has been challenged before the Hon'ble Bombay High Court in WP 3880/90 which has been admitted on 14-1-1991 and the High Court has also granted conditional interim relief. In these circumstances, he contends that important questions of law have arisen out of the order of the Tribunal and urges reference of the same to the Hon'ble High Court of Punjab and Haryana at Chandigarh.
5. Learned SDR, Shri Sanjeev Sachdeva supports the findings of the Tribunal; however, with characteristics fairness, he leaves it to the Bench to decide as to whether to refer the questions of law to the High Court.
6. We have considered the submissions and carefully perused the various judgments cited by the learned Counsel. We find that in the case of Indian Explosives Ltd. v. Collector of Central Excise - 1990 (50) E.L.T. 117, the Tribunal extended the benefit of proforma credit to printing ink used to print product details on the cartridges of explosives as required under the Explosives Rules as well as the printing inks used to print the product details on card-board containers used for packaging of explosives and accessories on the reasoning that without such printing, the excisable goods cannot be marketed by the company and the printing is a process incidental and auxiliary to the completion of the manufacture of the product. This decision has been followed by the Tribunal in the case of Multilayer Composites P. Ltd. v. Collector of Central Excise reported in 1993 (65) E.L.T. 565, while extending the benefit of modvat to printing ink used as .an input in the manufacture of printed plastic films. Modvat has been extended to plastic granules used in making of the containers for cosmetics and toilet preparations by the Madras High Court in the case of Ponds (India) Ltd. v. Collector of Central Excise - 1993 (63) E.L.T. 3 (Mad.) We further note that the Madras High Court decision (supra) was noted by the Tribunal in paragraph 4 of its order, but not dealt with. In such circumstances, and particularly when the Park Products decision of the Tribunal which forms the basis for the present decision in the appeals before the Tribunal is itself in dispute before the Hon'ble Bombay High Court, we are of the view that an important question of law does arises for reference. Accordingly we forward the following question of law for reference to the High Court:
"Is it correct in law for the Tribunal to hold that modvat credit under Rule 57A read with 57G is not available on inputs such as printing ink, HR media, Ethyl/Butyl Acetate, Wax Cello Solve, poly granules, etc. on the ground that these are inputs for packaging material and not for the final products i.e. biscuits when the final product cannot be sold without the packaging material bearing trade name and other particulars required by various statutory provisions and when printed packaging material has been held to be eligible for modvat credit?"
The above question was drafted and put to both sides who accepted the same.