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2013 (9) TMI 818 - HC - Central ExciseMODVAT Credit - Whether ‘Glass Bottles’ used for packaging/containing aerated water were eligible for modvat credit under Rule 57A of the Central Excise Rules, 1944 as it existed during the material period – Held that:- The law as settled in the reports leads to an inevitable conclusion that the circular dated 13.9.1995, wherein the Board allowed the credit of duty paid on Glass Bottles/Crates only if the value of such Bottle was included in the value of the final product in case of a claim for modvat credit, binds the revenue and they cannot take a stand that the said circular was contrary to either Section 4 of the Act or Rule 57A of the Rules. Interpretation of Explanation (iii) appended below Rule 57A - Whether the CEGAT’s interpretation of clause (b) (iii) of the explanation appended below Rule 57A of Central Excise Rules, 1944 as it existed during the material period of its order was lawfully correct – Held that:- Following C.C.E., Chandigarh-II –vs- Dhillon Kool Drinks & Beverages Ltd. [2007 (12) TMI 228 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ] - Under Rule 57A of the Rules, Modvat credit was admissible on the specified inputs used in the manufacture of final product - Explanation (iii) to Rule 57A of the Rules define that inputs does not include packaging material if its value had not been included during the preceding financial year in the cost of assessable value - The Tribunal had categorically found as a fact that the cost of packing material had been included in the assessable value although on installment basis and, therefore, the assessees’ were entitled to Modvat credit of duty. The plea taken by the assessees’ that the cost of glass bottles and plastic crates was included in the aerated water could not be rebutted by the revenue. Overriding Effect of Section 4 - Whether the provisions of Rule 57A of the Central Excise Rules, 1944 can override the provisions of Section 4 of the Central Excise Act, 1944 - Whether the Hon’ble Tribunal was correct in holding that the assessee was entitled to claim modvat credit by exercising his option to include the value of the durable and returnable packaging material or container in spite of the fact that such packaging material of container was specifically excluded from the definition of ‘input’ in Rule 57A of the Central Excise Rules, 1944 read with Section 4 (4) (d) (I) of the Central Excise Act, 1944 - Held that:- The respondent have been including the value of the Glass Bottles and the Plastic Crates on prorata basis in the assessable value of the final products i.e. the aerated water which was permissible under the circular dated 13.09.1995 - The department cannot take a different stand and say that the aforesaid circular offends Section 4 of the Act - The respondent also submitted the report of the Charter Accountant suggesting the aforesaid fact and, therefore, this Court does not find that the stand of the petitioner can at all be tenable. There was a distinction between a decision in a particular assessment by a quasi-judicial authority and a decision on principle by the Board - While an instruction issued u/s 37B cannot be binding upon a quasi-judicial authority under the Act, the departmental officers conducting the lis before such quasi-judicial authority cannot take a stand contrary to the directive/instruction issued. The instructions which may be binding on the Central Excise Officers were not binding on the Assessee who may question the correctness of the same before a quasi-judicial authority and before a Court - Both the quasi-judicial authority and a fortiori, the Court, can question the correctness of the instructions - Decided against the revenue.
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