9911796707
TMI Blog1996 (1) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... `Active 25.', I find that their claim for Modvat credit on such wasted/damaged tin containers is totally unsubstantiated and inadmissible. 2. The facts of the case in brief are that the appellants are manufacturers of `Active 25'. For consumer packing the appellants use metal containers of different sizes, which they purchase from different suppliers. In the process of packing and finishing at different stages metal containers pass through the machine or hands, resulting in a marginal wastage namely the tin containers get twisted out of shape, print scratched, misfits in lids, improper closing, occasional bursting etc. On the tin containers so wasted in the process of packing and finishing the appellants continued to avail of the Modv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject and submitted that the Tribunal in the case of Union Carbide Ltd. v. Collector of Central Excise, Calcutta-II reported in 1994 (74) E.L.T. 381 had held that the goods rejected during the testing and inspection are waste and scrap is arising during manufacture/processing of inputs; Dry cell batteries rejected during the testing and inspection are waste and scrap as they are to be treated fully manufactured only after they pass testing and inspection; that Modvat Credit on duty paid inputs contained in rejected dry cell battery not to be denied in view of Rule 57D(1). However, such waste and scrap to be destroyed as per the procedure of Rule 57F of Central Excise Rules, 1944. The learned Counsel also relied upon the decision of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, submitted that admitted position in their case was that tin containers were essential for putting finished product `Active 25' in their case into the market and, therefore, tin containers were inputs. Following the ratio of the decision in the case of Swaraj Mazda (supra) that admitted position was also that tin containers get damaged in the process of filling `Active 25'. Since the process of packing is a process of manufacture and therefore, wastage of tin containers essentially is waste in the process of manufacture that Rule 57D provides :- "Rule 57D. Credit of duty not to be denied or varied in circumstances. - (1) credit of specified duty allowed in respect of any inputs shall not be denied or varied on the ground that par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before me and the points pressed by the learned Counsel on the basis of case law cited, I find that the containers are inputs inasmuch as they make finished product `Active 25' marketable. I also find that there is no evidence brought out by the Department that no wastage or damage occurred to the containers in the process of packing finished product. The appellants have stressed in their reply that damage or waste occurred in the process of manufacture. It is well settled now that Modvat Credit cannot be varied or denied on the ground that part of the modvat credit on input is contained in the wasted/damaged input. In this view of the matter I hold that the appellants shall be eligible to Modvat Credit on the inputs wasted/damaged in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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