ORDER
S.L. Peeran, Member (J)
1. In all these appeals common question of facts and law are involved hence, they are all taken up together for disposal as per law.
2. The short question that arises for consideration in these appeals is as to whether the duty paid on printing ink utilised for printing the brand name and the manufacturer’s name on the paper bags just to identify the product with the manufacturer is entitled for the benefit of MODVAT Credit. The appellants had utilised MODVAT Credit in respect of input printing ink falling under Chapter Heading 3215.00 of the Central Excise Tariff Act, 1985. The department issued a show cause notice in respect of such alleged wrong utilisation for MODVAT purpose and has demanded as to why the duty should not be recovered from them under the provision of Rule 57-I of Central Excise Rules, 1944.
3. Arguing for the appellants the Learned Advocate submitted that the lower authorities have followed the judgment of the Tribunal rendered in the case of Park Products (P) Ltd. v. Collector of Central Excise as reported in 1992 (57) E.L.T. 152 wherein west Regional Bench of the Tribunal had taken a view that printing ink and other chemicals used for lamination is only an input for manufacture of packing materials and not utilised in relation to manufacture of the final product and therefore, the benefit of MODVAT Credit is not available to such inputs. The Learned Advocate pointed that in that case packaging materials were exempted from levy of duty and therefore, the Tribunal had expressed such a view. It is his contention that as there were conflicting views, the matter was referred to a Larger Bench by WRB itself, as in the case of Ashwin Vanaspati (Pvt) Ltd. v. Collector of Central Excise & Customs, which had been finally decided as reported in 1994 (70) E.L.T. 754. The Larger Bench has taken a view that packing material from which a package for packing of manufactured final product is to be considered as raw material. This view has been taken in the light of the definition of the term “manufacture” as appearing in Section 2(f) of the Central Excises and Salt Act and in the light of Hon’ble Supreme Court in the case of Collector of Central Excise v. Eastend Paper Industries (P) Ltd. as reported in 1989 (43) E.L.T. 201. The Hon’ble Supreme Court has held that the process of manufacture is complete only when the product is in a marketable condition or commercially expedient, and process of manufacture, be in the direct line of manufacture, or ancilliary one, has to be taken as process of manufacture of the main product, and any distinct excisable item that may come into existence, has to be taken as intermediary product and even if that excisable product is exempt from payment of duty, vide Rule 57D the input therefore, remains eligible to get MODVAT Credit. In that view of the matter, the Larger Bench held that the input used eligible to get the MODVAT Credit. The Learned Advocate pointed out that in the present case the final goods namely, tea was being packed in unit containers and the classification under various sub-heading was on the basis of grammage packed in tea container and the manner in which it is sold to consumer in packed condition. It is his contention that the process of repacking itself has been considered as ‘manufacture’, and further the labels on the containers disclose not only the quantum of the content but also the type and variety of tea packed therein. The consumer identifies the variety of tea on the basis of labels therein namely, Yellow or Red Label i.e. the specific brand by which the tea is sold. It is his submission that the words on the container discloses the nature of goods and the manner in which it is understood in the market, and the goods are identified on the basis of package also. Therefore, the printing ink has to be considered as an important input of the packing material. It is his further submission that the Hon’ble Supreme Court in the case of Collector of Central Excise v. Jay Engineering Works Ltd. as reported in 1989 (39) E.L.T. 169 has taken a view that name plate affixed on fan becomes a raw material or a component part, in view of the fact that fan is identified in the market on the basis of its nameplate and the marketing is done on the basis of brand name or trade name of the fan. He also [pointed] out that in the case of Indian Explosive Ltd. v. Collector of Central Excise, as reported in 1990 (50) E.L.T. 117 the East Regional Bench has granted benefit of MODVAT on printing ink, which has been used for marking of explosives. He also brought to the notice of the Bench the ruling of the West Regional Bench itself as rendered in the case of Collector of Central Excise v. Indian Aluminium Co. Ltd. as reported in 1994 (69) E.L.T. 776, wherein the MODVAT Credit has been extended to printing ink which has been used for printing the necessary details on the aluminium foil which is used as a packing material. He also referred to the judgment of the Tribunal rendered in the case of Geep Industries Syndicate Ltd. v. Collector of Central Excise, as reported in 1995 (76) E.L.T. 399, wherein a broad view has been taken by the Bench in respect of packing material duplex boards used for producing cartons for packing material and it has been held to be eligible for Modvat credit under Rule 57A of the Central Excise Rules, 1944. In view of these submissions, the Learned Advocate submits that view from any angle, the benefit of the MODVAT credit in respect of printing ink utilised for printing the necessary details on the packet, is required to be extended.
4. The Learned DR reiterated the findings given by the lower authorities and submitted that the ratio followed by the lower authorities as rendered in the case of Park Products should be followed and it is not distinguishable.
5. I have carefully considered the submissions made by both the sides and have also perused the records. As can be seen from the Tariff Heading No. 9009.02 of CET the classification of the item Tea is on the basis of packing in unit containers and also on the basis of gramage. The wordings of the Heading 0902 reads:
“Tea, including Tea waste – Green tea and black tea”
The subsequent sub-heading reads in respect of 0902.11:-
“-Packed in unit containers of content not exceeding 25 grams and ordinarily intended for sale to consumers in that pack”.
0912.12 – Packed in unit containers of content not exceeding 25 grams
but not exceeding 20 kilograms, whether or not ordinarily
intended for sale to consumers in the pack
0902.13 – Packed in bags for retails consumption known as ‘tea bags’
0902.19 – Other
– Tea waste
0902.21 – Denatured
0902.29 – Other
0902.90 – Other
As can be seen from the above Tariff classification, the goods is identified on the basis of the content printed on the unit containers. The contention of the Learned Advocate that the goods are identified on the basis of quality brand name and type of tea sold is not disputed by the department. The goods are sold on the basis of details printed on the packet and it is also a statutory requirement. In that view of the matter, the printing ink used for printing various details on the packet becomes a necessary ingredient in the process of marketing of the goods, inasmuch as that the goods are identified in the market by its label and the details given on the label. The goods are not sold in the market on the basis of its packing and further packing is not used merely for protection of the goods, but the goods are identified in the market on the basis of the details which are printed on the packet. In that view of the matter the judgment rendered in the case of Jay Engineering Works Ltd. (supra) is very relevant and fully covered the issue in the present case. The fans are identified by name plate and the Hon’ble Supreme Court has held that nameplate becomes an input. The Larger Bench in the case of Ashwin Vanaspati Industries Pvt. Ltd. (supra) has also analysed this issue and has held that the packing materials being an intermediary product will be entitled for the benefit of MODVAT. The Hon’ble Supreme Court in the case of East end Paper Industries (supra) has clarified the term ‘manufacture’ as appearing in Section 2(f) of the Act. The goods would attain the stage of manufacture only when they are marketable and as is known in the market. In the present case, the item Tea is not known in the market as such, but they are known on the basis of its trade name and the label, which is there on the pack. Therefore, the printing ink assumes great importance in the present case for putting the goods in the marketable stage. The contention taken by the department in this case that printing ink is not an input, is not a correct proposition. Further the ruling rendered in the case of Park Products Pvt. Ltd. was in the context of packing material being exempted from duty leviability. Therefore, the Parle Product Pvt. Ltd. case is no longer a good law in view of the Judgment rendered in the case of Ponds (India) Ltd. v. Collector of Central Excise as decided by Hon’ble Madras High Court reported in 1993 (63) E.L.T. 3.
6. In that view of the matter, the impugned orders are set aside and the appeals are allowed.