ORDER
S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Appeal No. 17/97 dated 31.1.97 by which the learned Commissioner (Appeals) has held that the measuring cup supplied alongwith the final product syrup is an accessory. Accessories of final product cleared along with such final product the value of which is included were brought within the purview of Rule 57A vide Notification No. 28/95-CE (NT) dated 29.6.95. He has noted that the appellants took credit before the aforesaid amendment on 14.6.95 and, therefore, the credit cannot be allowed. He has noted the judgment of Sterlite Industries Ltd.. wherein, oil paint used for marking on the wooden drums containing the final product as not applicable to the facts of the case. So also he has distinguished the judgment of Heal Well Pharmaceuticals case which granted the benefit in respect of dropper attached to the bottle on the premise that it is an attachable component. Commissioner (Appeals) has noted that the measuring cup is not an attachable component to the bottle containing syrup and, therefore, this judgment is distinguishable.
2. That appellants in this case contend that the judgment of Heal Well Pharmaceuticals and other judgment cited are directly applicable to the facts of the case. It is their contention that the measuring cup is compulsorily provided along with the bottle in terms of FDA requirements to facilitate the patient to take correct dosage of the drug, it is stated that the cost of such measuring cup is included while determining the assessable value of the end product. Therefore, they state that the measuring cup has to be considered as an input used in relation to the manufacture of final product and eligible for Modvat credit. It is stated that even if it is presumed without admitting that such measuring cup is an “accessory’ to the final product that fact by itself cannot be a disqualifying factory for such item to be considered eligible for Modvat so long as such so called accessory is essential and compulsorily supplied alongwith the final product and is not made optional one and also the cost thereof is included in the value of the final product, this said them, even though considered to b an accessory is eligible as an input for the purpose of Modvat credit. In this regard they rely on the following judgments:
1. Heal Well Pharmaceuticals v. CCE .
2. Jayshree Industries v. CCE .
3. CCE v. Jay Engineering Works Ltd. .
4. CCE v. Eastend Paper Industries. .
5. BPL Sanyo Ltd. v. CCE. 1996 (82) 337 (Tri).
6. Bajaj Auto Ltd. v. CCE. .
3. They further state that Notification No. 28/95-CE (NT) dated 28.6.95 requires to have retrospective effect and the benefit is required to be extended.
4. The appellants have requested the case to be decided on merits in view of the Modvat credit being only Rs. 14,985/-
5. Learned DR arguing for the revenue, reiterated the Commissioner’s findings and stated that the judgment cited are all distinguishable. He submits that Rule 57A was amended only on 29.6.95 and it can have only prospective effect. He further submits that the item was not attached to the bottle and the measuring of the medicines can even be done otherwise and used and hence cannot be considered as an input despite the fact that its value has been added in the final product.
6. On a careful consideration of the submissions, I notice that these very issues were considered in the Heal Well Pharmaceutical’s case and the entire matter was considered at great length and the Tribunal in a detailed findings held that the value of the dropper was being added to the value of the bottle and it was cleared at the factory gate and the same was essential for the purpose of marketing. It noted that in terms of the Supreme Court Judgment rendered in the case of East End Paper Industries it was held that anything which goes to render the goods marketable at the factory gate is to be regarded as component. The Tribunal also noted the question as to whether Rule 57A is to considered de hors Section 4 and answered in the negative and held that whatever goes into the making of the value of the final product as delivered at the factory gate and on which value, Central Excise duty is levied, would therefore by relevant for consideration. It held that because, credit of duty paid on inputs is to be utilised towards the duty payable on the final product, calculated on’ the assessable value of the final product, in the form in which it is cleared at the factory gate, it further held that if the value of the dropper does into the value of the pack of medicine cleared at the factory gate, the duty suffered on dropper would get stuck to the final product, leading to cascading effect of the input duty on dropper, if the duty is not given credit. Therefore, a view was expressed that viewed from this angle the Tribunal construed the dropper as a component, whose value is included in the value of the final product and hence Modvat credit of duty paid on dropper would be eligible.
7. The Tribunal further noted that the assessee in that case was declaring the retail price of the final product under Drugs (Price Control) Order and, therefore, it has to be considered as a component only. It rejected the plea of the revenue that the medicine can be administered even otherwise without the help of a dropper. It held that dropper is connected with the administration of prescribed dosage of drops and it is not a complementary gift given along with the bottles of drops. It held in a sense, as functionally designed it is an attachable component of the bottle containing drops. Therefore, it held that even otherwise it can be construed as an attachable component of the bottle but separately.
8. I notice that the entire findings given in the case of Heal Well Pharmaceuticals would directly apply to this case also as the measuring cup is supplied and marketed along with the bottle and cleared at the factory gate its value has been included in the final product. The drug has to be taken on the basis of the prescribed measure through this measuring cup. Therefore, the findings given by the Tribunal would directly apply to the present case and it has to be considered as an input. Therefore, the other question raised by the appellant as to the notification having retrospective effect need not be gone into in view of the finding arrived at by the Bench that the judgment of Heal Well Pharmaceuticals is not distinguishable and is required to be applied in the present case.
9. Applying the ratio thereof. I set aside the impugned order and allow the appeal.
Pronounced and Directed in Open Court.