ORDER
R. Jayaraman, Member (T)
1. The aforesaid Reference Application has been brought by the Revenue in respect of this Bench’s Order No. 1762-64/93-WRB, dt. 8-9-1993, whereunder the aforesaid three appeals filed by the Respondents herein were allowed by this Bench. The issue involved in the aforesaid three appeals relates to extension of MODVAT Credit in respect of ‘paints’ which is brought by the Respondents for marking on the drums of wires and cables, before they are delivered to the Customers at the factory gate. This Bench appreciated that as per the terms of contract with the customers namely the Telecommunication Department, these wires and cables are to be marked with the particulars and specifications and also they are to be marked in specified coloured paints and these particulars could not be marked on the final product themselves; but they could be marked only on the wooden drums, which contain the wires and cables. This Bench allowed the MODVAT Credit holding that the department is not justified in rejecting the claim for Modvat on the ground that the paint is not used in or in relation to the manufacture of final product. The final product is wires and cables which are cleared the packed wooden drums and these wooden drums are required to be marked with specification of the contents as per the requirements of the customer and they are delivered in wooden drums duly painted with such markings and hence the paints could be said to have been used in or in relation to the manufacture of the final product. This Bench also took the view that even as per Rule 51 of the Central Excise Rules, markings are required to be done even for central excise purposes, before the goods are delivered outside the factory. The present Reference Application is against the aforesaid order.
2. The only question framed is “whether the tribunal is correct in allowing the Modvat benefit in respect of paint which is not used in or in relation to the manufacture of wires and cables but only used for painting the wooden drums which are packing material, in view of the Tribunal’s earlier judgment in Parle Products, 1992 (57) E.L.T. 152 (Tribunal) and also in view of the fact that there is a relaxation from making under Rule 51 of the rules in the case of wires and cables in terms of Trade Notice 48/C.E./87, dated 17-12-1987 issued by the Chandigarh Collectorate?
3. Shri Harnek Singh, the Ld. JDR, mainly pleads that there is an apparent inconsistency viewed in the context of the decision taken by this Bench in Parle Products. If the ratio of the aforesaid decision is applied, the Tribunal would not have allowed Modvat benefit in respect of paint used only for painting wooden drums which is a packing material. In the case of Parle Products, this Bench disallowed Modvat credit for printing ink, which was to be used for printing the Aluminium foils on the ground that it is not per se identifiable as a packing material. This view has been taken despite the fact that the Supreme Court’s decision in Eastend Paper Industries was cited before the Bench. Since paint is not used as a packing material and it is only used for marking on the wooden drums, which is a packing material, the ratio of the decision of Parle Product is clearly applicable and hence there is a need for making a reference to the High Court on this very ground alone. He also pointed out that there is no requirement for marking the drums for Central Excise purposes as per the relaxation granted in the trade notice referred to above.
4. After hearing both the sides, we are to observe that the decision in the case of Parle Products was taken during the period, when, based on a decision of the South Regional Bench in the case of Ponds (India) Ltd., we were accepting the view that packaging materials referred to in Rule 57A should per se be identifiable as such materials and raw materials for making packing materials, which are capable of varied uses, cannot be construed as packaging materials. In that view, we had, no doubt, held that printing ink, which per se is not a packaging material, cannot be allowed Modvat benefit, since it is used only for printing of the foils to prepare a packaging material; but this view based on the decision of the South Regional Bench, in the case of Ponds (India) Ltd., has been negatived by the Madras High Court on the reference made by Ponds (India) Ltd. – reported in 1993 (63) E.L.T. 3 (Mad.). In that case of Ponds (India) Ltd., plastic granules bought in by Ponds (India) Ltd. were denied Modvat Credit benefit on the ground that they are not packaging materials. They were using these granules in the manufacture of plastic jars, which are exempted and hence such plastic granules were held to be used in or in relation to the manufacture of the final products namely cosmetics and in that view, Modvat Credit was disallowed by the South Regional Bench. Subsequently the Madras High Court, on a Reference, held that Modvat Credit is admissible even for materials, which are used for making packaging materials such as jars/containers. The Madras High Court have taken into account the various case laws including the decisions of the Supreme Court. In view of the aforesaid decision of the Madras High Court on reference on this point of law, the position is now settled by the decision of the Madras High court. Based on the decision of the Madras High Court in the above case of Ponds (India) Ltd., the Larger Bench in the case of Aswin Vanaspati Industries allowed Modvat Credit in respect of tin plates used in the manufacture of metal containers, treating such tin plates as a packaging material. In the circumstances, the position of law is now clear and we are not inclined to make a reference as pleaded by the Collector in view of the fact that there is a direct decision of the Madras High Court in the case of Ponds (India) Ltd. referred to above on this point of law and this decision has also been adopted by the Larger Bench. Reference is called for only, when there is no authoritative pronouncement by the High Court available on the specific point of law. There are no contra judgments of High Courts on this issue.
5. As regards the relaxation granted for Rule 51 in respect of wires and cables we are to observe that irrespective of whether a relaxation is given or not, Rule 51 contemplates marking on the excisable product on the outer packings. Hence this is the normal statutory requirement to be complied with in respect of excisable goods manufactured. Moreover, in this case, the customers have specifically demanded such markings, without which they will not accept the goods. Hence there is no wrong appreciation of the factual position as pleaded by the Collector. The Reference Application is therefore dismissed.