ORDER
G.R. Sharma, Member (T)
1. Revenue has filed this reference petition stating that a point of law arises out of the Tribunal’s final order No. A/171/98-NB, dated 16-3-1998 [1998 (102) E.L.T. 381 (Tribunal)] reading as “Whether an item which is specifically excluded from the category of input in Rule 57A, during a relevant period, would still be eligible for Modvat credit during that period i.e. March, 1994 to May, 1994.”
2. In the instant case, the Tribunal in para 7 had held that “We have considered the submissions. The appellants have contended that the authorities below have failed to appreciate their submissions relating to the scope of the exclusion Clause under Rule 57A in relation to HDPE bags and sacks. It is contended that there is no mention of HDPE bags in the said exclusion clause but it only talked of bags or sacks made of fabrics woven from strips or tapes of plastic. It was their contention that exclusion clause did not affect bags falling under Heading No. 39.23. Such bags would be outside the purview of the exclusion clause. The Madhya Pradesh High Court in Ralpack Well v. Union of India, 1990 (50) E.L.T. 201 (M.P.) had held that HDPE sacks/bags were classifiable under Heading No. 39.23 and under sub-heading 3923.90 and not Heading 63.01. It was their contention that the exclusion Clause (vi) was intended to deny Modvat credit only to sacks/bags made from fabrics classifiable under Heading No. 63.01 and not to others and that HDPE bags/sacks made from strip/tapes of plastics are not hit by the mischief of the exclusion, and the item presently under dispute do not come within the exclusion clause and Modvat facility was rightly taken by the appellants on the said items. This Tribunal held “We find that the appellants’ contention regarding eligibility for Modvat credit for HDPE bags/sacks is not in dispute after the decision in CCE v. Orissa Cements, 1994 (69) E.L.T. 357 (Tribunal). Following the said decision, we hold that HDPE bags used as packaging in the manufacture of cement are eligible for Modvat credit.”
3. Arguing the application for reference, Shri S. Srivastava, ld. JDR submits that the Tribunal had accepted the contention of the assessee that exclusion Clause (vi) was intended to deny Modvat credit only to sacks/bags made from fabrics classifiable under Heading No. 63.01 and not to others and that HDPE bags/sacks made from strip/tapes of plastics are not hit by the mischief of the exclusion clause, inasmuch as the exclusion Clause (vi) as quoted supra says of bags or sacks made out of fabrics woven from strips or tapes of plastics is wrong because HDPE is also a plastic material. He submits that the assessee in his above contention stating that bags/sacks made from strip/tapes of plastics are denied Modvat credit; that the bags/sacks made of fabrics/tapes of plastics are eligible to Modvat credit; that the contention of the assessee was incorrect and illogical only to justify their claim. Ld. JDR sub-mits that the Tribunal relied on the judgment of this Tribunal in the case of Orissa Cement [1994 (69) E.L.T. 357]. He submits that this Tribunal did not take into consideration that the period in that case was prior to 17-9-1990 while in the instant case the period is March, 1994 to May, 1994; that the exclusion clause came into effect from 17-9-1990. Ld. JDR submits that since the period in the present case is after 17-9-1990, HDPE bags were excluded from the purview of the eligibility of Modvat credit in view of the exclusion Clause (vi) to Rule 57A.
4. Shri Daya Sagar, ld. Consultant submits that the case was argued before the Tribunal and that the issue is now well settled by various decisions of this Tribunal and other forum.
5. We have heard the rival submissions. Having regard to the fact that the present case covers the period when the HDPE bags/sacks were specifically excluded from the list of inputs eligible for Modvat credit under Rule 57A. We, therefore allow reference application.
STATEMENT OF THE CASE
The respondents were issued two SCNs by the department asking them to explain why Modvat credit availed on HDPE bags/sacks should not be disallowed on the ground that the said items were ineligible inputs. The Asst. Commissioner in his Order-in-Original held that HDPE bags/sacks were not admissible inputs, and therefore no credit on the said items was permissible. Against this decision, the assessee filed an appeal before the Commissioner (Appeals) who confirmed the order of the Asst. Commissioner holding that HDPE bags/sacks were covered by the exclusion Clause (vi) to Rule 57A and therefore HDPE bags/sacks could not be considered as eligible inputs in terms of Rule 57A. The assessee filed an appeal before the Tribunal. This Tribunal in its judgment held that the Hon’ble M.P. High Court in Rajpack Well, 1990 (50) E.L.T. 201 (M.P.) had held that HDPE sacks/bags were classifiable under Heading No. 39.23 and under sub-heading 3923.90. It was contended by the assessee that the exclusion Clause (vi) was intended to deny Modvat credit only to sacks/bags made from fabrics classifiable under heading 63.01 and not to others and that HDPE bags/sacks made from strip/tapes of plastics are not hit by the mischief of the exclusion clause and the item presently under dispute do not come within the exclusion clause, therefore Modvat facility was rightly taken by the appellants on the said items. The Tribunal, therefore held that the contention of the appellants is not in dispute after the decision of this Tribunal in the case of Orissa Cement cited above. The Tribunal allowed the appeal of the assessee holding that the HDPE bags used as packaging in the manufacture of cement are eligible for Modvat credit. Having regard to the fact that there was an exclusion clause for HDPE bags/sacks during the relevant period, a point of law arises, the matter is, therefore referred to the Hon’ble Allahabad High Court to decide the issue.