Kaytis Food Preservers vs Collector Of Central Excise on 18 June, 1996

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Customs, Excise and Gold Tribunal – Delhi
Kaytis Food Preservers vs Collector Of Central Excise on 18 June, 1996
Equivalent citations: 1996 (86) ELT 526 Tri Del

ORDER

Shiben K. Dhar, Member (T)

1. The issue that calls for determination in both these appeals which were heard together is admissibility or otherwise of Modvat Credit on flattened metal containers brought into the factory for use in packing food products.

2. Arguing for the Appellants the ld. Advocate submits that in accordance with trade practice flattened metal containers which have discharged their duty liability as metal containers are brought into the factory. In the factory top and bottom lids are put on the metal containers which are then called reform containers. The credit has been denied on the ground that there was a Notification No. 181/88 dated 13-5-1988 which exempted such reformed Metal containers and therefore in terms of 57-C the credit was not admissible.

3. The Ld. Advocate submits that the duty has been paid on flattened metal containers and they are merely reformed in their factory. In fact similar dispute had arisen in the past when C.B.E.C. clarified the matter vide their circular No. 267/56/90/CEX, dated 23-12-1992. In this circular CBEC over ruled their earlier clarification, dated 13-2-1990 according to which packing material must be received in the factory in ready to use condition to become eligible for credit, and held that flattened metal containers having discharged duty as metal containers and brought to the users factory in that condition for ease of transportation can be regarded as direct inputs and Modvat credit can be allowed on such metal containers, provided reformation taken place within the factory where the food products are manufactured.

4. The Ld. Counsel also cited in support of her contention in the case of Kaytis Food Preservers v. C.C.E., New Delhi reported in 1996 (12) E.L.T. 676 and A689/91-WRB, dated 3-9-1991.

5. The Ld. D.R. while reiterating the departmental arguments, submits that it is a covered case against them.

6. Considered. In case of Shehanki Processors vide order No. 686/91-WRB dated 3-9-1991, W.R.B. of this Tribunal has held that flattened containers directly go as inputs in the manufacture of the final product, apart from the fact that they are admissible for Modvat as packaging materials. In case of Kaytis Food Processors (supra), the appellants’ own case, Tribunal held that the object of exemption Notification is to exempt a product which is otherwise dutiable but the mere fact that an exemption has been issued would not convert a duty paid product into another dutiable product by a simple process of reforming.

7. This Tribunal, therefore, held that the credit of duty on flattened metal containers used for filling food products is not to be denied on the ground that the containers are reformed in the appellants factory and are exempted from duty.

8. Following the ratio of these decisions we set aside the impugned orders and allow both these appeals.

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