2001 (8) TMI 1156 - AT - Central Excise

Tribunal allows Modvat credit for fruit-pulp beverages, clarifies rule interpretation

SRI SARVARAYA SUGARS LTD. Versus COMMISSIONER OF C. EX., VISAKHAPATNAM

SRI SARVARAYA SUGARS LTD. Versus COMMISSIONER OF C. EX., VISAKHAPATNAM - 2002 (149) E.L.T. 661 (Tri. - Chennai) Issues:1. Interpretation of Rule 57B(2)(iv) regarding Modvat credit eligibility for glass bottles used in manufacturing fruit-pulp beverages.2. Classification of glass bottles used for fruit-pulp beverages under Chapter Heading 2202.40.3. Application of the term 'aerated waters' to exclude Modvat credit for glass bottles used in manufacturing fruit-pulp beverages.Issue 1: Interpretation of Rule 57B(2)(iv)The case involved a dispute over the interpretation of Rule 57B(2)(iv) regarding the eligibility of Modvat credit for glass bottles used in manufacturing fruit-pulp beverages. The appellants argued that the exclusion of 'crates and glass bottles used for aerated water' did not apply to their product, which was fruit-pulp based drinks classified under Chapter Heading 2202.40. They contended that the authorities incorrectly applied the term 'aerated waters' to their product, leading to the denial of Modvat credit.Issue 2: Classification of glass bottlesThe appellants manufactured Maaza, a fruit-pulp beverage falling under Chapter Heading 2202.40. They highlighted that the bottles used for bottling the fruit pulp were eligible for Modvat credit until excluded by a specific notification. The appellants emphasized that their product was distinct from aerated waters, which are classified under a different heading in Chapter 2202. They argued that the authorities wrongly applied the exclusion to their product, which was not mentioned in the statute.Issue 3: Application of term 'aerated waters'The disagreement centered on whether the term 'aerated waters' could be extended to include fruit-pulp beverages for the purpose of Modvat credit eligibility. The authorities contended that since the crates were common for both aerated waters and fruit-pulp beverages, the Modvat credit should be rejected. However, the appellants rebutted this argument by pointing out that only bottles, not crates, were involved in their case. They highlighted that each bottle was labeled as 'Maaza Fruit pulp based juice,' distinguishing it from aerated water bottles.Judgment Analysis:The Tribunal held that the appellants had a strong prima facie case in their favor. It was noted that the exclusion under Rule 57B(2)(iv) specifically referred to 'crates and glass bottles used for aerated water.' Since the appellants' product fell under a different classification from aerated waters and was engraved on the bottles themselves, the Tribunal found no interchangeability between aerated water bottles and those used for fruit-pulp beverages. Consequently, the Tribunal accepted the appellants' argument that the exclusion did not apply to bottles used for fruit-pulp or fruit-juice based drinks. The Tribunal emphasized the specificity of the rule and rejected the authorities' broad interpretation to include products not mentioned in the rule. As a result, the impugned orders were set aside, and the appeals were allowed in favor of the appellants.This judgment clarifies the interpretation of Rule 57B(2)(iv) in the context of Modvat credit eligibility for glass bottles used in manufacturing fruit-pulp beverages, emphasizing the importance of specific statutory language and classification distinctions in determining entitlement to such benefits.