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of <h1>Tribunal overturns order on Modvat credit for jute bags, citing excise rules & previous court decision.</h1> The Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order that required the appellant to reverse the Modvat credit on jute bags. The ... Cenvat/Modvat Issues:Challenge against order-in-appeal regarding admissibility of credit on duty paid for jute bags used as packing material for soda ash.Analysis:The appeal was against the order-in-appeal by the Commissioner of Central Excise (Appeals) concerning the admissibility of duty credit on jute bags used for packing soda ash. The Commissioner held that the appellants failed to maintain accounts of jute bags, thus making the credit on duty paid for jute bags inadmissible. However, the adjudicating authority acknowledged that duty on jute bags was not payable upon clearance from the factory. The authority referred to a previous judgment where it was established that the packaging material, like empty drums, cannot be considered as goods cleared as such. Despite this, the Commissioner (Appeals) reversed the order, requiring the appellant to reverse the Modvat credit on jute bags.The appellants contested the Commissioner (Appeals) order, arguing that the duty paid was on soda ash, inclusive of the value of jute bags, and not specifically on the bags themselves. The duty payment document clearly indicated payment for soda ash, not jute bags. Therefore, the clearance of jute bags should not be considered as clearance of inputs to trigger the relevant excise rules. As the jute bags were not declared or used as inputs, the rule in question did not apply. The Tribunal's previous judgment in a similar case was cited, which was upheld by the Supreme Court, supporting the appellant's position.Consequently, the Tribunal found the Commissioner (Appeals) order lacking in logic and without basis. The duty paid was specifically on soda ash, and the jute bags were merely packaging material, not declared or used as inputs. Relying on the previous Tribunal judgment and the Supreme Court's confirmation, the appeal was allowed, and the impugned order was set aside.
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