Proforma credit on wrapping paper denied where packing was treated as post-manufacturing, not part of manufacture under Rule 56A.

Rule 56A of the Central Excise Rules, 1944 applied only to material, component parts or finished products brought into the factory for manufacture of excisable goods or for more convenient distribution of the finished product. Wrapping paper used to pack other paper varieties was not brought in for its own convenient distribution, but for packing goods after manufacture. Packing was treated as a post-manufacturing process, not an incidental or ancillary step in completing manufacture. The reference to packing cost in valuation under Section 4 did not change that position, because the issue was not double assessment of the same goods under the same tariff entry. Proforma credit was therefore not available.

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Issues: Whether wrapping paper used for packing other varieties of paper in the factory was eligible for proforma credit under Rule 56A of the Central Excise Rules, 1944.

Analysis: Rule 56A was held to apply to material, component parts, or finished products brought into the factory either for manufacture of excisable goods or for the more convenient distribution of the finished product itself. The wrapping paper in question was not brought in for its own convenient distribution, but for packing other varieties of paper. Packing was treated as a post-manufacturing process and not as a process incidental or ancillary to completion of manufacture of the wrapped goods. The reference to inclusion of packing cost in valuation under Section 4 did not alter the position, because the issue was not double assessment of the same goods under the same tariff entry.

Conclusion: The wrapping paper was not eligible for proforma credit under Rule 56A, and the Department's appeal succeeded.

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