CENVAT credit on transport crates upheld where packing cost formed part of assessable value and duty was paid.

Plastic crates used to transport finished goods were treated as admissible packing materials for CENVAT/MODVAT credit where their cost was included pro rata in the assessable value of the excisable goods and duty was discharged on that value. The Court noted that credit is allowable when containers or packing materials form part of the value of the final product, and the assessee's prior assessments had also accepted the claim. On that basis, the credit claim was upheld and the connected penalty could not survive; the Tribunal's order was sustained and the departmental appeal failed.

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Issues: Whether plastic crates used for transportation of finished goods and the cost of which was included in the assessable value entitled the assessee to CENVAT/MODVAT credit, and whether the connected penalty could survive.

Analysis: The plastic crates were used for safe transportation of the finished auto electric parts from the factory to the customers. Their cost was included on a pro-rata basis in the assessable value of the excisable goods on which duty was paid. The legal position, as noticed by the Court, was that credit is allowable on packing materials or containers when their cost forms part of the value of the final product. The assessee's own earlier assessments had also allowed such credit.

Conclusion: The assessee was entitled to the credit claimed, and the challenge to the allowance of credit and the related penalty failed.

Final Conclusion: The impugned order of the Tribunal was sustained and the department's appeal was dismissed.

Ratio Decidendi: Where containers or packing materials are used for transporting the finished goods and their cost is included in the assessable value on which duty is discharged, CENVAT/MODVAT credit is admissible.

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