Polyprolylene & Polyethylene Strips Deemed Eligible Inputs for Modvat Credit

COMMISSIONER OF C. EX., PUNE-I Versus TETRA PAK CONVERTING (I) LTD.

COMMISSIONER OF C. EX., PUNE-I Versus TETRA PAK CONVERTING (I) LTD. - 2007 (218) E.L.T. 494 (Bom.) Issues:
Whether PPP, PEP, Pull Tab strips are inputs for Modvat credit in the manufacture of finished product.

Analysis:
The applicant, a manufacturer of aseptic packaging, uses imported strips of polyprolylene or polyethylene along with the packaging made of aluminium plastic with paper and aluminium. The packaging is sold to customers in rolls, filled with liquid like fruit juice or milk, and sealed by inserting the strips of polyprolylene or polyethylene. The revenue contended that since the strips were not used in the manufacture of packaging and supplied separately, Modvat credit was not eligible. However, the Tribunal found that the packaging rolls could not be made into containers without the strips, making them essential for the final product. Citing legal precedents, the Tribunal held that the strips were indeed inputs for the finished product under Rule 57A(4) of the Central Excise Rules, 1944.

The Tribunal's decision was based on factual findings, not warranting a case statement. Consequently, the revenue's application was rejected, with no costs awarded.