1998 (9) TMI 276 - AT - Central Excise

Appeal Granted: Modvat Credit Allowed for Metal Containers

The Tribunal allowed the appeal, setting aside the Order-in-Original that denied Modvat credit for Metal Containers used in receiving calcium carbide ... Modvat - Packing material Issues: Appeal against Order-in-Original denying Modvat credit for Metal Containers; Interpretation of Modvat credit rules.In the present case, the appellant challenged the Order-in-Original denying them Modvat credit for Metal Containers used in receiving their input, calcium carbide. The appellant argued that the adjudicating authority erred in relying on a specific Board instruction and referred to a previous Order-in-Appeal and a Tribunal judgment supporting their position. After considering both sides' submissions and reviewing the case records, the Tribunal found that Modvat credit is taken based on duty paid on inputs, which includes the value of packing. Citing a previous Tribunal decision, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order.Editor's Comments:The Excise Law Times highlighted conflicting decisions by different CEGAT benches regarding duty on discarded packing material used for Modvatable inputs. The West Regional Bench held that such material is not liable to duty upon clearance, while the South Regional Bench initially ruled otherwise. However, the South Regional Bench later aligned with the West Regional Bench's decision, stating that duty is not demandable on discarded packing material used for Modvat inputs. Additionally, the Central Board of Excise and Customs issued a circular clarifying the non-demandability of duty on packing material used for Modvat inputs when cleared from the manufacturing factory.