Modvat credit on packing materials turns on assessable value evidence; limitation defence fails where no time bar applied.

For the period before a limitation provision was inserted in the relevant Modvat recovery rule, a demand for reversal of wrongly availed credit was not barred by time, so the limitation objection failed. Admissibility of Modvat credit on empty glass bottles used for packing aerated waters depended on whether the bottles' value was included in the assessable value of the final product. As the record was insufficient to decide that factual question, the credit issue was remanded for fresh adjudication by the original authority with opportunity to adduce evidence.

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Issues: (i) whether the demand for reversal of Modvat credit was barred by limitation; (ii) whether Modvat credit on empty glass bottles used for packing aerated waters was admissible on the facts of the case.

Issue (i): whether the demand for reversal of Modvat credit was barred by limitation.

Analysis: The period involved was prior to the insertion of a limitation period under the relevant rule governing recovery of wrongly availed credit. The settled position applied was that, for the period concerned, no time bar could be invoked where the rule then in force did not provide a limitation period for such demand.

Conclusion: The plea of limitation was rejected and the demand was held to be not time barred.

Issue (ii): whether Modvat credit on empty glass bottles used for packing aerated waters was admissible on the facts of the case.

Analysis: Admissibility of credit depended on whether the value of the empty glass bottles had been included in the assessable value of the final product. That question required examination of the evidence before the adjudicating authority and could not be conclusively answered on the record before the appellate authority. The matter was therefore required to be reconsidered afresh in de novo proceedings, with opportunity to adduce evidence.

Conclusion: The matter on admissibility of Modvat credit was remanded to the original authority for fresh decision.

Final Conclusion: The limitation objection failed, while the substantive Modvat credit issue was sent back for fresh adjudication on evidence, leaving the parties to contest that issue before the original authority.

Ratio Decidendi: Where admissibility of Modvat credit turns on whether the value of packing material formed part of the assessable value, the issue is factual and must be decided on evidence in fresh adjudication if the record is insufficient.

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