Modvat credit on HDPE packing bags was admissible for detergent manufacture, with penalty and denial of credit rejected.

Modvat credit on HDPE bags used to pack detergent manufactured by a job worker was treated as admissible because earlier orders in the same assessee's case had already recognised such bags as eligible inputs. The Tribunal noted that the cost of the bags formed part of the assessable value of the detergents, and the same reasoning applied to the present dispute. On that basis, the denial of credit and the associated penalty were not sustained, and the Revenue's challenge failed.

---

---

Issues: Whether Modvat credit was admissible on HDPE bags used for packing detergent manufactured as a job worker, and whether the denial of credit and penalty could be sustained.

Analysis: The lower appellate order had followed earlier orders in the same assessee's case holding that Modvat credit was admissible on HDPE bags. The earlier Tribunal order on the same issue had held that HDPE bags were eligible inputs and that their cost formed part of the assessable value of the detergents. As the same reasoning applied to the present dispute, no legal infirmity was found in the impugned order.

Conclusion: Modvat credit on HDPE bags was held admissible and the Revenue's appeal was rejected.

---