AI Drafter 
TaxTMI 
TaxTMI 
1993 (11) TMI 127
X X X X Extracts X X X X
X X X X Extracts X X X X
....he goods on which they have taken modvat credit as packaging material used in or in relation to the manufacture of their product, Vanaspati is used by them to close the flaps of the corrugated cardboard boxes in which the pouches containing Vanaspati are packed. The Assistant Collector had wrongly held that only the pouches are packing material and not the cardboard boxes. Hence, cellophane tapes were held to be not packaging material. The Collector (Appeals) upheld the Assistant Collector's order on the reasoning that cardboard boxes are used only for safe transportation of the goods and hence cellophane tapes used for sealing such cardboard boxes cannot be treated as packaging material. It is contended in the Appeal that the expression "p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lector of Central Excise (2) 1993 (68) E.L.T. 258 - Collector of Central Excise v. Swaraj Mazda In the former case, Modvat Credit was held to be admissible by this Regional Bench in respect of certain varieties of Paper and Board etc. used as packaging material in relation to the manufacture of biscuits. In the latter case, Mats supplied in motor vehicles have been held to be inputs eligible for Modvat. Shri Gupta pleaded that their Appeal be allowed as their case is on even stronger ground. 3. Shri N.K. Mandal, learned Departmental Representative replied to the arguments advanced on behalf of the appellants. He referred to the decision of the West Regional Bench in Parle Products (P) Ltd. v. Collector of Central Excise, 1992 (57) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated boxes have missed the crucial fact that the final product in question is not Vanaspati as it is produced in the plant, or even after it is packed in the plastic pouch but the product that is cleared from the factory in the packed condition. It is cleared from the factory in a marketable condition only after being packed in the cardboard boxes, duly sealed. In that view of the matter, the cellophane adhesive tapes are a component in the final product. Such a view would be consistent with the provisions of Section 2(f) of the Central Excises and Salt Act, 1944 defining manufacture as including any process incidental or ancillary to the completion of a manufactured product. In this context, the Supreme Court decisions in the following cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Packing and Wrapping Paper used for packing or wrapping of other paper was held to be eligible to be treated as utilised in the manufacture of such paper. It was observed that anything required to make the goods marketable must form part of the manufacture and any raw material or any material used for the same would be component part for the end product. In Star Paper Mills case, Paper Cone on which paper was wound for being cleared as Paper Rolls was treated as used in the manufacture of such paper for the benefit of Notification 201/79. Viewed in the context of these judgments by the Supreme Court, the case for grant of Modvat Credit for cellophane adhesive tapes used for sealing the cardboard boxes is quite secure, particularly as th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o go along with that approach, particularly when the manner of use of the adhesive paper in the present case points to such use in packaging. It was held by the Special Bench 'D' in Kissan Products Ltd. v. Collector of Central Excise that Coproco adhesive used in fixing the label on the unit containers meant to contain P.P. foods is eligible for the benefit of Notification 201/79, as used in the manufacture of such P.P. foods. It is relevant to note that the expression "packaging material" has only been mentioned in the Explanation under Rule 57A as one of the items included in the expression "inputs". It is illustrative in scope. The term "input" actually refers to goods used in or in relation to the manufacture of the final product. Hence....