TaxTMI 
TaxTMI 
1994 (12) TMI 193
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....00/-. The duty has been demanded by holding that they were not eligible for Modvat Credit in respect of Duplex Board claimed by them as an input in relation to the manufacture of their final product, Torches. The item Duplex Board was held to be not a packing material for torches. It would become a packing material only after it is converted into printed cartons. Torch cannot be packed in a Duplex Board. The amount of credit availed by them was held to be recoverable from them under the provisions of Rule 57-I read with proviso to Section 11A of the Central Excises and Salt Act, 1944. It was observed by the Addl. Collector that there was no question of time bar as the assessments were provisional till August, 1990. There is a finding of bla....
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....ed their earlier judgment in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer. The larger Bench resolved the conflict in views between the South Regional on the one hand and the East and West Regional Benches on the other on the scope of the term "Packaging material" for determining Modvat eligibility of materials like Tin Plates, Duplex Board etc. used for making containers like Tins, cartons which are then used for packaging the final products. It was held by the larger Bench that tin sheets used for making tin containers, which were exempt from duty being manufactured without the aid of power are eligible for Modvat credit, the tin containers going into the packing of vanaspati. The tin containers were held to be covere....
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....hat the inputs dealt with in that case namely, Tin Plates and Sheets were themselves Packaging materials for the purpose of grant of Modvat benefit under Rule 57A. On the analogy of the said decision, Duplex Board which is used first for producing cartons which are then used for packing torches are themselves treatable as packaging materials for the purpose of Rule 57A. In this connection we find that the said item "Packaging materials" has also been referred to in the excluded category under the explanation clause in Rule 57A viz. "packaging materials in respect of which any exemption to the extent of duty payable on the value of the packaging material in respect of any exemption to the extent of duty payable on the value of the packaging ....
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.... `Rule 57A allows Modvat credit for packaging materials and not on raw materials for making such packaging materials. Packaging materials are ready to use articles such as containers, boxes, cartons, bottles etc. Therefore modvat credit will be admissible for the duty paid on such ready to use packaging materials but not on the raw materials such as plastic granules, steel, steel sheets/strips, etc. used for making packaging materials. Raw materials like plastic granules or steel sheets/strips are general purpose articles which can be put to various uses, one of which is making of packaging materials. These raw materials by themselves are not recognisable as packaging materials.' As already stated, we are unable to agree with this inter....
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.... of sub-section (3) appears to us to have been deliberately couched in a language which brings within its sweep all kinds of ready-made receptacles or other materials which are intended or by slight alteration or fabrication can be converted into such receptacles for the purpose of storage of goods provided the use to which those receptacles are ultimately put by the dealer is not to sell them as independent articles of sale as such, but as receptacles for storage or transportation of goods contained therein for sale. It is not necessary that those materials should be capable of being used directly for purposes of packing. It is quite enough if the intention of the dealers is to acquire them in order that they may be used for packing of goo....
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....tion whether it is packaging material or not. This entry appears in the inclusive definition of the expression "input" in the Explanation clause under the said Rule. The expression "input" in turn has been used therein to refer to "goods used in or in relation to the manufacture of final products". Hence one has to only see whether the goods in question are used in or in relation to the manufacture of the final product and the question whether such use is as packaging material is really irrelevant. "Obviously the entry (Paints and) packaging materials has been provided in the Rule to make the position clear about such goods used as packaging material also being eligible for Modvat benefit." But it has paradoxically led to problems of the pr....