2004 (1) TMI 598

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....The appellants are manufacturers of footwears. They cleared their products in cardboard boxes (cartons). In each carton, they also enclosed a 'plastic carry bag' in multi-folded form. They cleared the goods, on payment of duty, to their dealer and the ultimate consumer who would buy the footwear from the retail dealer would carry it home by putting the footwear-in-carton in the plastic bag. This manner of use of the plastic bag has been forthrightly stated in the memorandum of appeal thus : "These carry bags were neatly folded and kept inside the box in which the pair of shoes were also kept so that at the ultimate sale point, the consumer is enabled to carry the box by putting the same inside the bag. In fact, the delivery of the articles ....

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....hicles. The DR, on the other hand, submits that the issue is already covered in favour of the department by the Tribunal's decision in Liberty Shoes Ltd. v. CCE, New Delhi [2001 (135) E.L.T. 1103], in which case similar 'carry bags' used for similar purpose during the period April to November, 1996 were held to be ineligible for input duty credit under Rule 57A. It is submitted that the said decision rendered by a 2-Member Bench of the Tribunal is binding on this Bench. 3. I have carefully considered the submissions. In the case cited by the DR, the assessee was engaged in the manufacture of footwears and was clearing the same along with 'carry bags' in cardboard boxes after including the cost of such bags in the assessable value of....

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....uch these are not used even indirectly much less directly for the packing of the footwears. The benefit of Notification No. 28/95-C.E., dated 29-6-95 relied upon by the appellants cannot be also extended to them. Under that notification the Modvat credit had been made eligible not only on those inputs which are used only directly but also indirectly in the manufacture of the final product. But such is not the position here. The carry bags are not being used as inputs directly or indirectly by the appellants in the manufacture of footwear. These bags are in fact utilized by the retailers at the time of the sale of the footwears to the consumers as they supply these bags to enable them to carry footwear cardboard box to home conveniently." ....