Decided on December 30,1991



S. Kalyanam, Member (J) - (1.) THIS appeal is filed by the Department and is directed against the order of the Collector of Central Excise (Appeals), Madras dated 17 -5 -1988 giving the respondents herein the benefit of Modvat credit in respect of "Surface Protection Film" used as an input in the manufacture of High finished stainless steel sheets. Shri R. Subramaniam, Id. D.R. adopted the reasoning of the original authority and contended that the end -product could be manufactured without the protective film layer.
(2.) SHRI Venkataraman, Id. Counsel for the respondents submitted that without the protective layer the finished product would not emerge at all or could not be made use of in the market and further submitted that even the cost of the same is also included in the assessable value and without this surface protection film it would not be possible to manufacture the goods of this quality.
(3.) WE have carefully considered the submissions made before us. The original authority has proceeded on the basis that these are in the nature of packing material, the value of which has not been included in the assessable value and, therefore, the Modvat credit would not be applicable in terms of Rule 57A. The fact would appear to be that the value has also been included. The lower appellate authority has held that the plastic film is more akin to painting of the sheets than packing and, therefore, would be eligible for Modvat credit. We were explained by the learned counsel that high finished stainless steel would not serve any purpose without this protective layer coating. We also take note of the fact that even at the manufacturing stage this protective layer is used on the sheets and the cost of it is also included in the assessable value. We, therefore, in the facts and circumstances of the case, having regard to the use of the input in the sheets, hold that the same is eligible for Modvat credit. In this view of the matter we uphold the finding of the lower appellate authority and dismiss the appeal. V.P. Gulati, Member (T) I observe that the learned Appellant Collector has held that the value of the film which is in the nature of the packing material has not been included in the assessable value as the goods are charged to specific rate of duty. In my view the plea has to be considered differently. In the present case there is no plea from the Revenue that the sheets are at all marketed by the respondents without the film coated on to the sheet. There is also no dispute that the sheets of the type manufactured require a coating of the film as affixed as pleaded by the respondents. The question, therefore, to be considered is whether the use in such circumstances could be considered to be in or in relation to the manufacture of the same. A film coated on to the sheets cannot be considered as a packing material as such. We have considered the scope of the term 'in or in relation' to the manufacture' in our judgment in the case of Addison Tools, reported in 1990 (48) E.L.T. 281 and relying on the judgment of the Hon'ble Supreme Court we have held that anything which would be used to render the goods marketable would be considered to be used in or in relation to the manufacture of finished product. Following the ratio of our decision in the case of Addison Tools, we hold that the respondents are eligible for the benefit of Modvat credit.;

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