Decided on September 25,1991



K. Sankararaman, Member (T) - (1.) APPEAL No. E-96/91 is posted for hearing today, the corresponding Stay Petition having already been disposed of by rejecting the prayer therein for stay of operation of the impugned order-in-appeal dated 20-2-991 passed by the Collector of Central Excise (APPEALs), Calcutta. There is also a Cross Objection (C.O. No. 44/91) filed by the respondents IDL Chemicals Limited. On a perusal of the appeal and the Cross Objection, we find that against a similar Order-in-APPEAL dated 15-2-1991, the same appellant Collector has filed another appeal, which has been registered under APPEAL No. E-98/91. That appeal has not been listed for hearing today. However, since the issue involved in the appeal posted for hearing today completely overlaps the issues canvassed and agitated therein, we have decided to take up all these matters for simultaneous hearing and disposal.
(2.) Shri M.N. Biswas, learned Senior Departmental Representative appeared for the appellant Collector. He referred to the arguments contained in the appeal and adopted the reasoning therein. He clarified that the modvat credit in the present case which has been claimed by the respondents relates to the duty paid on LDPE/HDPE granules received by the respondents which are converted into blow moulded tubes and lay flat tubings. The respondents use such products for packaging the slurry explosives. Though their case is that the tubes and lay flat tubings are forming part and parcel of the explosives and also get blasted along with the explosives themselves during use, it does not take them away from the identity of packagaing materials. Under the modvat provision, only packaging materials themselves are eligible for the credit and not raw materials thereof, which the granules are. He, therefore, supported the appeal and pleaded that the impugned order may be set aside. On the point regarding the decision of the Collector (Appeals) about the Assistant Collector's order being a nullity in view of his earlier decision to the contrary which had not been got reversed by following proper remedies prescribed under Section 35E of the Central Excises and Salt Act, 1944, Shri Biswas stated that he would require clarification from the Collector. Shri Jatin Ghosh, learned Counsel, assisted by Shri S.N. Sinha Mahapatra, learned Counsel appeared for the respondents. He started his arguments with the main observation that the appeal not having challenged that part of the impugned Order-in-Appeal about the lack of jurisdiction on the part of the Assistant Collector to revise his own earlier decision, the Order-in-Appeal should stand. He added that on merits also they have a very strong case. The Collector (Appeals) had visited the factory of the respondents and seen the process of manufacture of the slurry explosives and also their actual use. He had taken note of what he has observed in this regard and given his reasoned finding. The contention of the Department that the plastic tubes and lay flat tubings are only packaging materials, is not based on a correct appreciation of the factual position. These are not packaging materials any more than the tissue paper inside which the tobacco of a cigarette is wrapped or the gelatine capsule in which medicines are packed, are packaging materials. He also gave another analogy of ice-cream being supplied in edible cones where the cone is treated as part and parcel of the ice-cream and gets consumed along with that.
(3.) ON the question of applicability of the relevant provisions of the Modvat Rules, the learned counsel submitted that they had given proper declaration under Rule 57G in respect of the plastic granules as a raw material and the lay flat tubings/blow moulded tubes as intermediate product and slurry explosives as final product. Even if the product arising at the intermediate stage happened to be exempted, the position is well covered by the provisions of Rule 57D.;

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