Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2296

Credit eligibility of duty paid on plastic granules used for making container for packing final products.

Case:-  COMMR. OF C. EX., MUMBAI-I VERSUS TAINWALA CHEMICAL & PLASTICS (I) LTD.
 
Citation:- 2011 (274) E.L.T. 357 (Tri. - Mumbai)
  
Brief facts:-Briefly stated facts of the case are that the respondent is engaged in the manufacture of wet detergent tissues falling under Chapter Heading 3402.30 of Central Excise Tariff Act, 1985. The respondent took MODVAT credit on duty paid on two of its inputs namely high density polyethelene powder and homopolymer crude polypropylene falling under Chapter 39 used in the manufacture of plastic containers. The allegation of the department is that the respondent did not file a proper declaration as required under Rule 57G(2) of the Central Excise Rules, 1944 and the respondent cleared the inputs to the job workers without obtaining permission from the concerned authorities. Accordingly, proceedings were initiated against them and the lower adjudicating authority confirmed the demand of Rs. 35,040/- and also imposed a penalty of Rs. 1,000/- under Rule 173Q under Central Excise Rules, 1944. The respondent challenged the same before the Commissioner (Appeals). The Commissioner (Appeals) allowed the appeal and set aside the lower adjudicating authority’s order. Aggrieved by the order, the Revenue filed an appeal before this Tribunal. The Tribunal vide Order No. C-II/1165/WZB/2001 dated 26-4-2001 dismissed the Revenue’s appeal on the ground that the mandatory words ”not legal and proper” were omitted in the authorization signed by the Collector in terms of Section 35B of the Central Excise Act, 1944. The department challenged the same vide Writ Petition No. 35 of 2002 and the Hon’ble High Court of Bombay has remanded the matter back to this Tribunal.
 
 
Appellant’s contentions:-The learned JDR produced a copy of the relevant ”Note Sheet” wherein the expression ”not legal and proper” is appearing. The learned JDR further submitted that they did not dispute the applicability of the decision of Hon’ble High Court of Madras in case of Ponds (India) Ltd. v. Collector of Central Excise - 1993 (63) E.L.T 3 (Mad.). Their grievance is that in the declaration the respondent did not disclose the final product i.e. container and the respondent did not take permission for removing the goods to the job workers under Rule 57 of erstwhile Central Excise Rules, 1944.
 
 
Respondent’s contentions:- The contention of the respondent is that the respondent’s final products are not plastic containers but wet detergent tissue papers which are clearly shown as final products in the Modvat declaration by the respondent as required under Rule 57G. In the manufacture of final products and while using packaging raw material namely polypropylene plastic containers emerges at intermediate stage as an intermediate product. It is not in dispute that these plastic containers are intermediate product and not final products. The learned Counsel further submitted that credit of duty paid on plastic granules used for making container for packing final products is admissible under Rule 57A. In support of their contention they placed reliance on the decision of Ponds (India) Ltd. (supra). They also placed reliance on the decision in the case of CCE, Bangalore v. Vijaya Seamless Containers Pvt. Ltd. - 2001 (135) E.L.T 107 (Tri. - Bang.).
 
Reasoning of judgment:- From the Note Sheet produced by the learned SDR it was found that the expression ”not legal and correct” forms part of the said note sheet. Therefore, the appeal cannot be dismissed on this count. Accordingly, Tribunal proceed to decide the case on its merits. The allegation of the department is that the respondent did not disclose the final products and permission was not obtained by the respondent for removing the goods to the job workers. From the perusal of para 3 of the order-in-appeal, it was found that the Collector (Appeals) has found that ”in the definition the high density Polyethelene powder and homopolymer crude polypropylene were declared as inputs in the final product shown as detergent paper.” The learned SDR pointed out that they had not declared the final product i.e. the container in the declaration under Rule 57G. In the case of Ponds (India) Ltd. (supra) the Hon’ble High Court held that the plastic container would be treated as intermediate products and in case the duty is payable on the final products then modvat credit on the inputs used by them for final product cannot be denied. The above decision has been relied on in the Tribunal’s decision in the case of Commr of Cus. & CCE, Mumbai-III v. Polyolefins Industries Ltd. - 2001 (138) E.L.T 567 (Tri.-Mumbai) and Vijaya Seamless Containers Pvt. Ltd. (supra). It was also found that it is no one’s case that input in the case sent for job work were not received back. It is also no one’s case that the final product were not cleared on payment of duty. Therefore, Tribunal did not find any merit in the appeal filed by the Revenue. Accordingly, the Commissioner (Appeals) order is upheld and the appeal is dismissed.
 
 
Decision:- Appeal dismissed.
 
 
 Comment:- The crux of the case is that credit of duty paid on inputs that are used in making packaging materials is admissible as far as the final product is correctly declared in Cenvat declaration and final product is cleared on payment of duty. The fact that inputs were cleared to job workers without permission from concerned authority cannot be made a ground to deny rightly admissible cenvat credit when it is no one’s case that input sent for job work was not received back or that final product was not cleared on payment of duty. Therefore, credit is admissible if substantial conditions for availment are satisfied.
 
Prepared by: Monika Tak
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com