By TIOL News Service

CHENNAI, MAY 03, 2016: THE appellant assessee is a manufacturer of moulded plastic furniture and material handling crates falling under Chapter Sub-Heading 9401.00/9403.00 and 3923.90 of the Central Excise Tariff Act, 1985. The officers of the department on a surprise visit found out that at request of the dealers, the packing materials namely HDPE Woven Sacks were sent along with finished products in loose condition to enable them to load more materials per truck thereby reducing the cost of freight per piece of the product. The appellant was however, issued a Show Cause Notice denying CENVAT Credit. The Tribunal also held that the assessee is not eligible for credit. The appellant is before the High Court challenging the order of the Tribunal.

The High Court held:

+ The object of granting CENVAT credit is to ensure a single incidence of tax of the final product. The very purpose of the value added tax system is only to ensure this and to avoid incidence of tax more than once. The Tribunal has found that there is a mention about the packing material in fine print in the invoices. But, merely because it was found in a small print, the Tribunal interfered with a finding of fact recorded by the Commissioner of Appeals.

+ There is no dispute about the fact that the final products were cleared along with the packing material in this case. The surprise inspection did not reveal that the packing materials were recalled and again made use of as sought to be contended by the Standing Counsel. An invention of this nature across the bar cannot improve the case of the Revenue.

+ The appeal is allowed and the order of Tribunal is set aside.

(See 2016-TIOL-861-HC-MAD-CX)