UNION OF INDIA Vs. KWALITY BISCUITS LTD.

JUDGEMENT

(1.) The revenue has filed this appeal, challenging the order dated 15th December 2005 made in final order No. 2080/2005 [2006 (205) E.L.T. 669 (Tri. - Bang.)] by the Customs and Excise Appellate Tribunal, Bangalore, raising the following substantial questions of law.

(2.) The respondent is engaged in the manufacture of Biscuits and it claimed MODVAT credit with regard to Liquid Adhesives, BOPP Tapes and such other materials used as secondary packing for the said goods, to an extent of Rs. 1,74,934/- on the ground that the said goods are used as secondary packing material and the value of the same is included in the value of the Biscuits. The appellant issued show cause notices to the respondent on the ground that it could not have availed of the said credit under the provisions of Rule 57A of the Central Excise Rules, 1944, in response to which, the contention of the respondent was that the said materials were used for selling the cartons in which the Biscuits were packed and hence, it was entitled to avail MODVAT credit. The Deputy Commissioner, after hearing, passed an order, stating that, the said goods were not part of the secondary packing material and that the deduction claimed for the said material as inputs could not be allowed under Rule 57A of the said Rules. Accordingly he disallowed the credit to an extent of Rs. 1,74,934/-. Against the order of the Deputy Commissioner, an appeal was preferred by the assessee before the Commissioner, which authority confirmed the order of the Deputy Commissioner. Being aggrieved by the said order, the respondent preferred the appeal before the Tribunal. The Tribunal, however, reversed the order of the Commissioner and granted the relief to the respondent. The said order is in challenge in this appeal, raising the aforesaid substantial questions of law.

(3.) We have heard learned counsel for the appellant and the learned counsel for the respondent.