FLEX INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE adjudicating and first appellate authorities have denied Modvat credit of countervailing duty of Rs. 80,228/ - to the appellants in respect of Colour Proofing Film (Tariff sub -heading No. 3702.90), which was used in April, 1998 in connection with the manufacture of Gravure Printing Cylinders (GPC, in short). The appellants are manufacturers, inter alia, of printed/unprinted articles of plastics in roll form (Tariff sub -heading No. 3920.38).

(2.) IN the present appeal, it is contended that the finding recorded by the lower appellate authority is beyond the scope of the allegation made in the show -cause notice. The show -cause notice alleged that the use of the Colour Proofing Film was a post -manufacturing activity, but the Commissioner (Appeals) has held that the film was used before the start of manufacture of GPC. It has also been contended that the activity of taking proof of design by using the Colour Proofing Film was integrally connected with the ultimate manufacture of the final product and that, without such activity, it was not possible at all to manufacture the final product ordered by the customer. In this connection, reliance has been placed on the Supreme Court's decision in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. STO [1997 (91) E.L.T. 34].

(3.) I have carefully examined the submissions. The manner of use of the Colour Proofing Film in connection with the manufacture of GPC has already been stated and the same is not in dispute. The Company's representative has given an amplification of the process. He has stated that, if a customer requires a multi -coloured design for printing on their packing material, they will place order with the appellants for so many GPCs as there are different colour elements in the required design. This is because proofing films of different colours cannot be used for the manufacture of one GPC. GPCs of different colour designs can be manufactured by using only different Colour Proofing Films and the ultimate printing of the multi -colour design on the customer's packing material would be done by a combination of all the GPCs bearing different colour designs. It appears to me that the use of the Colour Proofing Films certainly an activity integrally connected with the manufacture of GPCs and the same should be held to be in relation to the manufacture of GPCs. The reliance placed by the appellants on the Supreme Court's decision in J.K. Cotton Spinning and Weaving Mills and the Larger Bench decision in Union Carbide India Ltd. is quite apposite. The impugned order cannot be sustained and the same is set aside. The appeal is allowed.