FLEX ENGINEERING LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) Brief facts of the case, inter alia, are that the applicant M/s. Flex Engineering Limited manufactures packaging machines of various types of classifiable under Chapter 84 of the Central Excise Tariff. It is the case of the applicant that it was availing the benefit of Modvat credit oh laminated plastic films and poly papers. Show cause notices were issued to the applicant with regard to denying the benefit on the above inputs on the ground that they are used for the purpose of testing of their final product 'packaging machines' and is not an input as defined under Rule 52A of the Central Excise Rules. The adjudicating authority denied the benefit or Modvat credit. The applicant preferred an appeal, which too was rejected. The applicant filed appeals before the Customs, Excise and Gold (Control) Appellate Tribunal. Following the earlier order in the case of the same applicant the Tribunal, on 17th April, 1998 [1998 (102) E.L.T. 387 (Tri.)], upheld the order passed by the Commissioner (Appeals). In the meantime, in regard to the earlier order Court, on 1st July, 1997, had directed the Tribunal to refer questions of law to this Court for opinion. Accordingly, the following questions of law have been referred to this Court for opinion:

(2.) "Whether such use of material in testing in view of the purposes mentioned above, could be said to be 'use in the manufacture of or use in relation to the manufacture of the final products viz., Machines as assembled?"

(3.) It has been contended by Mr. Mathur, learned Counsel for the applicant that there are no testing machines and the laminated plastic films and poly papers are not used in any testing machines. On the other hand, laminated plastic films and poly papers are used by the applicant in the process of manufacture of filling and sealing machines, which is also evident from Order No. Ref/42/96-NB passed by the Tribunal on the reference application filed by the applicant [1996 (86) E.L.T. 660 (Tri.)].