G.M. ENTERPRISES Vs. CCE

JUDGEMENT

(1.) The appellant is a job worker for Gillete India Ltd. It receives parts from Gillete India Ltd. and assembles razors out of them. Those razors are subject to excise duty. The razors are packed along with free supply (from Gillette) blades by blister packing. While paying duty on razors, the appellant claimed CENVAT credit in respect of duty paid on the free supply blades (which are packed along with the razors). Under the orders impugned in these appeals. Central Excise authorities held that no credit was available in respect of free supply blades, inasmuch as such blades are not inputs going into the manufacture of razors under assessment. It was also rioted that blades in question are free supply (promotional) items and their value is not included in the assessable value of the razors under assessment. The lower authorities were following the order of this Tribunal in the case of another job worker in Gillette India, namely, G.S. Enterprise , while passing the impugned order. The Commissioner (Appeals) has also noted that the said order of the Tribunal has been confirmed by the Apex Court 2003 (151) ELT page A 297.

(2.) The contention of the appellant in the present appeals is that the earlier order of the Tribunal is not applicable to the present case, inasmuch as that order was in regard to Modvat credit and the present dispute is in regard to CENVAT Credit. It is being pointed out that definition of 'input' under CENVAT Credit Rules, 2001 specifically includes 'accessories of the final products cleared along with the final product', while, under the earlier Rules, accessories had not been specified. A factual difference is also being relied upon i.e. in the present case, free supply blades are compatible with the razors under assessment, while free supply blades in the case of G.S. Enterprises were not compatible with the razors under assessment.

(3.) We have perused the records and have heard both sides. We have also been shown samples of the razor packings under assessment. They are marketed under names like "NEW SAVAGE SAFETY RAZOR CLICK -ACTION RAZOR WITH BALANCE HADLE", "NEW WILKINSON SWORD PREMIUM METAL HEAD FOR SAFER CLOSER SHAVES"; "7 O' CLOCK - PERMASHARP STAINLESS"; and "NEW WILKINSON SWORD CLICK RAZOR" internationally designed for closer shave". As already noted, these razors are blister packed along with blades. About the free supply blades, the packs state 'FREE 2 SAVAGE BLADES', 'FREE 2 WILKINSON SWORD Premium Blades', 'FREE 5 BLADES WORTH Rs. 23.50', 'FREE 1 WILKINSON STAINLESS BLADE'. It is, thus, clear from the packings that the items under sale at the declared MRPs are safety razors and blades are under "free" supply. It is noted that in respect of one particular packing of plastic razor, the MRP of the razor is Rs. 23.50, which is the same as the price of 5 free supply blades. Thus, in respect of this packing, as a matter of fact, no duty will be payable on the razor manufactured by the assessee once the credit of duty in respect of the free supply blades is given as Cenvat credit. Clearly, there is no value addition by the input (blades) so as to satisfy the requirement of Value Added Tax. In the tax relief claimed on the input accessory, effectively makes the newly manufactured item, (razors) tax free.