K. Sankararaman, Member (T)

1. This Stay Petition and the connected appeal by M/s. Rasoi Ltd., Calcutta are against the order of the Collector of Central Excise (Appeals), Calcutta rejecting their appeal before him claiming the grant of Modvat benefit in respect of duty paid on tin plates/tin sheets used by them for making containers used for packing vegetable product. Their claim was that the manufacture of tin containers by using the tin plates/tin sheets is in relation to the manufacture of their final product viz. vegetable product. They were initially directed to deposit the amount of credit under Section 35F of the Central Excises and Salt Act, 1944. On their failure to deposit the said amount as directed their appeal was rejected.

2. In their appeal against the order of the Collector (Appeals) they had contended that appeal was rejected by him not on merits but on procedural grounds which also was not correct as predeposit is a prerequisite only in respect of duty demanded or penalty imposed but not for Modvat credit disallowed.

3. When the Stay Petition was posted for hearing, Shri R.S. Vaidyanathan, Director of the appellant company appeared on their behalf and pressed for the grant of the stay prayed for and the hearing of the appeal without predeposit of the amount demanded. He also handed over a copy of an Order-in-Appeal passed by the same Collector (Appeals) in a subsequent appeal wherein he had allowed the appeal accepting their stand. He prayed for the stay prayed for.

4. Shri M.N. Biswas, learned SDR appearing on behalf of the respondent Collector requested for time to ascertain whether the subsequent order had been accepted by the department or they have filed an appeal against it. We accordingly granted the adjournment prayed for but indicated our willingness to hear the appeal itself if both sides were ready to argue the merits of the appeal, after the departmental representative reports the position about the acceptance of the appellate order of the Collector (Appeals). It was clarified by Shri Vaidyanathan that this is not a recurring problem now as they are paying duty on the metal containers utilising the Modvat credit on the duty on the tin plates used in their manufacture and while clearing their final product they avail of Modvat credit on duty paid on the containers.

5. When the matter was posted again for hearing, Shri Biswas indicated that no appeal has been filed by the department against the order of the Collector (Appeals). With the consent of both the sides we proceeded to hear the appeal impliedly granting the stay prayed for by the applicants (appellants).

6. On behalf of the appellants, Shri S.K. Sinha, learned Advocate pleaded that their appeal may be allowed as the tin plates and tin sheets are eligible inputs for the grant of Modvat benefits as they are used in relation to the manufacture of their final outputs on which they pay duty. He referred to the Order-in-Appeal passed in their favour by the Collector (Appeals) subsequently. Reacting to the arguments of the learned Counsel and the contentions raised in the appeal, Shri M.N. Biswas, learned Sr. Departmental Representative pleaded that the subsequent order of the Collector (Appeals) is not legally correct as per the relevant provisions whereas the earlier one which is now under appeal in the present proceedings is legally in order and should be sustained. The tin plates/tin sheets are not inputs for their final product viz. vegetable products but they are used for the manufacture of the containers only which are a finished product themselves, which are exempt from duty and on which no duty has been paid. Hence, the tin plates/sheets cannot be considered as inputs for vegetable product and do not qualify for Modvat benefit, he contended. He opposed the appeal.

7. We have considered the arguments advanced by both the sides. The appeal memorandum makes out that the impugned Order-in-Appeal is not a speaking order and is not legally susta