I.J. Rao, Member (T)

1. The appellants manufacture rayon tyre yarn cord, etc. The yarn and cord are wound on paper tubes. The corrugated paper discs are inserted in the paper tubes so that these tubes do not collapse when the yarn and cord are wound around the same. After winding, the paper tubes are placed in cardboard boxes. The appellants claim that in terms of Notification No. 201/79-CE (hereinafter referred to as the said notification), these three goods are 'inputs' and, therefore, the duty paid on the same should be allowed as set off on the duty payable on the final product, namely, on the nylon yarn and cord. The Assistant Collector of Central Excise disallowed the claim holding that the packing materials in the form of the three articles are not essential ingredients for the manufacture of the rayon tyre yarn and cord, "despite the fact that the cost of packing is included in the assessable value of these items on clearance under Section 4 of the Central Excises and Salt Act, 1944."

2. An appeal was then filed to the Appellate Collector, who rejected it holding that, use of goods "in connection with manufacture" does not amount to use of goods "in the manufacture". Ref