Per Shri V.P. Gulati :

The issue in the appeal relates to grant of MODVAT Credit in respect of plastic crates in which the aerated waters are cleared from the factory. The learned lower appellate authority in this while allowing the appeal of the respondents has held as under :

"I have gone through the records of the case and the grounds urged by the appellants including the submissions made during the personal hearing. I observe that packaging materials have not been given any definition either in the Act, or under the Rules, although there is a definition for `packing' under Section 4 of the Act. But this definition is obviously about primary packing. Notwithstanding the above position, even according to common parlance understanding, I would observe that if wooden crates can be considered as packaging material, there is no reason as to why plastic crates should not be considered so. It is also an admitted fact that such plastic crates are being used to transport aerated water bottles from one place to another and they are definitely in the nature of a secondary packing. Therefore I hold that plastic crates are eligible inputs as packaging materials and since during the relevant period aerated waters were subjected only to a specific rate of duty, the question of adding the value of plastic crates in the assessable value of the aerated water bottles also would not be relevant. In view of the above discussions, I set aside the impugned order and allow the appeal with consequential relief.".

The Revenue is aggrieved of the findings of the learned lower authority and the following grounds have been urged in the grounds of appeal:

2. During the period in question, the aerated bottles were assessed to specific rate of duty with reference to bottles and not crates. Thus the crates were not considered as an essential packing material for transport of goods. Collector (Appeals) has therefore erred in observing that the items can be considered as a secondary packing eligible for treatment as packing material.

3. The Collector (A)'s observation that the question of including the amount in the value does not arise as there was only specific rate is not relevant here as the point to be decided, is whether the incidence of duty on crates will have a cascading effect on the selling price of the aerated waters. It has been accepted by the unit during personal hearing that the value of crates is not collected from the customers, and therefore the same will have no cascading effect on the sale of the final product and hence no credit can be granted to such items. The Asst. Collector reference to explanation b (iii) to the Rule 57A is only to explain that the items which does not result in cascading effect cannot be given relief under Modvat.

2. The learned JDR for the Department has reiterated the grounds as urged in the appeal memorandum. He however fairly concedes that the issue is covered against the Revenue by the decision of the Tribunal in the case of Collector of Central Excise, Calcutta-I Vs. Black Diamond Beverages Ltd. reported in 1997 (91) ELT 422 (T)=1996 (14) RLT 855. Analysing the pleas of the Department, the Tribunal in para 4.3 to 4.7 held as under :

4.3 Plea of the department that a crate is merely a handling device or accessory and not a 'container' or a package also stands rebutted on the analogy of the Supreme Court's judgement in the case of G. Claridge and Co. Ltd. Vs. Collector of Central Excise [1991 (52) E.L.T. 341 (S.C.)]. In that case, a question was considered by the Apex Court whether egg trays are 'containers' or not. In considering the aforesaid question, the Hon'ble Court examined the definition of the term 'container' in various Dictionaries and Glossary of Packaging Terms. In this connection, Paras 8 and 9 of the said report are reproduced below:

"8. The learned counsel for the appellant has urged that the products manufactured by it are `containers' and in support of this submission the learned counsel has inv