LexM/S FLEX ENGINEERING LIMITED versus COMMISSIONER OF CENTRAL EXCISE, U.P
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2012] 1 S.C.R. 209
M/S FLEX ENGINEERING LIMITED
v.
COMMISSIONER OF CENTRAL EXCISE, U.P
(Civil Appeal No. 7152 of 2004)
JANUARY 13, 2012.
[D.K. JAIN AND ASOK KUMAR GANGULY, JJ.]
Central Excise Rules, 1944:
A
B
Rule 57-A - Modvat credit - Inputs used 'in relation to c
manufacture' offinal product - Manufacturing process -Testing
of machines - Flexible laminated plastic film in roll form and
poly paper used for testing the automatic form f111 and seal
machines (F & S Machines) manufactured by the assessee
- Held: The process of testing the customised machines is
0
integrally connected with the ultimate production of the final
product viz. the F&S machines and, therefore, that process
is one in relation to the manufacture, falling within the sweep
of r. 57 A - The manufacturing process in the instant case gets
completed on testing of the F&S machines and, therefore, the
E
flexible plastic films and poly paper used for testing the said
machines are inputs used in relation to the manufacture of
the final product and would be eligible for Modvat credit under
r. 57 A - Central Board of Excise and Customs Circular No.
33133194/CX.8 dated 4.5.1994 - Notification No. 28195-
F
C.E.(N. T) dated 29.6.1995.
The appellant-assessee, engaged in the manufacture
of various types of packaging machines, marketed as
automatic form fill and seal machines ("F&S machines"),
classified under chapter heading 8422.00 of the Schedule
G
to the Central Excise Tariff Act, 1985, filed declarations
and availed of the benefit of Modvat credit in respect of
the flexible laminated plastic film in roll form and poly
paper (falling under chapter headings 3920.38 and
209
H
210
SUPREME COURT REPORTS
[2012] 1 S.C.R.
A 4811.30 of the Schedule to the Tariff Act), which,
according to the assessee was used for testing the F&S
machines. It was the case of the assessee that the F&S
machines manufactured by it were 'made to order'
inasmuch as all the dimensions of the packaging/sealing
B pouches, for which the F&S machine was required, were
provided by the customer as per the purchase order
which contained an inspection clause to the effect that
inspection/trial would be carried out by purchaser's
Engineer before dispatch of equipment for the
c performance of the machine. The adjudicating authority
did not accept the stand of the assessee and denied the
benefit of Modvat credit as claimed. The appeals of the
assessee were dismissed by the Commissioner (Appeals)
as also by the Customs, Excise and Gold (Control)
0 Appellate Tribunal. The reference was also answered by
the High Court against the assessee opining that testing
the performance of a final product was not a process of
manufacture and, therefore, materials used for testing the
performance of the F&S machines could not be termed
as 'inputs' for the purpose of allowing Modvat credit.
E
Allowing the appeals, the Court
HELD: 1.1. Rule 57A of the Central Excise Rules,
1944 entitles a manufacturer to take credit of the Central
F Excise duty paid on the inputs used in or in relation to
the manufacture of the final product, provided that the
input and the finished product are excisable goods and
fall under any of the specified chapters in the tariff
schedute. Circular No.33/33/94/CX.8, dated 4.5.1994,
G issued by the Central Board of Excise and Customs,
relating to the Modvat scheme stipulates, "Modvat credit
is available for all excisable goods used as inputs in or
in relation to the manufacture of finished goods. It is, ·
therefore, clarified that the input credit is admissible
H whether such input is physically present in the finished
FLEX ENGINEERING LIMITED v. COMMISSIONER OF 211
CENTRAL EXCISE, U.P.
excisable goods or not so long such inputs are used in
A
or in relation to the manufacture of finished excisable
goods". By Notification No.28195-C.E. (N.T.), dated
29.6.1995, r.57-A was amended and the phrase "whether
directly or indirectly and whether contained in the final
product or not" was inserted. There is no dispute that in
B
the instant case, both the F&S machines and the flexible
laminated plastic film and poly paper are excisable. [para
13 and 16] [221-D-H; 224-C]
Collector of Central Excise & Ors. Vs. So/aris Chemtech
Ltd. & Ors. 2001 (8) SCR 501 = (2007) 7 sec 347: 2001
C
(214) E.L.T. 481 (S.C.); Collector of Central Excise, Jaipur
Vs. Rajasthan State Chemical Works, Deedwana, Rajasthan,
1991 (1) Suppl. SExcerpt shown. Read the full judgment & AI analysis in Lexace.