(Appeal under Section 35-G of the Central Excise Act, 1944)
SATISH K. AGNIHOTRI, J.
1. Heard learned counsel for the parties.
2. The present appeal filed under section 35-G of the Central Excise Act, 1944 (for short "the Act, 1944") arises from the order passed in Case No. E/4117/04-NB/SM passed by the Principal Bench, Customs, Excise and Service Tax Appellate Tribunal (for short `the CESTAT') New Delhi, on 20.07.2005 (Annexure A/1) whereby the appeal filed by the respondent/assessee was allowed.
3. The appeal was admitted on the following substantial question of law :
"Whether the Tribunal was correct in setting aside the order of Commissioner (Appeals) and allowing the appeal of the respondent with consequential relief on the issue to the effect that the respondent was eligible for taking modvat credit on the glasses of bottles on its findings that value of the same was included in the assesseable value of aerated water during the material period without ascertaining the fact in this regard?"
4. The facts, in brief, are that the respondent/assessee is engaged in the business of manufacturing of aerated water falling under Chapter 22 of the schedule to the Central Excise Tariff Act, 1985. The respondent/assessee took Modvat credit of Rs. 3,03,220/- on glass bottles and Rs. 2,44,027/- on crown corks received by them during period from month of March, 1994 to August, 1994. The Deputy Commissioner, Central Excise, issued a show cause notice dated 02.09.1994 (Annexure A/2) asto why the aforesaid credit may not be disallowed on the ground that the aforesaid goods were not entitled to input credit as their cost was not included in the value of the aerated water for the purpose of charging duty of excise. The adjudicating authority vide his order dated 4/5.9.95 (Annexure A/3) allowed the Modvat credit, as aforestated and dropped the show cause notice. The appellant preferred an appeal before the Commissioner (Appeals) Central Excise, Raipur against the order dated 04/05.09.1995 passed by the Deputy Commissioner. The appellate authority i.e. Commissioner (Appeals) set aside the order dated 04/05.09.1995 of the Deputy Commissioner, vide its order dated 09.07.2003 (Annexure A/4). Thereagainst, the respondent/ assessee filed an appeal before the CESTAT, which, by the impugned order dated 20.07.2005 (Annexure A/1) allowed the appeal and allowed Modvat credit on the articles, as aforestated.
5. Shri Manish Sharma, learned counsel appearing for the appellant/revenue submits that the decision of the CESTAT is based upon its earlier decision in the case of CCE, Jalandhar v. Dhillon Kool Drinks and Beverages Ltd. Phillaur, in the final order dated 14.02.2005 against which the appellant/revenue filed an appeal before the High Court of Punjab and Haryana. As per section 4(4)(d)(i) of the Act, 1944, returnable packing is not to be included in the assesseable value and as per clause (iii) of the explanation to Rule 57 A of the Central Excise Rules, the cost of packing material which is not included or had not been included in the preceding financial years in the assesseable value of the final product under Section 4 of the Central Excise Act, does not qualify as `inputs' for the purpose of the Modvat credit. The contention of the respondents that the cost of glass bottles and crown corks was included in the value for computing the assesseable value, is not correct. The respondent/assessee submitted a certificate dated 30.04.1994 from S.V.Ramana and Company, Chartered Accountants certifying the cost of aerated water from the year ending 31st March, 1994. It has been certified that the above figures were as per the book of accounts maintained and other relevant information made available to him by the respondent/assesse. This certificate neither contains the registration number of Chartered Accountants with the Institute of Chartered Accountants nor his seal. Further, the break-up and various elements, which had been considered and on the basis of which the cost per crate of aerated water was determined had not been furnished. This certificate is therefore, incomplete in material details and cannot be considered as true and correct. The cost computation sheets do not indicate the period of the cost data. It neither contains any date nor the name or designation of the officer who is certifying the correctness of the computation of cost except a seal of the company with some initials. The cost computation sheet captioned as Cost of Production Statement for the year ended 31.03.1994 does indicate inclusion of Rs. 2/- as cost of empty bottles, while working out the cost of various brands of aerated water. However, there is no implication regarding the nature of cost of empty bottles included in the cost.
6. Shri Sharma would further submit that the respondent/assessee is required to prove that the cost of packing materials included in the value of excisable goods for the purpose of charging duty. This finding is derived from the ratio of the Supreme Court's judgment in Jayesh Containers v. CCE, Baroda1. The Tribunal has not given any finding on the issues involved in this appeal. It appears that the Tribunal has confused the issue of inclusion of value of "empty glass bottles and crown corks" with the inclusion of value of the "broken glass bottles".
7. On the other hand, Shri Manoj Paranjpe, learned counsel appearing for the respondent/assessee would submit that the order passed by the Tribunal in case of Dhillon Kool Drinks has not attained finality, does not survive because the Punjab and Haryana High Court has dismissed the appeal filed by the appellant/revenue in case of CCE Chandigarh-II v. Dhillon Kool Drinks and Beverages Ltd2. He would further submit that the ground raised by the appellant that the certificate issued by the Chartered Accountant did not give the break up of various elements constituting the determination of assessable value, is factually incorrect and contrary to the facts on record. As far as reliance placed on the judgment of the Supreme Court in Jayesh Containers is concerned, Shri Pranjpe would submit that the said judgment was rendered in context of an exemption notification granting total exemption to corrugated boards manufactured/ produced out of craft paper or paper or paper board on which the duty of excise has been paid @ 37 +% . The burden to prove the same was on the manufacturer and such fact was to be proved to the satisfaction of the appropriate officer. Shri Paranjpe would next submit that the scope of section 35-G of the Act, 1944 is restricted to the case where the order passed by the appellate tribunal involves a substantial questions of law. The appeal against the order of the CESTAT cannot be entertained if it involves a question of fact asto whether in a given case the manufacturer availing Modvat credit on the packaging materials and containers, adds the cost of such packaging material on the cost of packaging material/containers in the assessed value of the final product or not. In a similar circumstances, wherein identical question of law was framed in an appeal filed by the appellant/revenue, the same was dismissed by the Punjab and Haryana High Court in Dhillon Kool Drinks. In view of the above submission, the appeal filed by the appellant/revenue is not maintainable for the reason that it does not involve any substantial questions of law and secondly, the question of fact, relevant for the purpose of allowing Modvat credit on the packaging materials/containers, stands decided in favour of the respondent/assessee not only by the original adjudicating authority but also by the CESTAT, the order of which is under challenge in the present appeal.
8. Contention of Shri Sharma that the CESTAT has not considered the facts of the case and relying on a decision of the Tribunal in CCE, Jalandhar v. Dhillon Kool Drinks and Beverages Ltd, has passed the impugned order, is not correct. The Tribunal has considered all the facts and came to the conclusion that the assessee had added price of the empty glass bottles and crown corks in the assessable value of the final product and as such, they are entitled to avail the Modvat credit. The said decision of the Tribunal has been upheld by the Punjab and Haryana High Court in CCE, Jalandhar v. M/s. Dhillon Kool Drinks and Beverages Ltd.
9. The decision of the Supreme Court, in Jayesh Containers v. CCE, Baroda1 was on the issue asto when an item is assessable to duty, the burden of proof is on the person who claims the exemption.
10. It is indisputable that Rule 57-A of the Central Excise Rules, prevailing during the period in between March 1994 to August, 1994, provided for Modvat credit of the Central Excise Duty on packaging materials or containers. In the case on hand, the only issue is asto whether the assessee has established that the glass bottles and the crown corks were included in the assessable value of aerated water. The Assessing Authority i.e. Deputy Commissioner, Central Excise, after having considered the case of all the parties, came to the conclusion and observed as under:
"As per this cost production certificate, cost of empty bottles for Rs. 2/- per crate is included in the assessable value declared by the notice. It is also observed that Rs. 2/- is not the full cost of the bottles but it is a part of the cost distributed over sale units as the bottle is recycled for the number of times. Similarly crown cork is also used in each bottle and is consumed each time the aerated water bottle is opened by a consumer. Crown corks are not returnable and the cost of crown corks at the rate of Rs. 5.58 per crate are also not included in the value of the aerated water."
and consequently, dropped the show cause notice dated 02.09.1994, bearing No. V(CH.22)15=68/94Adj/21121. The Assessing Authority further held that the bottles were durable and returnable is not relevant because explanation appended in Rule 57-A of the Central Excise Rules disqualifies the bottles or containers for Modvat credit. The Commissioner of Central Excise (Appeals), by order dated 09.07.2003 relying on several decisions set aside the order passed by the Deputy Commissioner, holding that the assessee had not established their entitlement to the credit. The CESTAT, after having considered the facts, passed the impugned order and restored the order passed by the Deputy Commissioner. It is a pure question of facts as to whether the value of the bottles and crown corks were included in the assessable value.
11. In case, where there is no dispute with regard to findings, it is well settled proposition of law in terms of section 35-G of the Act, 1944 that the High Court can entertain an appeal only if a question of law is involved.
12. We have perused the orders passed by the authorities below as well as by the Tribunal. We have not found any infirmity or perversity in the recording of any finding of fact. Thus, in view of the foregoing, no substantial question of law arises when admittedly there is no perversity or infirmity in the findings of the fact. (See: Union of India v. M/s. Nova Iron and Steel Ltd.)
13. As an upshot, the appeal, is dismissed on the ground that it does not raise any substantial question of law for decision in the facts of the case by this Court.