CEA No.87 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Date of Decision:-20.4.2010 M/s Perfetti Van Melle India Pvt. Ltd. ...Appellant Versus Union of India and others ...Respondents CORAM: HON'BLE MR.JUSTICE ASHUTOSH MOHUNTA HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR Present:- Mr.M.P.Devnath, Advocate with Mr.Sandeep Goyal, Advocate for the appellant. ORDER:- The appellant-assessee M/s Perfetti Van Melle India Pvt. Ltd. (for short “the assessee”) has directed the present appeal against the impugned order dated 17.9.2009 (Annexure A1), vide which, the Customs, Excise & Service Tax Appellate Tribunal, maintained the demand of duty. However, the order of penalty was set aside. 2. The crux of the facts, culminating in the commencement of and relevant for disposal of present appeal, is that the assessee was engaged in the manufacture of Chewing Gum/Bubble Gum, Toffee and Candy containing Cocoa and was availing the benefit under Cenvat Credit Scheme. During the course of scrutiny of the record, it was noticed by the officer of concerned department that the assessee was wrongly availing the Cenvat credit on the inputs. 3. The revenue claimed that on physical examination, it revealed that the tattoos, in piece or roll form are stickers, made of paper/plastic having transferable printed figures and the children, by putting the tattoos on skin, are able to transfer the figure thereof on the parts of their bodies by applying hand pressure. Therefore, it was claimed that the assessee has mis-described the tattoos as inputs to avail an inadmissible cenvat credit. The case of the revenue further proceeds that the assessee is running a tattoo promotion scheme with their finished products and the same were packed inside the individual jars/pouches/displays and tattoos were being offered free and the maximum retail prices displayed on the containers had been worked out taking into consideration the tattoos. In all, according to the revenue, the indicated tattoos were CEA No.87 of 2010 2 neither used in or in relation to the manufacture of final products nor constituted the accessories or packing material and since the assessee wrongly availed the cenvat credit, so a show cause notice dated 24.3.2004 (Annexure A6) was issued to it (assessee), as to why the benefit of wrongly availed cenvat credit be not disallowed and interest and penalty be not imposed. 4. In the wake of show cause notice, the assessee filed the reply (Annexure A7), inter-alia, explaining that they have legally claimed the cenvat credit and the value of the tattoos is included in the maximum retail price fixed for the final products. 5. The reply filed by the assessee did not find favour and the Commissioner, Central Excise disallowed the cenvat credit, confirmed the demand of duty plus interest and imposed a penalty, vide order dated 31.8.2004/10.9.2004 (Annexure A8). 6. The appeal filed by the assessee was also dismissed by the Appellate Tribunal vide impugned order dated 17.9.2009 (Annexure A1). 7. Aggrieved by the impugned order (Annexure A1), the assessee filed the present appeal raising the following substantial question of law:- “Whether the order passed by the Tribunal is correct in denying the Cenvat credit, while not taking into consideration the term inputs as defined under Rule 2(f) of the Cenvat Credit Rules, 2001 and Rule 2(g) of the Cenvat Credit Rules, 2002, thereby denying the credit on the Tattoos?” 8. We have heard the learned counsel for the assessee and have gone through the record. 9. The vehement contention of the learned counsel for the assessee that the manufacturer can avail the cenvat credit in respect of inputs including the packing material and as the “Boomer tattoos” are used in package material in respect of its final products, therefore, the assessee is entitled to cenvat credit, is not tenable. A manufacturer can only claim the cenvat credit on the inputs used in or in relation to the manufacture of final product as envisaged under Rule 2 of the Cenvat Credit Rules (for brevity “the Rules”). Admittedly, the assessee is availing the cenvat credit in respect of other packing material in which bubble gums are wrapped but the revenue has denied the same benefit in respect of “Boomer tattoos” only. 10. Above being the position on record, the core question, that arises for determination in this appeal, is whether the assessee is entitled to claim cenvat credit on “Boomer tattoos” or not? It is not a matter of dispute that chewing gum/bubble gums etc. manufactured by the assessee are directly or primarily packed into the printed aluminum CEA No.87 of 2010 3 foils wrapped in the cover. Meaning thereby, putting a “Boomer-tattoo” in the package material of the bubble gum is not used in or in relation to the manufacture of final product but used as an additional step in aid for promotional purposes and cannot be termed as a packing material as such, which is used in or in relation to the manufacture of final product. Hence, the primary function of putting the “Tattoo” in the wrapped bubble gum is to promote the trade in order to attract the children, rather than to be used for the purpose of packing material in this regard. 11. Above all, it is not the case of the assessee that tattoo material is used for initial packing in the real sense, rather the final product is wrapped in aluminum foils and other packing material, on which it (assessee) is claiming cenvat credit. The tattoos are additionally placed in the container of the product. Therefore, it cannot possibly be termed that the tattoo material is used as an initial packing material. In other words, the tattoo on the bubble gum is not at all required in the form of primary packing and the assessee is not entitled to claim cenvat credit in this relevant connection. 12. An identical question came to be disposed of by this Court in case CEA No.16 of 2010 titled as “M/s Wrigley India Pvt. Ltd. Vs. Commissioner of Central Excise, Chandigarh' decided on 22.2.2010. Having considered the matter, it was held that “Boomer-tattoo” is not an input used in or in relation to the manufacture of final products and putting such boomer tattoo in the container, is an additional step in aid to promote business and its specific purpose is of promotion of the product and for the purpose of advertisement. Therefore, the question raised in this appeal is squarely covered by the decision of this Court in M/s Wrigley India Pvt. Ltd.'s case (supra). 13. Moreover, the authorities below have recorded a finding of fact based on the evidence that there is no direct or indirect use of “Tattoo” in or in relation to the manufacture of product, rather it is separately known as “Tattoo” in the market, has a separate identity, specific purpose of promotion of the product and for the purpose of advertisement. Thus, it is not a packing material and cannot be considered as inputs within the meaning and definition of “input” as contained under Rule 2 of the Rules. No cogent material or legal provisions have been pointed out by the learned counsel for the assessee to dislodge the finding of the authorities below in this relevant behalf. 14. In the light of the aforesaid reasons and thus seen from any angle, we are of the considered view that the “Boomer Tattoo” is not primary packing material used in or in relation to the manufacture of final products, either directly or indirectly nor can it be termed as primary packing material. The use of tattoo material is an additional step CEA No.87 of 2010 4 to promote the trade and involves element of advertisement. Therefore, the assessee is not entitled for cenvat credit in this relevant direction as contemplated under Rule 2 of the Rules in the obtaining circumstances of the case. 15. As no other legal infirmity in the impugned order has been pointed out by the learned counsel for the assessee, therefore, the same is maintained. 16. For the reasons recorded above, we do not find any merit in this appeal, which is hereby dismissed as such. (Ashutosh Mohunta) Judge (Mehinder Singh Sullar) Judge 20.4.2010 AS