I am directed to refer to Board's Circular of even number dated 22nd September, 1994 on the subject mentioned above wherein the field formations were advised to safeguard revenue by issue of demand notices and not to take any precipitatory action.

2.    The matter has been examined by the Board.

3.    As per Rule 57-A of Central Excise Rules, 1944, Modvat credit is allowed on packaging material or containers if their cost is included in the value of the final product.

4.    Board is, therefore, of the view that consequent to the change in duty structure of aerated waters from specific to ad valorem, credit of duty paid on glass bottles/ crates can be allowed only if the value of such bottles in included in the value of the product viz. the bottles containing aerated waters. It is a question of fact to be ascertained in each case of claim for MODVAT.

5.    All pending cases may be decided accordingly.