2002 (11) TMI 424 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty on glass scrap generated in the factory during the filling process of tomato ketchup and sauces in glass bottles/jars.
2. Whether the demand is barred by limitation.
3. Imposition of penalty justified or not.

Issue 1 - Liability to pay duty on glass scrap:
The common issue in these appeals is whether the respondent assessee is liable to pay duty on glass scrap generated during the filling process of tomato ketchup and sauces in glass bottles/jars. The Commissioner (Appeals) held that the scrap arising in the factory is not dutiable based on a previous Tribunal decision. However, the Revenue argued that the waste and scrap arising from broken bottles are dutiable under Rule 57F(18)(a) of the Central Excise Rules, as the assessee had taken credit for the bottles. The Tribunal found that the waste and scrap are exigible to duty under the deeming provision of the rule, treating them as manufactured in the factory. The Tribunal distinguished previous decisions that did not consider Rule 57F(18)(a) and held the scrap arising from broken bottles/jars during filling to be taxable under the tariff heading 7001.10.

Issue 2 - Limitation on demand:
In one appeal, the demand for duty was challenged as barred by limitation, with the period in question from 1-1-95 to 31-5-99. The assessee contended that they were under the wrong impression regarding duty liability, supported by previous decisions. The Tribunal agreed that the demand was not sustainable due to the lack of intent to evade duty, dismissing the appeal on limitation grounds. However, in another appeal for the period from 1-1-2000 to 31-3-2000, the issue of limitation did not arise as the show cause notice was issued in time.

Issue 3 - Imposition of penalty:
Regarding the imposition of penalty, the Tribunal found that as there was no suppression of facts with intent to evade duty, the penalty was not justified. Consistent with the earlier decision on limitation, the Tribunal upheld the demand for duty but vacated the imposition of the penalty in the appeal, modifying the impugned order accordingly.

In conclusion, the Tribunal ruled that the glass scrap generated during the filling process is liable for duty under Rule 57F(18)(a), dismissed one appeal due to limitation, and vacated the penalty imposition in another appeal due to the absence of intent to evade duty.