2003 (10) TMI 416 - AT - Central Excise

SSI Exemption - Value of clearances - Computation of - Valuation - Security deposited by franchisees - Penalty - Exemption - Captive consumption - Benefit of Notification No. 67/95-C.E. available - Cenvat/Modvat - Modvat vis-a-vis Exemption

Issues Involved:
1. Availability of benefit of exemption under Notification No. 15/94-C.E.
2. Availability of benefit of exemption under Notification No. 67/95-C.E.
3. Under valuation of water dispenser.
4. Eligibility to Modvat credit of duty paid on inputs under Rule 57A of the Central Excise Rules, 1944.
5. Eligibility for SSI exemption under Notification No. 1/93-C.E.
6. Confiscation of land, building, plant, and machinery.
7. Confiscation of seized goods.
8. Imposition of penalties under various provisions of the Central Excise Rules, 1944 and the Central Excise Act.

Detailed Analysis:

1. Availability of Benefit of Exemption under Notification No. 15/94-C.E.:
The Commissioner denied the benefit of exemption under Notification No. 15/94-C.E. for 12/24 litre bottles since Modvat credit of the duty paid on inputs used for manufacture of bottles had been availed. The Tribunal upheld this decision, agreeing with the Revenue that the condition of the Notification should have been satisfied at the time of clearance of the bottles. Reversal of credit after detection by Central Excise Officers does not comply with the condition of the Notification. The Tribunal cited the Supreme Court's decision in Chandrapur Magnet Wires Ltd., emphasizing that the credit must be reversed before the removal of the product.

2. Availability of Benefit of Exemption under Notification No. 67/95-C.E.:
The benefit of exemption under Notification No. 67/95-C.E. was denied as the cost of packing was not included in the value of the mineral water. The Tribunal remanded this issue to the adjudicating authority to reconsider whether the cost of bottles was included in the assessable value of mineral water, as per a previous Tribunal order in the Appellants' own matter.

3. Under Valuation of Water Dispenser:
The Commissioner found that the assessable value of water dispensers was under-represented due to the lack of a wholesale price. The Tribunal found merit in the Appellant's argument that retail price cannot be adopted as the assessable value without adjustments. The issue of interest-free security deposits and advertising expenses was remanded to the adjudicating authority to ascertain whether interest was paid on the security deposits, which would affect the assessable value.

4. Eligibility to Modvat Credit of Duty Paid on Inputs under Rule 57A:
The Tribunal upheld the disallowance of Modvat credit amounting to Rs. 40,874/- for 3 tons of ABS, as the Appellants failed to rebut the findings that they had received only 3 tons instead of 6 tons mentioned in the invoice.

5. Eligibility for SSI Exemption under Notification No. 1/93-C.E.:
The eligibility for SSI exemption was dependent on the duty liability of the bottles. The Tribunal remanded this issue to be decided afresh after determining the duty liability on the bottles.

6. Confiscation of Land, Building, Plant, and Machinery:
The judgment does not provide a detailed analysis of this issue, but it was part of the Commissioner's order.

7. Confiscation of Seized Goods:
Similar to the above, the judgment does not delve into details but includes it in the Commissioner's order.

8. Imposition of Penalties:
The Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act for the period prior to 28-9-1996. The matter of penalties under other provisions of the Central Excise Rules, 1944, was left open for the Commissioner to reconsider during re-adjudication.

Conclusion:
The Tribunal remanded several issues back to the adjudicating authority for reconsideration and re-adjudication, particularly focusing on the inclusion of the cost of bottles in the assessable value of mineral water, the arm's length nature of transactions with franchisees, and the payment of interest on security deposits. The penalty under Section 11AC was set aside for the period before its enforcement date.

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