2005 (4) TMI 375 - AT - Central Excise

Summary

Issues:

1. Eligibility for exemption on PET bottles used for filling and storage of aerated water.

Analysis:

The appeal was filed against the Commissioner's order challenging the finding that the appellants were not eligible for exemption on PET bottles used for filling and storage of aerated water. The appellants claimed that they are manufacturers of PET bottles used for filling aerated waters sold by them, and duty was paid under Section 4A of the Central Excise Act. They sought remission of duty on damaged bottles, which was granted. The period of dispute was from 1-12-2000 to 30-6-2001, and the relevant notification allowed exemption for goods used within the factory of production as capital goods or specified inputs for manufacturing final products. The condition was that finished goods should not be exempt from excise duty. The appellants argued that since PET bottles were used for filling aerated waters on payment of duty, they were entitled to exemption.

The JDR argued that the notification specified that if finished goods are dutiable, captively consumed goods should be exempted, and vice versa. In this case, since duty was remitted at the final stage, captively consumed goods should be cleared on payment of duty. The Commissioner found that the finished goods remained non-duty paid, leading to the demand being confirmed and penalties imposed. The JDR highlighted that it was unclear whether the aerated water filled in the disputed bottles was cleared on payment of duty.

The Tribunal noted that for captive consumption of bottles under the notification, aerated waters filled in the bottles should be cleared on payment of duty. However, it was unclear from the records whether duty was paid on the aerated water. The Tribunal remanded the case back to the Commissioner for verification on whether the aerated water was cleared on payment of duty and to reassess the eligibility for the benefit of the notification regarding PET bottles used for filling aerated waters. It was ordered that the verification process should be conducted to clarify the payment status of duty on the aerated water and to decide the eligibility for the exemption on PET bottles accordingly.