2005 (11) TMI 301 - AT - Central Excise

Scrap - Dutiability - Demand - Cenvat/Modvat - Samples - Testing - Penalty - Excess reversal of credit

Summary

Issues:
1. Admissibility of Modvat credit on glass shells.
2. Duty on scrap.
3. Duty on paper scrap.
4. Unused/obsolete inputs duty.
5. Stock variation.
6. Capital goods on Electrostatic Power Coating machine and sealing machine.
7. Samples dutiability.
8. Penalty on the appellant company.

Admissibility of Modvat credit on glass shells:
The Commissioner found that a portion of the credit reversed by the appellant company was not required to be reversed. The appellant agreed but sought re-credit of the amount. The Tribunal stated that the remedy did not lie with them and the appellant should apply for permission based on the Commissioner's order.

Duty on scrap:
The Commissioner dropped the demand on drums and carbuoys cleared as scrap without payment of duty. The appellant had no grievance against this finding and wanted the amount to be allowed as credit, which the Tribunal did not need to decide upon.

Duty on paper scrap:
The Commissioner held that duty was payable on paper scrap generated during the unpacking of glass shells. The Tribunal observed that if the waste paper was merely packing material recovered during unpacking, duty was not payable as it had already suffered duty in the hands of the supplier. The demand for duty on waste paper was set aside.

Unused/obsolete inputs duty:
The Commissioner's decision on this account was found unsustainable, but the Tribunal stated that the appellant could claim relief from the authorities and did not need to make a decision on this issue.

Stock variation:
The Commissioner alleged that Modvat credit was taken on inputs not physically available, based on discrepancies in figures between Bin Cards and RG23A Part-I. The Tribunal upheld the Commissioner's contention that proportionate Modvat credit needed to be reversed.

Capital goods on Electrostatic Power Coating machine and sealing machine:
The Commissioner denied credit on these machines received before a certain date, as the final product was exempt from duty. The Tribunal rejected the appellant's plea and upheld the Commissioner's decision.

Samples dutiability:
The Commissioner held that duty was payable on samples of electric bulbs removed for testing quality. The Tribunal upheld this decision based on a Supreme Court ruling, stating that duty was indeed payable on such samples.

Penalty on the appellant company:
The Commissioner imposed a penalty under Section 11AC, which the Tribunal upheld. However, considering the period involved and other factors, the penalty amount was reduced. The Tribunal also upheld the penalty on specific individuals under Rule 209A.

Conclusion:
The Tribunal partly allowed the appeal of the appellant company on various issues, rejected the appeals of certain individuals, and also rejected the appeal of the Revenue.