2005 (7) TMI 559 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on empty bottles and crown corks.

Analysis:
The appeal was filed against the denial of Modvat credit to the appellants on empty bottles and crown corks used in the manufacture of aerated water. The grounds for denial included the durability of the items and the fact that the bottles were returnable to the appellants by their dealers, who were also charged container hire charges. However, the judge found these grounds legally unsustainable for denying the credit. The appellants, as franchise holders of Pepsi, included the value of the bottles and corks in the assessable value of the final product and duly discharged the duty. There was no evidence to suggest undervaluation, as their price list had been accepted without objection.

The judge emphasized that since the appellants had added the price of the bottles and corks to the assessable value of the final product, they were entitled to claim the Modvat credit. The fact that the bottles were durable and returnable did not hinder this entitlement. Crown corks were never returned to the appellants, as consumers discarded them when opening the bottles. The practice of charging container hire charges did not justify denying the Modvat credit. The judge cited a Tribunal case where credit on empty bottles was allowed to the assessee under similar circumstances, further supporting the appellants' position.

Based on the above analysis, the impugned order was set aside, and the appeal of the appellants was allowed with consequential relief as per the law.