2008 (8) TMI 702 - AT - Central Excise

Summary

Issues:
1. Duty demand on breakage of glass shells during transit.
2. Imposition of penalty on the Appellant.
3. Interpretation of Rule 6(2) of the Cenvat Credit Rules, 2004.

Analysis:
1. The case involved the duty demand on the breakage of glass shells during transit by the Appellant, who was engaged in the manufacture of Fluorescent Tube Light. The Central Excise Officers visited the factory and based on the statement of the Director, a duty demand of Rs. 2,36,079/- was raised. The Adjudicating Authority confirmed the demand along with penalties, which were upheld by the Commissioner (Appeals).

2. The Appellant's counsel argued that the statement regarding breakage during transit was not supported by evidence and that the Revenue confirmed the duty demand solely based on the Director's statement without conducting any inquiry. The counsel cited legal precedents to support the Appellant's position, emphasizing the lack of corroborative evidence and procedural lapses in the investigation.

3. The Tribunal analyzed Rule 6(2) of the Cenvat Credit Rules, 2004, which requires the maintenance of separate accounts for inputs used in dutiable and exempted goods. The Tribunal noted that the rule does not allow credit for breakage during transit. It distinguished the present case from a previous decision where credit was allowed for washed away inputs, as in this case, the breakage occurred before the inputs reached the factory. The Tribunal found that the Director's admission of breakage, coupled with the Appellant's failure to refute or provide evidence, justified the disallowance of credit on the breakage of glass shells during transit.

In conclusion, the Tribunal rejected the appeals filed by the Appellants, upholding the duty demand and penalties imposed. The decision was based on the Director's admission of breakage, the lack of evidence or refutation by the Appellant, and the inapplicability of Rule 6(2) to claim credit for breakage during transit.