2010 (7) TMI 960 - AT - Central Excise

Summary

Issues involved: Interpretation of Cenvat Credit Rules, 2002/2004 regarding demand of duty on broken bottles and reversal of Cenvat credit.

Summary:
The appeals were filed against order-in-appeal No. 70/2007 (V-I) C.E., dated 3-8-2007, with Appeal No. E/780/2007 by the assessee and Appeal No. E/786/2007 by the Revenue. Both appeals were directed against the same order-in-appeal and were disposed of by a common order.

The issue in question revolved around the demand of duty as per the show cause notice, specifically concerning the liability to pay Cenvat credit on broken bottles. The appellant argued that the provisions of Cenvat Credit Rules do not support the recovery of duty on inputs like bottles. The JCDR, on the other hand, justified the reversal of Cenvat credit on goods cleared from the factory premises and subsequently destroyed. The Member found that the issue was narrow, emphasizing that duty was paid on the glass bottles received and used for filling aerated waters, and appropriate duty was paid on the finished goods cleared from the factory premises under Section 4A of the Central Excise Act, 1944. The Member concluded that there should be no demand for reversal of Cenvat credit from the assessee if the bottles were broken at the dealers' premises, aligning with the scheme of Cenvat Credit Rules, 2002/2004.

In the final decision, the impugned order challenged by the assessee was set aside, while the Revenue's appeal for the reversal of proportionate Cenvat credit and penalty was rejected since the entire impugned order was set aside.