2015 (4) TMI 1024 - AT - Central Excise

Reversal of CENVAT Credit - Whether the appellant is required to reverse the credit in respect of the durable and returnable glass bottles and crates retained/ not returned by the buyer of the soft drinks - Held that - On perusal of the issue before the learned Commissioner (Appeals) where the appellant is required to pay duty on the crates and glass bottles broken during the process of filing and packing of soft drinks or not whereas the learned Commissioner (Appeals) has decided the issue whether the respondent is required to reverse the credit in respect of durable and reuseable glass bottles and crates returned by the buyers of the soft drink. Learned Commissioner (Appeals) has erred in deciding the issue. Therefore, impugned order is set aside and I remand the matter to the adjudicating authority to decide the issue as prayed by the Revenue in their appeal. Accordingly, matter is remanded back - Decided in favour of assessee.

Summary

Issues involved: Reversal of Cenvat Credit on sale of scrap glass bottles, applicability of Rule 8 of Central Excise Rules, 2002, reversal of credit on durable glass bottles and crates, interpretation of relevant case law and circulars, error in decision by Commissioner (Appeals).

Analysis:

The judgment by the Appellate Tribunal CESTAT New Delhi involved the issue of reversal of Cenvat Credit on the sale of scrap glass bottles. The Adjudicating authority had confirmed a duty amount and penalty against a party for clearing broken glass bottles without paying Central Excise duty. The party had contravened Rule 8 of Central Excise Rules, 2002 by not paying duty on scrap glass bottles classified under Chapter Heading 7001 of the CETA. The Commissioner (Appeals) was tasked with deciding whether the party needed to reverse credit on durable and returnable glass bottles and crates not returned by buyers of soft drinks. The Commissioner referred to a case law involving recovery of amounts for broken bottles and crates, ultimately dropping the proceedings.

The judgment highlighted the reliance on Board's Circulars in the decision-making process. Circular No. 697/13/2003-CX was cited by the Hon'ble CESTAT for valuation of goods, not for the reversal of Cenvat Credit on scrap glass bottles. Similarly, Circular No. 643/34/2002-CX dealt with fixing MRP/assessable value of aerated water, not the reversal of Cenvat Credit on scrap glass bottles, which was the crux of the issue at hand. The Commissioner (Appeals) was criticized for erroneously relying on the CESTAT's order and the Circulars, which were deemed irrelevant to the specific matter under consideration.

Ultimately, the Appellate Tribunal found fault with the Commissioner (Appeals) for incorrectly deciding the issue of whether the party was required to reverse credit on durable and reusable glass bottles and crates returned by buyers of soft drinks. The impugned order was set aside, and the matter was remanded to the adjudicating authority to decide the issue as requested by the Revenue in their appeal. The Tribunal directed the Commissioner (Appeals) to reconsider and decide the issue in accordance with the specific circumstances of the case, emphasizing the need for a proper determination in line with the relevant legal provisions and precedents.