2007 (4) TMI 110 - AT - Central Excise

Demand and penalty - Alleged that the appellants sold bottles of aerated water as burst and no duty was paid on the said goods during impugned period and accordingly demand were made along with penalty - Demand were set aside by Commissioner(A) after considering the details

Summary

Issues:
1. Duty liability on burst aerated water bottles.
2. Application of Board Circular dated 8-9-1971.
3. Finding of bottles burst beyond human control.
4. Rejection of remission application by the Commissioner.
5. Setting aside of duty demand by Commissioner (Appeals) and Deputy Commissioner.

Analysis:
1. The case involved the duty liability on burst aerated water bottles sold by the appellants. The show cause notices alleged that duty was not paid on the bottles sold as burst. The adjudicating authority confirmed the duty demand and imposed a penalty, which was upheld by the Commissioner (Appeals).

2. The appellant argued that the loss due to burst bottles was within 0.5%, seeking condonation of duty payment as per the Board Circular dated 8-9-1971. They contended that the bottles burst beyond human control, citing relevant Tribunal decisions supporting their case.

3. The Revenue representative reiterated the findings of the Commissioner, stating that the rejection of the remission application by the Commissioner of Central Excise justified the demand of duty.

4. Upon review of the case and the appellant's explanation, it was noted that the burst bottles were due to the expansion of gases in aerated water, beyond the appellant's control. The appellant also referenced the Board Circular allowing adjustment of breakage within 0.5%, which was within the permissible limit.

5. The Tribunal's decision in a similar case highlighted that insignificant losses due to breakage should be considered bona fide, especially when within the norm fixed by the Board circular. The rejection of the remission application did not impact the duty demand, leading to the set aside of the impugned orders and allowing the appeal with consequential relief. The duty demand on burst bottles was set aside by the Commissioner (Appeals) and the Deputy Commissioner of the appellants' other units, further supporting the appellant's case.