2015 (10) TMI 1133 - AT - Central Excise

Denial of CENVAT Credit - whether the glass bottles which were used for filling/packing of the aerated waters and which in course of manufacture of aerated waters were broken, and were cleared as glass scrap are excisable - Held that - Since, CENVAT Credit had been taken in respect of the glass bottles, at the time of clearance of glass scrap, duty would be payable. However, we find that during the period of dispute there was no provision in the CENVAT Credit Rules, 2001/2002 providing that when CENVAT Credit availed inputs are cleared as waste, some amount in respect of the same is required to be paid - During the period of dispute, there was no such provision. Moreover, the department in these cases, has demanded Central Excise Duty by treating glass waste as manufactured product and this issue has been examined in the Tribunal s judgment cited by the ld. Counsel for the appellant on the basis of the section 2 (d) of the Central Excise, Act, 1944. In view of this, we hold that the judgment of the Tribunal in the case of Commissioner of C. EX., Delhi Vs. Dhillon Kool Drinks & Beverages Ltd. (2000 (9) TMI 550 - CEGAT, NEW DELHI) the civil appeal against which has been dismissed by the Apex Court vide judgment reported in 2001 (5) TMI 942 - SUPREME COURT and also judgments of Tribunal in the cases of Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Commr. Of EX., Mumbai reported in 2003 (6) TMI 346 - CESTAT, MUMBAI , Ponna Bottling Co. Ltd. Vs. Commissioner of Central Excise, PUNE-II reported in 2001 (6) TMI 390 - CEGAT, MUMBAI , Charminar Bottling Co. (P) Ltd. Vs. Commissioner of C. EX., Hyderabad reported in 1999 (11) TMI 538 - CEGAT, NEW DELHI , would be applicable to the facts of this case. - impugned order is, therefore, not sustainable - Decided in favour of assessee.

Summary

Issues:
1. Whether glass scrap in the form of broken glass bottles attracts Central Excise Duty.
2. Interpretation of CENVAT Credit Rules in relation to clearance of waste or scrap.
3. Applicability of previous Tribunal judgments on similar cases.

Analysis:
Issue 1: The dispute revolved around whether glass bottles, used for filling aerated waters and cleared as glass scrap after breakage, are excisable. The department argued that duty should be paid on the glass scrap since CENVAT Credit was taken for the glass bottles. However, during the period in question, there was no provision in the CENVAT Credit Rules requiring payment when cleared as waste. The Tribunal examined the matter based on the Central Excise Act and previous judgments. It was held that the glass waste was not excisable, as per the Tribunal's previous decisions and the absence of relevant provisions during the disputed period.

Issue 2: The Tribunal highlighted that the CENVAT Credit Rules did not mandate payment when inputs cleared as waste during the relevant period. The introduction of Rule 3(5) in 2005 specified payment for cleared waste, but this was not applicable to the case in question. The department's demand for duty on glass waste was deemed unsustainable due to the absence of such provisions during the disputed period.

Issue 3: The appellant relied on previous Tribunal judgments in similar cases to support their argument. The Tribunal referenced judgments like CCE-Delhi Vs. Dhillon Kool Drinks & Beverages Ltd. and others, which held that glass scrap from broken bottles used in aerated water production is not excisable. These precedents were deemed applicable to the present case, leading to the setting aside of the impugned order and allowing the appeal in favor of the appellant.