1995 (11) TMI 473 - AT - Central Excise

Summary

Issues:
- Duty demand on unaccounted crown corks used in the manufacture of Aerated Water
- Applicability of Rule 57-1 of the Central Excise Rules
- Allegation of clearing final product without payment of duty
- Interpretation of Modvat Credit in relation to damaged crown corks
- Lack of inquiry into procurement and utilization of materials for manufacturing

Analysis:
The case involved an appeal by M/s. Punjab Beverages Pvt. Limited against a duty demand of &8377; 69,432.60 for unaccounted crown corks used in manufacturing Aerated Water. The duty demand was based on the allegation that the appellants did not dispose of 150882 crown corks as required by Rule 57F(4) of the Central Excise Rules. The main argument presented was that the wastage of crown corks during manufacturing was unavoidable and had been acknowledged by the department in previous instances. The appellants contended that Rule 57-1 of the Central Excise Rules, invoked for duty demand on Aerated Water, only applied to Modvat Credit on inputs, not final products. They argued that no suppression or misstatement occurred, and the demand should not extend beyond six months. Additionally, they claimed eligibility for Rule 57D(1) benefits and highlighted that damaged crown corks were still available during the proceedings. The Tribunal found the demand unsustainable, noting the lack of inquiry into other manufacturing materials, the absence of findings on the normality of reported wastage, and the untenable assumption of Aerated Water production solely based on damaged crown corks. The impugned order was set aside, and the appeal was allowed.

The Tribunal emphasized that the demand was not for disallowing Modvat Credit but for duty on the final product, Aerated Water, calculated based on reported waste crown corks. It clarified that Rule 57-1 applied only to Modvat Credit issues, not duty on final products. The lack of investigation into the procurement and utilization of other materials necessary for manufacturing Aerated Water was highlighted, indicating a crucial oversight in the authorities' findings. The Tribunal deemed the demand unreasonable, as it solely relied on the assumption that the reported damaged crown corks corresponded to the entire production of Aerated Water, without considering other essential components. The Tribunal also noted the appellants' significant production volume and duty payments, underscoring the insignificance of the reported crown cork wastage in relation to their overall operations. Ultimately, the Tribunal found the impugned order unsustainable due to the absence of factual support for the duty demand and set it aside, allowing the appeal.