2008 (2) TMI 965 - AT - Central Excise

Summary

Issues involved: Appeal against demand confirmation and penalty imposition by the adjudicating authority, appeal by revenue against setting aside demand of Central Excise duty.

Demand Confirmation and Penalty Imposition:
The appellant, a company manufacturing glass bottles, was found to have under-valued clearances by not including the cost of primary packing material supplied free of cost by customers and availing Modvat credit without reversing it. The adjudicating authority confirmed the demand on clearances without payment of duty and imposed a penalty of Rs. 6.71 lakhs under Sec. 11AC.

Appellant's Submission:
The appellant argued that the dropping of the demand related to packing material cost was correct as per Supreme Court precedent. They clarified that freshly manufactured bottles were cleared against rejected duty paid bottles due to customer needs, and any Modvat credit lapses were rectified promptly.

Revenue's Submission:
The Revenue contended that the dropping of proceedings regarding packing material cost was incorrect, as the material supplied by customers was not returned and all goods were sold in packed condition at the factory gate.

Judgment:
The Tribunal upheld the dropping of proceedings related to packing material cost based on the Supreme Court ruling. The appellant's admission of Modvat credit lapse and subsequent correction were noted. However, duty confirmation on clearances of freshly manufactured bottles against rejected duty paid bottles was upheld, citing procedural violations and extended limitation period for demand confirmation. The penalty imposition was deemed valid. The appeals were disposed accordingly.