2007 (9) TMI 240 - AT - Central Excise

Use of common inputs plastic crates and Furnace Oil in the manufacture of dutiable aerated waters and exempted fruit pulp based drink Slice - it was not possible for the appellant to ascertain the quantum of input relatable to clearance of exempted Slice appellant reversed the entire credit availed held that reversal of ascertained credit on inputs used in exempted products before their clearance amounted to non-availment of credit demand under Rule 6(3) not sustainable

Issues:
1. Demand of duty on dutiable aerated waters and fruit pulp drink 'Slice' by Commissioner of Central Excise.
2. Imposition of penalty on M/s. Pepsico India Holdings India Pvt. Ltd.
3. Failure to maintain separate accounts of common inputs.
4. Appeal against Order No. 14/2005 dated 18-10-2005.
5. Appeal against Order No. 6/2006 dated 2-6-2006.
6. Errors apparent in Final Order No. 464/2007 dated 30-4-07.
7. Recalling of Final Order.
8. Review of own order.
9. Reversal of credit taken on common inputs.
10. Compliance with Rule 6(3)(b) of Cenvat Credit Rules, 2002.
11. Application of judicial authorities' decisions in the case.
12. Interpretation of Rule 6(3)(b) and related case laws.
13. Applicability of penalty provisions.
14. Consideration of separate accounts for common inputs.
15. Judicial interpretation of reversal of credit on exempted goods.

Analysis:
1. The Commissioner of Central Excise demanded duty on 'Slice' cleared by M/s. Pepsico India Holdings India Pvt. Ltd. The demand was challenged, and the appeal was allowed as it was found that the demand pertained to crates already accounted for and no new crates were used for packing 'Slice' bottles during the material period.

2. Penalties were imposed on PIHPL for not maintaining separate accounts of common inputs. The demand was upheld due to the failure to maintain separate accounts for Furnace Oil, even though the entire credit was reversed. However, errors in the computation of the demand were acknowledged, leading to the allowance of the appeal.

3. The failure to maintain separate accounts of common inputs led to demands and penalties. The Tribunal considered the requirement of maintaining separate accounts under Rule 6(3)(b) of CCR and the consequences of not fulfilling this condition.

4. The appeal against Order No. 14/2005 dated 18-10-2005 was allowed as the demand was set aside based on the usage of crates for packing duty paid goods.

5. The appeal against Order No. 6/2006 dated 2-6-2006 was partially upheld due to the failure to maintain separate accounts for Furnace Oil, despite the reversal of credit. The demand was set aside for the period in question.

6. Errors in the Final Order were identified, leading to a reconsideration of the demand upheld. The Tribunal acknowledged and rectified the mistakes in the computation of the demand.

7. The Final Order was recalled based on inconsistencies with previous judgments and the Supreme Court's ruling in Chandrapur Magnet Wires case.

8. The issue of reviewing one's own order was raised but overruled as the Misc. Order was passed after hearing all parties involved.

9. The reversal of credit taken on common inputs was a key point of contention, with arguments based on legal precedents and the timing of credit reversal.

10. Compliance with Rule 6(3)(b) of CCR was a central issue, with the Tribunal analyzing the necessity of maintaining separate accounts for common inputs.

11. The application of judicial authorities' decisions, such as Chandrapur Magnet Wires case, and their relevance to the present case were extensively discussed.

12. The interpretation of Rule 6(3)(b) and related case laws played a crucial role in determining the liability of the appellant and the applicability of penalty provisions.

13. The Tribunal examined the penal consequences for using common inputs and the implications of reversing the entire credit taken on such inputs.

14. The importance of maintaining separate accounts for common inputs to differentiate between dutiable and exempted final products was emphasized throughout the judgment.

15. The judicial interpretation of reversal of credit on exempted goods was a significant aspect in determining the liability of the appellant and the subsequent decision to set aside the demand.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the case and the Tribunal's decision-making process.

← Previous Next →