2007 (12) TMI 79 - AT - Central Excise

Finished goods i.e. aerated water bottles which had been destroyed/broken during handling/loading - respondent claimed remission in respect of breakage which were below 0.5% which is in permissible limit as prescribed in Board circular261 /D/1 /75 submission of revenue that Board Circular dated 17-9-1975 pertains to the period when Cenvat facilities were not there is immaterial reversal not required

Summary

Issues:
1. Duty liability on destroyed aerated water bottles.
2. Application of Rule 21 of Central Excise Rules for duty remission.
3. Interpretation of Board Circulars regarding remission of duty.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the question of duty liability on aerated water bottles destroyed during handling/loading. The Commissioner (Appeals) considered the appellant's submission regarding the remission of duty up to 0.5% as permitted by Board Circulars. The Revenue contended that the appellant should have applied for remission of duty under Rule 21 of Central Excise Rules and reversed the Cenvat credit on inputs used in the finished goods. The Revenue argued that the Board Circular from 1975 was not applicable due to the introduction of the Modvat credit/Cenvat facilities.

The Tribunal noted that the finished goods were indeed destroyed during manufacture and referred to the Board Circular from 1975 which allowed for a 0.5% tolerance limit for breakage of bottles. The Circular specified that this tolerance was applicable for breakages during handling, storage, and clearances. The Tribunal found that as inputs were used in the manufacturing process, there was no requirement to reverse the credit. Additionally, there was no evidence to suggest that the Board had modified the Circular when the Modvat scheme was introduced. Since the appellant claimed remission for breakage below 0.5% in line with the Circular, the Tribunal upheld the impugned order and dismissed the appeal.

In conclusion, the Tribunal's decision was based on the interpretation of the Board Circulars regarding the remission of duty for destroyed aerated water bottles. The Tribunal found that the appellant's claim aligned with the Circular's provisions, and as there was no evidence of a modification to the Circular, the duty liability was appropriately addressed. The judgment reaffirmed the importance of adhering to Circulars issued by the Board in matters of duty remission and credit reversal.