2000 (1) TMI 103 - AT - Central Excise

Summary

Issues: Appeal against duty demand for excess Modvat credit availed due to breakage of glass bottles.

Analysis:
1. Facts of the Case: The respondent company manufactured pharmaceutical products under Chapter 30 of the Central Excise Tariff Act, 1985, and availed Modvat facility. A duty demand of Rs. 57,257.60 was raised for excess Modvat credit availed due to the quantity of bottles not actually used in production. The Assistant Commissioner confirmed the duty demand, which was set aside by the Commissioner, leading to the department's appeal.

2. Contentions: The department argued that there was no evidence of the actual number of bottles lost due to breakage, no documentary evidence or records to show the loss, and the glass scrap from breakage was not waste as per rule 57D. The respondent justified the Modvat credit availed on account of breakage as permissible under rule 57D(1) due to unavoidable breakage during manufacturing. The respondent maintained that the breakage proportion was small and reasonable, citing precedents supporting their claim.

3. Authorization Compliance: The authorization issued by the Commissioner of Central Excise did not comply with Section 35B clause (ii) of the Central Excise Act as it lacked a conclusion on the legality of the impugned order. Due to this deficiency, the appeal was deemed not maintainable and was disallowed.

4. Order Evaluation: The impugned order was supported by statistical data on input usage and the possibility of breakage in the manufacturing process. The Assistant Commissioner's dismissal of breakage as an alibi was unfounded, and the order-in-appeal was deemed well-founded, citing precedents like the Glaxo case. The decision emphasized the industry-wide assessment of breakage, rejecting the appellant's contentions and upholding the rejection of the appeal.

In conclusion, the judgment addressed the duty demand issue concerning excess Modvat credit availed due to breakage of glass bottles, analyzing the evidence, contentions, authorization compliance, and order evaluation to reject the appeal and affirm the impugned order.