2004 (7) TMI 203 - AT - Central Excise

Summary

Issues:
Challenge to duty demand and penalty for disposal of aerated water without proper accountal and payment of duty.

Analysis:
The appeal challenged the correctness of the impugned order-in-appeal that affirmed the duty demand of Rs. 6,59,137.00 with an equal penalty against the appellants. The duty was confirmed due to the disposal of manufactured aerated water without proper accountal in RG-1 and without duty payment, along with the disposal of samples required for laboratory tests without accountal or duty payment. The appellants argued that the disposed aerated water was not marketable and, therefore, not liable for duty. They claimed the water did not meet quality standards, but this plea was rejected as there was no evidence of proper disposal procedures followed by the appellants.

The appellants contended that the disposed aerated water did not qualify as 'goods' for duty levying purposes due to defects, which were recorded in production formats. However, the authorities did not accept this plea as the appellants failed to provide evidence of proper disposal or destruction of the defective goods. The appellants did not follow the required procedures for disposing of excisable goods, such as seeking remission/abatement of duty under Rule 49 of the Rules. The absence of evidence regarding the destruction of the defective goods led to the rejection of the appellants' claim for non-marketability.

The Tribunal noted that the case law and guidelines cited by the appellants were not applicable to the present situation. The appellants failed to make entries in the RG-I register regarding the manufacture and disposal of aerated water bottles/crates, which was a procedural requirement. The appellants did not follow the necessary procedures for disposing of the goods, leading to the confirmation of duty demand against them. The penalty imposed on the appellants was reduced to Rs. 65,000 considering the circumstances of the case. Ultimately, the impugned order was upheld, except for the modification in the penalty amount.

In conclusion, the Tribunal upheld the duty demand against the appellants for disposing of aerated water without proper accountal and payment of duty. The appellants' plea of non-marketability was rejected due to the lack of evidence supporting the proper disposal of defective goods. The penalty imposed was reduced, but the overall decision of the impugned order was upheld based on the facts and circumstances of the case.