2006 (5) TMI 37 - AT - Central Excise

Central Excise Exempted vanaspati containers ceased - Demand confirmed on the plastic containers used in packaging of exempted vanaspati as appellant sent granules to job worker for manufacture of containers claiming exemption under Notif. No. 214/86-CE dt. 25.3.86 and cleared without payment of duty which were liable to duty

Summary

Issues involved: Duty demand on plastic containers used in packaging of Vanaspati, penalty on plastic container manufacturer, penalty on vanaspati manufacturer under Rule 209A.

Duty demand on plastic containers used in packaging of Vanaspati:
The appellant received plastic granules for converting into containers used for packaging Vanaspati. The Central Excise officers confirmed duty demand on the plastic containers, even though the procedure under Notification No. 214/86-CE was followed. The duty demand was discharged before the show cause notice was issued. The Tribunal upheld the duty demand as the benefit of duty on clearances of plastic containers was not available when Vanaspati was fully exempted from duty.

Penalty on plastic container manufacturer:
Referring to the decision in Machino Montell case, the penalty under Section 11AC was set aside for the plastic container manufacturer. However, the confiscation liability on containers under seizure was upheld, and the redemption fine was reduced to 30% of the value of the seized goods.

Penalty on vanaspati manufacturer under Rule 209A:
The vanaspati manufacturer was penalized under Rule 209A as they were aware that their Vanaspati was under exemption and they could not receive duty-free plastic containers. The Tribunal confirmed the penalty under Rule 209A but reduced it to Rs. 30,000 considering the circumstances of the case.

In conclusion, the Tribunal confirmed the duty demand on plastic containers, set aside the penalty under Section 11AC for the plastic container manufacturer, and confirmed the penalty under Rule 209A for the vanaspati manufacturer but reduced it to Rs. 30,000. The redemption fine was reduced to 30% of the value of the seized goods. The appeals were partially allowed, and the applications were disposed of accordingly.