1998 (10) TMI 233 - AT - Central Excise

Summary

Issues:
1. Demand of duty on glass bottles sold by the party.
2. Extended time limit for duty demand.
3. Contravention of various rules.
4. Imposition of penalty on the party and Director.

Analysis:

1. Demand of Duty on Glass Bottles Sold:
The Commissioner demanded duty and imposed penalties on the party for allegedly selling glass bottles without paying duty or reversing modvat credit. The appellant argued that the bottles sold were from pre-modvat stock and provided detailed explanations regarding their turnover, stock maintenance, and bottle quality. The Tribunal held that the department failed to prove that the bottles sold post-1991 were from modvat stock. Consequently, the demand for duty was deemed incorrect and unsustainable in law.

2. Extended Time Limit for Duty Demand:
Although the Tribunal ruled in favor of the appellants regarding duty demand, it noted that the extended time limit for duty demand could be applicable due to the lack of intimation or permission for clearing goods. This aspect was considered academically significant as the primary issue was resolved in favor of the appellants.

3. Contravention of Rules:
The Commissioner alleged contravention of multiple rules by the party, which was extensively discussed in the impugned order. The Tribunal found no legal infirmity in the Commissioner's observations regarding the contravention of Rules 9(2), 52A, 173B, 173C, 173F, 173G, 173Q, and 226.

4. Imposition of Penalty:
Regarding the imposition of penalties, the Tribunal acknowledged that modvat credit was admissible on the bottles used for filling aerated waters. However, the party failed to inform the department about using pre-modvat bottles, justifying the imposition of penalties. The initial penalty amount was deemed excessive and reduced from Rs. 19,61,566 to Rs. 5 lac on the party. The penalty on the Director was upheld due to evidence of clearing disfigured bottles without permission, but it was reduced from Rs. 3 lac to Rs. 50,000 considering the circumstances.

In conclusion, the impugned order was modified by reducing the penalties imposed on both the party and the Director. The Tribunal disposed of the appeal accordingly, providing relief to the appellants while upholding penalties for non-compliance with duty payment regulations.