2000 (7) TMI 358 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit and penalty imposition by Assistant Commissioner upheld by Commissioner (Appeals).
2. Appeal against Commissioner (Appeals) order.
3. Availability of Modvat credit on empty glass bottles.
4. Time bar of demand.
5. Inclusion of value of empty glass bottles in final product.

Analysis:
1. The appellants, manufacturers of aerated waters, were denied Modvat credit of Rs. 44,987 by the Assistant Commissioner, who also imposed a penalty of Rs. 1,000. This decision was upheld by the Commissioner (Appeals).

2. The present appeal challenges the Commissioner (Appeals) order. The appellants were not present but requested their appeal to be decided on merits. The Assistant Commissioner's order highlighted that the party availed Modvat credit on empty glass bottles, which was deemed ineligible based on the Explanation to Rule 57A.

3. In their appeal, the appellants argued that the value of empty glass bottles was included in the final product's value on a pro-rata basis, considering the bottles' passage life. They cited precedents like Delhi Bottling Co. v. CCE, Chandigarh and Collector of Central Excise, Calcutta-1 & II v. Black Diamond Beverages Ltd. to support their contention.

4. The appellants also raised the issue of the demand being time-barred, as the demand period differed from the date of the show cause notice. The judgment referred to a Supreme Court decision in Collector of Central Excise, Jaipur v. Raghuvar (India) Ltd., stating that demands under Rule 57 would not be time-barred before 6-10-1998.

5. After a thorough review, the judge set aside the Commissioner (Appeals) order and remanded the matter to the original authority for fresh consideration. The judge emphasized that the inclusion of the value of empty glass bottles in the final product is a factual question requiring evaluation of evidence. The appellants were granted the opportunity to present their case and provide evidence in the de novo proceedings. The decision was influenced by previous tribunal judgments favoring manufacturers of aerated waters on this issue.