2015 (10) TMI 884 - AT - Central Excise

Denial of CENVAT Credit - manufacturer of aerated water, soda water and mineral water - Held that - Appellant is manufacturer of aerated water not glass bottles and these glass bottles have been broken during the packing of the aerated water which is scrap generated during the manufacturing of final product i.e. aerated water. Therefore, we hold that appellant is not manufacturing broken glass bottles which is merely a scrap. Therefore relying on the appellant s own case for the earlier period we hold that appellant is not entitled to pay duty on broken glass water. Consequently, impugned order is set aside. - Decided against Revenue.

Summary

Issues:
1. Liability to pay duty on broken glass bottles cleared as scrap without payment of duty.

Analysis:
The case involved the liability of the appellant, a manufacturer of aerated water, for paying duty on broken glass bottles cleared as scrap without payment of duty. The revenue contended that the broken glass bottles constituted scrap and were subject to duty payment. The lower authorities upheld this view and imposed duty, interest, and penalties for the period from October 2002 to June 2005. The appellant challenged this decision before the tribunal.

The appellant's counsel argued that in a previous order dated 16.04.2015, it was held that the appellant was not liable to pay duty on similar grounds. On the contrary, the Revenue reiterated the findings of the impugned order, maintaining that duty was indeed payable on the broken glass bottles cleared as scrap.

After hearing both parties and considering the submissions, the tribunal referred to the appellant's earlier case where it was established that during the relevant period, there was no provision in the CENVAT Credit Rules requiring payment when cleared inputs were treated as waste or scrap. The tribunal cited relevant judgments and held that the appellant, being a manufacturer of aerated water and not glass bottles, was not liable to pay duty on broken glass bottles considered as scrap generated during the manufacturing process of aerated water.

Therefore, based on the precedent set in the appellant's earlier case and considering the nature of the manufacturing process, the tribunal concluded that the appellant was not obligated to pay duty on the broken glass bottles cleared as scrap. Consequently, the impugned order demanding duty, interest, and penalties was set aside, and the appeal was allowed with any consequential relief deemed necessary.