2015 (10) TMI 2265 - AT - Central Excise

Reversal of CENVAT Credit - Clearance of empty glass bottles on commercial invoices - Held that - Observation of the original authority that the bottles were unused is without any supporting evidence and we also observe that in the findings itself the original authority has mentioned the explanation of the appellant that the glass bottles were old, unusable or broken or brand name was scratched etc. Thus the finding of the original authority is without any basis. We also find that the Commissioner (Appeals) in his findings has only stated that the bottles were not unusable. Whatever the reason may be, there are no evidences that the bottles sold were unused bottles and in our view, the criteria prescribed under Rule 57F(1) is satisfied i.e. the inputs have been used in the manufacture of final products. Since the bottles have been used in the manufacture of final products, we do not find any reason to demand the cenvat credit availed on such glass bottles. In the result, the demand is not sustainable. - Decided in favour of assessee.

Summary

Issues:
1. Availing cenvat credit on empty glass bottles without reversing it.
2. Interpretation of Rule 57F of the Central Excise Rules regarding the removal of inputs for home consumption.
3. Whether the glass bottles sold were used or unused.

Analysis:
1. The appellant, engaged in manufacturing aerated waters, sold empty glass bottles without reversing cenvat credit availed during April 1994 to November 1996. The Revenue contended that since the bottles were removed for home consumption, the appellant should reverse the cenvat credit. The appellant argued that the bottles were reused, becoming redundant over time, and were sold only after becoming old and unusable. They emphasized that no credit was availed for bottles of other brand owners and cited previous cases supporting their stance.

2. The Tribunal considered the submissions and found that the bottles sold were indeed used in the manufacture of final products, meeting the criteria under Rule 57F(1). The original authority's claim that the bottles were unused lacked evidence, and the Commissioner (Appeals) stated that the bottles were still capable of use and not scrap. However, the Tribunal noted that there was no proof that the sold bottles were unused, and as they were used in manufacturing final products, the demand to reverse cenvat credit was deemed unsustainable. Consequently, the penalty was also deemed unsustainable, and the appeal was allowed.

3. The Tribunal's decision highlighted the importance of evidence and adherence to the provisions of Rule 57F in determining the eligibility to reverse cenvat credit on sold glass bottles. The case underscored the necessity for clear documentation and substantiation of claims regarding the utilization of inputs in manufacturing processes to avoid unwarranted demands for credit reversal.