2016 (3) TMI 258 - AT - Central Excise

Remission under Rule 21 of Central Excise Rules, 2002 - Liability on broken bottles - assessee had enjoyed CENVAT credit in the past - Held that - When Rule 21 of Central Excise Rules, 2002 is read that deals with the cleared goods. Bottles in this case are used as packing commodity but not cleared as such. The bottles were used as a filler of the aerated water. When the contents were cleared those were liable to duty and that has suffered duty. At the time of clearance, the duty having been suffered on the aerated water it cannot be conceived that Rule 21 is applicable to the bottles which were not cleared but were cleared as container containing the contents. The appellant s claim is also that it is governed by the Circular. All the conditions of the circular are satisfied by the appellant. Its loss of glass bottles are within the permissible limit of 0.5% and from to time the losses were recorded in the statutory record and known to the department. Therefore, following the decision of the Hon ble High Court of Allahabad in the case of Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Union of India 2013 (4) TMI 83 - ALLAHABAD HIGH also the circular, the appeal is allowed in favour of assessee

Summary

Issues: Dispute over liability to duty for broken bottles due to past CENVAT credit; Applicability of Rule 21 of Central Excise Rules, 2002; Interpretation of Rule 21 in relation to cleared goods and containers; Compliance with Circular and permissible loss limit for glass bottles.

The judgment addresses a dispute where the Department contested the liability of broken bottles to duty due to the assessee's prior CENVAT credit utilization. The Appellant argued against the application of Rule 21 of the Central Excise Rules, 2002, citing a judgment by the Hon'ble High Court of Allahabad in Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Union of India. The Tribunal examined the records and noted that Rule 21 pertains to cleared goods, whereas the bottles in question were used as packing material for aerated water, not cleared as standalone items. The duty had already been paid on the aerated water contents upon clearance, making Rule 21 inapplicable to the bottles functioning as containers. The Appellant claimed compliance with a Circular, satisfying all conditions, including the permissible loss limit of 0.5% for glass bottles, with losses duly recorded in statutory records and known to the Department. Consequently, in line with the Allahabad High Court decision and the Circular, the appeal was allowed.