9911796707
TMI Blog1996 (7) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The appellants manufacture I.V. Fluids classifiable under sub-heading 3003.20 CETA. They are availing of Modvat credit. They had declared bottles as input. The department found that there had been excess issue of the bottles and there was no corresponding production of medicines and on being asked to account for the detailed disposal of inputs, the appellants submitted that there was excess issue of bottles and because there was breakage of bottles at various stages in the process of manufacture. There were conflicting statements from the office incharge of the appellants firm and from Shri N.K. Dani, partner about the disposal of the rejected bottles. The office incharge person indicated that rejected bottles are broken whereas the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs used in the manufacture of goods which are cleared under full duty exemption or where they are chargeable to nil rate of duty. The contention that these are cleared for use within the factory under Notification No. 171/70, will not advance the case of the appellants so long as they remain clearances of finished product under exemption notification without payment of duty. Therefore, in the facts of this case, the order of the lower authority in respect of this demand is upheld. 3. In respect of Modvat credit on bottles broken during handling, the demand for duty on such bottles does not seem to be justified. The final product here manufactured by the appellants is I.V. Fluids which have to be manufactured in accordance with the U. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Modvat credit on their inputs, but will be eligible for Modvat in terms of Rule 57D (1) provided that such rejected waste is destroyed in accordance with the procedure under Rule 57F prescribed for the purpose. Therefore, we hold that same will apply in the present case in respect of rejected bottles which emerge before the RG 1 stage and Modvat credit thereon cannot be denied in terms of Rule 57D(1) subject to these being destroyed as per procedure in Rule 57F. That brings us to the question of quantum of penalty. The Additional Commissioner seems to have taken an adverse view because of the slow response from the appellants to the Department s queries which he termed as non-cooperation. Be that as it may the quantum of penalty has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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