The Customs, Excise& Service Tax AppellateTribunal, (CESTAT), Mumbai, Regional Bench, has recently while deciding upon an appeal filed before it by an appellant, held that excise duty is not demandable on the broken bottles of beverages.
The aforesaid observation was made by the Tribunal when, the assessee, M/s. PepsiCo (I) Holdings Pvt. Ltd., a company engaged in the manufacture of “Aerated Waters” at Roha plant, directed appeals against the orders-in-appeal of the Commissioner (Appeals), Mumbai-III & II, with regard to the recovery of excise duty in respect of on broken bottles of beverages.
The assessee appellant manufacturing aerated water in glass bottles and storing the same at their stores, removed some of the damaged glass bottles which were broken during the course of handling and storage, to its scrapyard, reversing the amount of Rs 5,47,217/- in September 2010, towards the CENVAT credit availed on such breakages.
With the revenue issuing show cause notices, proposing to recover excise duty along with interest and penalty in respect of these breakages, treating them as finished goods beverages, the appellant was left with no option but to file its appeals.
And deciding the same, the Tribunal obsereved :
“We have heardthe appellant andthe Revenue.We have considered the impugned orders along with the submissions made in appeal and during the course of argument.The reliance placed by the Commissioner (Appeal) on the Circular dated 09.07.2010 to decide the issue against the appellant for the period prior to issuance of the said circulars is contrary to the fact that during the period of dispute there were two circulars of 1971 and 1975 which have been followed by the appellant. It is not even stated in the impugned order that these two circulars were not applicable to the appellant. It is also noted that the MODVAT credit scheme was introduced in the year 1986 and CENVAT credit scheme is refined form of the said scheme.These circulars continued to hold field throughout till 09.07.2010.”
“Observations made by the Commissioner (Appeal) in para 8 of the impugned order cannot be sustained for this simple reason. However, we also note that substantial compliance with the circular of 2010 has been made by the appellant by reversing the CENVAT Credit on the inputs used in respect of the finished goods contained in the breakages. Thus, in our view, taking note of the reversal made, the impugned order cannot be sustained”, the bench added ,allowing the appeals and setting aside the impugned orders.
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