M/S. Pepsico India Holdings (P) Ltd vs Cce- Meerut-Ii

[Arising out of order-in-appeal no. 281-CE/MRT-II/2005 dated 29.11.2005 passed by Commissioner (appeals) Customs & Central Excise-Meerut-II]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

M/s. Pepsico India Holdings (P) Ltd., Appellant

Vs.

CCE- Meerut-II Respondent

Appearance: Shri B.L. Narsimhan, Advocate for the appellant.

Shri M.S. Negi, DR for the Respondent.

Coram: Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

Final Order NO. 51702/2015

Per: Rakesh Kumar

The appellants are manufacturers of Aerated Water. One of the inputs is glass bottles in respect of which input duty CENVAT Credit has been taken. Some glass bottles, during use get broken and the same are cleared as glass scrap. The department was of the view that the glass scrap in the form of broken glass bottles would attract Central Excise Duty. It is on this basis that the Joint Commissioner vide order-in-original dated 21/6/2005 confirmed the duty demand of Rs. 1,65,766/- against the appellant for the period from April, 2001 to August, 2003 along with interest on it under section 11AB and imposed penalty of equal amount on them under section 11AC on appeal being filed to Commissioner (appeals). Against this order, the same was dismissed by the Commissioner (appeals) vide order in-appeal dated 29/11/2005. Against this order of the Commissioner (appeals), this appeal has been filed.

2. Heard both the sides.

3. Shri B.L. Narsimhan, Advocate, ld. Counsel for the appellant pleaded that the issue involved in this case has been decided in the favour of the appellant by series of judgments of the Tribunal in the case of CCE-Delhi Vs. Dhillon Kool Drinks & Beverages Ltd. reported in 2001 (130) ELT 475 (Tri-Del.), Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Commr. Of EX., Mumbai reported in 2003 (159) ELT 938 (Tri-Mumbai), Ponna Bottling Co. Ltd. Vs. Commissioner of Central Excise, PUNE-II reported in 2001 (134) ELT 445 (Tri-Mumbai), Charminar Bottling Co. (P) Ltd. Vs. Commissioner of C. EX., Hyderabad reported in 2001 (134) ELT 179 (Tri-Del.) and that in all these cases, Tribunal has held that when glass bottles which were broken during the process of filling, handling, etc. duty paid aerated water, glass scrap in the form of broken bottles is not excisable under sub-heading 7001.10 of the tariff and as such no excise duty is payable. He, therefore, pleaded that in view of this the impugned order is not sustainable.

4. Shri M.S. Negi, ld. DR defended the impugned order by reiterating the findings of the Commissioner (appeals). He pleaded that glass waste is specifically covered by heading 7001.10 of the tariff and hence, is excisable and under CENVAT Credit Rules, final products means, the excisable goods manufactured or produced from inputs. He also pleaded that the Tribunals judgment cited by ld. counsel for the appellant pertain to the period when CENVAT Credit Rules, were not there.

5. We have considered the submissions from both the sides and perused the records.

6. The point of dispute in this case is as to whether the glass bottles which were used for filling/packing of the aerated waters and which in course of manufacture of aerated waters were broken, and were cleared as glass scrap are excisable. The departments contention is that since, CENVAT Credit had been taken in respect of the glass bottles, at the time of clearance of glass scrap, duty would be payable. However, we find that during the period of dispute there was no provision in the CENVAT Credit Rules, 2001/2002 providing that when CENVAT Credit availed inputs are cleared as waste, some amount in respect of the same is required to be paid. It is only sometime in 2005 that Rule 3 (5) was introduced in CENVAT Credit Rules, 2004 specifically, providing that when CENVAT Credit has been taken in respect of certain inputs or capital goods and the same are cleared as waste or scrap, an amount as specified in that sub-rule would be payable. During the period of dispute, there was no such provision. Moreover, the department in these cases, has demanded Central Excise Duty by treating glass waste as manufactured product and this issue has been examined in the Tribunals judgment cited by the ld. Counsel for the appellant on the basis of the section 2 (d) of the Central Excise, Act, 1944. In view of this, we hold that the judgment of the Tribunal in the case of Commissioner of C. EX., Delhi Vs. Dhillon Kool Drinks & Beverages Ltd. (supra) the civil appeal against which has been dismissed by the Apex Court vide judgment reported in 2002 (144) ELT A 210 SC and also judgments of Tribunal in the cases of Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Commr. Of EX., Mumbai reported in 2003 (159) ELT 938 (Tri-Mumbai, Ponna Bottling Co. Ltd. Vs. Commissioner of Central Excise, PUNE-II reported in 2001 (134) ELT 445 (Tri-Mumbai), Charminar Bottling Co. (P) Ltd. Vs. Commissioner of C. EX., Hyderabad reported in 2001 (134) ELT 179 (Tri-Del.), would be applicable to the facts of this case. The impugned order is, therefore, not sustainable. The same is set aside. The appeal is allowed.

(Rakesh Kumar) (S.K. Mohanty)

Member (Technical) Member (Judicial)

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