2009 (6) TMI 704 - AT - Central Excise

Tribunal defers duty payment examination to final hearing, upholds waiver of duties and penalties

HINDUSTAN COCA COLA BEVERAGES PVT. LTD. Versus COMMR. OF C. EX., THANE-I

The Tribunal deferred the examination of duty payment correctness to the final hearing, noting the issue's pendency in other cases. Considering revenue ... Stay/Dispensation of pre-deposit - Cenvat/Modvat - Demand - Time Limitation - whether Nashik unit correctly paid the duty on used empty glass bottles and crates shall be gone into at the time of final hearing? Issues:Stay petition seeking waiver of pre-deposit and penalties for availing Cenvat credit on glass bottles and plastic crates, demands for non-payment of duty, procedural irregularities, financial hardship, and revenue neutrality.Analysis:1. The Company filed a Stay Petition seeking waiver of pre-deposit of credit and penalties imposed. The Counsel argued that the Company, with bottling plants nationwide, availed Cenvat Credit on duty paid for new glass bottles and plastic crates, which were later used and returned between units. The Department demanded duty payment or credit reversal on used bottles and crates, leading to the Company adopting a duty payment policy. The Counsel cited revenue neutrality and eligibility of credit recipients in support. The Counsel also argued against time-barred demands, procedural irregularities, and financial hardship.2. The Joint CDR countered, emphasizing the need for credit reversal as per Cenvat Credit Rules, highlighting the Company's admission of not availing credit on returned bottles. The Joint CDR argued against the 'as such' removal of re-used bottles and crates, citing the Company's record-keeping capabilities. The Commissioner's decision was supported with references to Tribunal rulings and the Company's issuance of duplicate invoices. The financial impact on the Company was also questioned.3. After hearing both sides, the Tribunal deferred the examination of duty payment correctness to the final hearing. The issue's pendency in other units' cases was noted. The Tribunal considered the revenue neutrality argument and the undue hardship if the Company paid duty again. The Tribunal found merit in the argument against disallowing credit due to procedural breaches and left open the Rule 3(4) conditions examination for the final hearing.4. The Tribunal acknowledged the lack of suppression or misstatement based on audits and unrebutted evidence. A prima facie case was found for total waiver of demanded duties and penalties. The pre-deposit and recovery of duties and penalties were stayed pending appeal disposal. All issues were left open for final hearing consideration.5. The judgment was pronounced on 23-6-2009, with a strong prima facie case established for the waiver of duties and penalties. The Tribunal maintained an open stance on all issues for the final hearing.