2013 (12) TMI 453 - AT - Central Excise

Tribunal Overturns Duty Demands on Glass Bottles & Plastic Crates, Emphasizes Procedural Compliance

M/s HINDUSTAN COCA-COLA BEVERAGES PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE, PUNE

The Tribunal set aside the demands of duty on used empty glass bottles and plastic crates, penalties imposed under Rule 26, and challenges to the reversal ... Duty demand under Rule 16 of the Central Excise Rules, 2002 on the used empty glass bottles and used plastic crates cleared by Pune Unit to other units of M/s. Hindustan Coca Cola Beverages Pvt. Ltd – Held that:- In respect of used glass bottles/ used plastic crates, no separate duty has been paid at the time of removal as these were part of liquid beverage being cleared by the appellants - Duty was paid by the original manufacturer of glass bottles/plastic crates and credit of the duty so paid has already been taken by some or other unit of appellant - no Cenvat Credit was taken at the time of receipt of used glass bottles/plastic crates – thus, amount to be paid at the time of clearance will be zero. The nature of goods is such identification with a particular unit is not practically possible - it is neither possible for the assessee nor the department to prove one way or the other - the used glass bottles/crates were cleared on reversal of Cenvat Credit by the Nashik Unit - availment of Cenvat Credit by Wada Unit cannot be denied on the grounds that Cenvat Credit was not required to be reversed at Nashik unit – Relying upon Commissioner of Central Excise, Chennai Vs. CEGAT [2005 (1) TMI 125 - HIGH COURT OF JUDICATURE AT MADRAS] - once duty paid inputs received, Modvat Credit cannot be denied on the grounds that such inputs were not liable for duty - If any action for wrong payment of duty is required to be taken, it should be at the place where the duty was paid - Demand set aside – Decided in favour of Assessee. Issues Involved:1. Demand of duty under Rule 16 of the Central Excise Rules, 2002 on used empty glass bottles and plastic crates.2. Imposition of penalties under Rule 26 of the Central Excise Rules, 2002.3. Jurisdictional authority to challenge the reversal of Cenvat Credit.4. Validity of Cenvat Credit availed by Wada unit.5. Miscellaneous issues involving discrepancies in invoices.Detailed Analysis:1. Demand of Duty under Rule 16 of the Central Excise Rules, 2002:The primary issue in the appeals by M/s. Hindustan Coca Cola Beverages Pvt. Ltd. (HCCBPL) Pune was the demand of duty on used empty glass bottles and plastic crates transferred to other units without reversing the Cenvat Credit. The Tribunal noted that Rule 16 applies to goods brought back to the factory for remaking, reconditioning, etc., and allows taking Cenvat Credit of the duty paid. However, since no separate duty was paid on the bottles/crates at the time of removal as they were part of the liquid beverage, and no credit was taken upon their return, the Tribunal found no justification for confirming the demand. Thus, the orders demanding duty were set aside.2. Imposition of Penalties under Rule 26 of the Central Excise Rules, 2002:In the appeals against the Order No. 18/MS-18/2008/Th-I, penalties were imposed on the Wada unit and its officials under Rule 26. The Tribunal considered the nature of the goods and the operational practices, noting that the used bottles/crates could not be distinctly identified with particular units. The Tribunal found that the penalties were not justified given the operational context and set aside the penalties, except for a specific amount of Rs.43,744/- where the appellant admitted to an error.3. Jurisdictional Authority to Challenge the Reversal of Cenvat Credit:The Wada unit's appeal raised the issue of jurisdiction, arguing that the Commissioner of Central Excise, Thane I, had no authority to dispute actions taken by the Nashik unit. The Tribunal agreed, noting that the Nashik Commissionerate had not challenged the reversal of credit. Citing precedents, the Tribunal held that any action for wrong payment of duty should be taken where the duty was paid, thus setting aside the demand on this count.4. Validity of Cenvat Credit Availed by Wada Unit:The Tribunal examined whether the Wada unit could take Cenvat Credit on used bottles/crates cleared by the Nashik unit. Given that the Nashik unit reversed the credit and the Commissioner/Nashik had not disputed this, the Tribunal found that the Wada unit was entitled to the credit. The Tribunal referenced the Madras High Court's judgment, emphasizing that relief should be granted if the raw material suffered duty, thus setting aside the demand related to this issue.5. Miscellaneous Issues Involving Discrepancies in Invoices:Several smaller issues involved discrepancies in invoices, such as duplicate invoice numbers, different sizes of invoice copies, and document control numbers. The Tribunal reviewed the explanations provided by the appellants and found them reasonable, setting aside most of the demands. However, the Tribunal upheld a penalty of Rs.43,744/- for admitted errors and confirmed the payment of interest on certain amounts.Conclusion:The Tribunal set aside the majority of the demands and penalties, emphasizing the operational realities and jurisdictional limits. It upheld only specific minor penalties and interest payments where the appellants admitted errors. The judgment underscores the importance of procedural adherence and jurisdictional authority in excise matters.