Tribunal rejects duty claim on broken bottles, citing Central Excise Rules. Compliance with Circular key.

The Tribunal allowed the appeal in a dispute concerning liability for duty on broken bottles, rejecting the Department's claim based on past CENVAT credit. It held that Rule 21 of the Central Excise Rules, 2002, did not apply as the bottles were used as packing material and not cleared separately. The duty on the aerated water contents had been paid upon clearance, rendering Rule 21 inapplicable to the bottles as containers. The Appellant demonstrated compliance with a Circular, including meeting the permissible loss limit for glass bottles, leading to the appeal's success.

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Issues: Dispute over liability to duty for broken bottles due to past CENVAT credit; Applicability of Rule 21 of Central Excise Rules, 2002; Interpretation of Rule 21 in relation to cleared goods and containers; Compliance with Circular and permissible loss limit for glass bottles.

The judgment addresses a dispute where the Department contested the liability of broken bottles to duty due to the assessee's prior CENVAT credit utilization. The Appellant argued against the application of Rule 21 of the Central Excise Rules, 2002, citing a judgment by the Hon'ble High Court of Allahabad in Hindustan Coca-Cola Beverages Pvt. Ltd. Vs. Union of India. The Tribunal examined the records and noted that Rule 21 pertains to cleared goods, whereas the bottles in question were used as packing material for aerated water, not cleared as standalone items. The duty had already been paid on the aerated water contents upon clearance, making Rule 21 inapplicable to the bottles functioning as containers. The Appellant claimed compliance with a Circular, satisfying all conditions, including the permissible loss limit of 0.5% for glass bottles, with losses duly recorded in statutory records and known to the Department. Consequently, in line with the Allahabad High Court decision and the Circular, the appeal was allowed.

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