2018 (4) TMI 1159 - AT - Central Excise

Appellant wins CENVAT credit battle for plastic crates with separate accounts upheld by Tribunal.

M/s. Hindustan Coca–Cola Beverages Pvt. Ltd. Versus CCE, Chennai – IV

The appellant successfully claimed CENVAT credit on plastic crates used for both dutiable and exempted goods by maintaining separate accounts for crates ... CENVAT credit - manufacture of dutiable as well as exempt goods - appellants were using plastic crates printed as 'Coke/ Coca Cola' as transportation / packing materials for both the dutiable as well as exempted goods - non-maintenance of separate records - Held that: - The issue stands decided in the appellant‟s own case PEPSICO INDIA HOLDINGS PVT. LTD. Versus COMMR. OF C. EX., PONDICHERRY [2007 (4) TMI 84 - CESTAT, CHENNAI], where it was held that Non maintenance of accounts as regards use of credit availed inputs which have already been used once in the packing of final products does not invite the liability of 8% (later 10%) of the sale price of exempted final products as provided in Rule 6 of the CCR ibid - demand cannot sustain - appeal allowed - decided in favor of appellant. Issues:1. CENVAT credit on plastic crates used for both dutiable and exempted goods.2. Allegation of not maintaining separate accounts for used crates.3. Grounds of limitation for raising the demand.4. Interpretation of CENVAT Credit Rules and maintenance of accounts for used crates.Issue 1: CENVAT credit on plastic crates used for both dutiable and exempted goods:The appellant, engaged in manufacturing aerated water and exempted goods, claimed CENVAT credit on plastic crates used for both types of products. The department alleged that the appellant did not maintain separate accounts for these crates. The appellant argued that they only claimed credit on virgin crates, fulfilled all conditions under CENVAT Credit Rules, and did not claim credit twice on used crates. They maintained separate accounts for crates purchased after 1.3.2001 for dutiable and exempted products. The Tribunal noted a previous case in favor of the appellant on a similar issue.Issue 2: Allegation of not maintaining separate accounts for used crates:The main allegation was the appellant's failure to maintain separate accounts for the crates reused in the factory. The appellant contended that they fulfilled all requirements under CENVAT Credit Rules, and the duty-paying character of crates was lost after first usage, justifying their claim for CENVAT credit. The Tribunal referred to a previous decision supporting the appellant's argument and set aside the demand.Issue 3: Grounds of limitation for raising the demand:The appellant argued that the demand raised after a lapse of 31 months was beyond the limitation period. They highlighted that they promptly responded to audit objections raised earlier, and the department took no further action. The appellant claimed that the extended period demand was not sustainable as they did not suppress any facts.Issue 4: Interpretation of CENVAT Credit Rules and maintenance of accounts for used crates:The Tribunal analyzed the provisions of Rule 6 of the CENVAT Credit Rules regarding the maintenance of accounts for used crates. It was emphasized that as long as the manufacturer maintained accounts of virgin inputs, there was no obligation to account for used inputs repeatedly used in manufacturing final products. The Tribunal found that the appellant had fulfilled the requirements of Rule 6(2) of the CENVAT Credit Rules and allowed the appeal, setting aside the demand.This detailed analysis of the judgment provides insights into the issues of CENVAT credit, maintenance of separate accounts, grounds of limitation, and the interpretation of relevant rules in the context of the appellant's case before the Tribunal.