1994 (4) TMI 172

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....ing of the goods in the respondents' factory cannot be asked to be reversed in view of Rule 57D of the Central Excise Rules, 1944. The learned lower appellate authority has also allowed the respondents' plea on limitation. 2. The appellant-Collector has urged the following grounds of appeal : "(a) The Collector (Appeals) erred in appreciating that :- (i) The credit availed on inputs i.e. Glass bottles is available provided final product suffers C. Excise duty, as per Rule 57A. As the Glass Bottles broken were cleared before use as inputs in manufacture, credit availed is contravening the provisions of Rule 57C of Central Excise Rules, 1944 and hence not admissible. (ii) The waste and scrap of Glass Bottles are not by-product in ....

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....in the light of the Rule 57C, the modvat credit corresponding to the input (glass bottles) contents, contained in the waste requires recovery. The learned lower appellate authority while setting aside the order of the learned original authority, has held as under : "The appellants plea that the notice is hit by limitation is correct and on this point the said appeal is allowed. IIndly on the merits of the case there is no denial of the fact by the Asstt. Collector that the glass bottles are used as inputs in the manufacture of final product P or P medicines. During the process of manufacture certain bottles got broken and these are to be discarded. Credit involved in respect of the inputs which become waste during the course of manufactu....

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....DVAT rules the same have to be utilised in terms of Rule 57F. There is no dispute that the glass bottles were taken into use for the purpose of manufacture of finished product and while doing so some of the bottles got broken. Rule 57F(4) specifically provides for as to how the waste has to be dealt with during the course of manufacture. Under this Rule any waste arising from the processing of inputs in respect of which credit has been taken may be removed or destroyed as provided for under the said sub-rule. In the context of the use of glass bottles the word "processing" has to be given a wider meaning. The bottles may themselves may not undergo any change and may only be physically removed for being used as packing materials. The taking ....