1996 (7) TMI 333

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....at credit and also imposed penalty of Rs. one lakh on the appellants. The appellants manufacture I.V. Fluids classifiable under sub-heading 3003.20 CETA. They are availing of Modvat credit. They had declared bottles as input. The department found that there had been excess issue of the bottles and there was no corresponding production of medicines and on being asked to account for the detailed disposal of inputs, the appellants submitted that there was excess issue of bottles and because there was breakage of bottles at various stages in the process of manufacture. There were conflicting statements from the office incharge of the appellants firm and from Shri N.K. Dani, partner about the disposal of the rejected bottles. The office incharge....

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....Excise Rules clearly mandates that no Modvat credit is permissible on the inputs used in the manufacture of goods which are cleared under full duty exemption or where they are chargeable to nil rate of duty. The contention that these are cleared for use within the factory under Notification No. 171/70, will not advance the case of the appellants so long as they remain clearances of finished product under exemption notification without payment of duty. Therefore, in the facts of this case, the order of the lower authority in respect of this demand is upheld. 3. In respect of Modvat credit on bottles broken during handling, the demand for duty on such bottles does not seem to be justified. The final product here manufactured by the ap....