TaxTMI 
TaxTMI 
2013 (4) TMI 83
X X X X Extracts X X X X
X X X X Extracts X X X X
....th show cause notices dated 23.5.2008, 1.8.2008 and 3.11.2008 by the Joint Commissioner, Central Excise, Meerut-2 to show cause as to why a sum of Rs. 15,64,299/- and Rs. 1,08,080/- for the period June 2002 to June 2007 and July 2007 to September 2007 respectively may not be recovered as excise duty on the said 0.5% of the aforesaid excise goods under Section 11 A read with Section 11 A B of the Central Excise Act, 1944. On consideration of the interim replies furnished by the petitioners, Additional Commissioner, Central Excise vide order in Original Number 49-50/Additional Commissioner dated 22.10.2009 and 17-18/Addl. Comm/M-II/2010 dated 26.2.2010 affirmed the demand. The aforesaid orders were upheld in appeal by the Commissioner, Appeals (Customs) Central Excise and Service Tax vide orders dated 10.3.2010 and 23.7.2010 whereupon petitioners preferred revisions under Section 35 EE of the Act which were dismissed on 16.4.2012 and 9.8.2012 respectively. The above orders confirming the demand of excise duty for the above periods on 0.5% of the aerated waters produced and manufactured by the petitioners are under challenge in these writ petitions. I have heard Sri Tarun Gul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the petitioners, the same is subject to payment of excise duty. Section 37 B of the Central Excise Act, 1944 (hereafter referred to as Act) empowers the Central Board of Excise and Custom to issue such orders, instructions and directions to the Central Excise officers as it may deem fit inter alia for the purposes of levy of duties of excise on excisable goods. It is in exercise of above power conferred by Section 37B of the Act that Central Board of Excise and Custom had issued circular dated 8.9.1971 providing tolerance limit in respect of aerated waters to the extent of 0.5% subject to investigation by the Range staff. The aforesaid circular CBE CC No. ID/3/70-CX.B dated 8.9.1971 is reproduced herein below :- "3. Aerated Waters- Breakage of bottles after the stage of filing- Fixation of tolerance limit-question regarding-. The Board has had under examination the question regarding fixation of tolerance limit in respect of aerated waters on account of breakages of bottles occurring due to handling in course of movement from manufacturing place to bounded storeroom and at the time of clearance. After careful examination of the matter, it has been decided that such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 while dealing with circular issued by the Central Board of Direct Taxes took the view that circulars issued by the CBDT is to tone down the rigour of the law and are binding upon Income Tax Authorities. In Paper Products Limited Vs. Commissioner of Central Excise (1999) 7 SCC 84 their Lordships of the Supreme Court were dealing with a circular issued by the CBEC regarding classification of particular goods and they held that the circulars issued by the Board are binding upon the department and the department is precluded from challenging the correctness of the said circulars even on the ground of the same being inconsistent with the statutory provision. Therefore, whatever action is to be taken by the department, the same has to be in consistence with the circular in force at the relevant point of time. No contrary decision has been shown to me. Therefore, I have no option but to hold the above circulars dated 8.9.1971 and 17.9.1975 issued by the CBEC were binding, as undisputedly they were in force during the period June 2002 to September 2007. The above circulars have been withdrawn by the circular No. 930/20/2010 CX-dated 9.7.2010. The withdrawal has been done for two....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... specifically provide for the same. Further, as per Rule 3(5B) of CENVAT Credit Rules, 2004, if the value of any input is written off, the cenvat availed on the same is required to be reserved. Therefore, if the final product (i.e. bottled beverage) is broken/destroyed then remission can be claimed and if the bottle (input) is written off by the assessee as destroyed, the same is required to be dealt with as per the provisions of Rule 3 (5B) of CENVAT Credit Rules, 2004. 3. In view of the above, the application of the letters/instructions quoted in para 1 above, in the said judicial pronouncements, without recourse to the aforesaid provisions of law, is therefore per incuriam. Necessary action may be taken to safeguard revenue. Nevertheless, to avoid such such disputes in future, it is stated that the instructions/letters quoted in para1 above have no relevance in the present CENVAT scheme, and the instructions stand rescinded. 4. Trade and Industry as well as field formations may be suitably informed. 5. Receipt of this circular may kindly be acknowledged. 6. Hindi version will follow." A plain reading of the above circular brings to the forefront with certainty tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it of exemption on the tolerance limit as per the circulars. The aforesaid Rules came into force in 2002. Earlier to the enforcement of the above Rules, Central Excise Rules 1994 were in force and applicable. The aforesaid Rules also vide Rule 49 provided for remission of excise duty para materia with Rule 21 of the present Rules. Despite the rule providing for remission in existence since 1994, the authorities had never insisted for seeking remission as per the Rules and have been extending the benefit of exemption of excise duty on 0.5% of the tolerance limit as provided by circulars referred to above on the verification/satisfaction recorded by Range Staff. In the above situation, it is difficult to visualize the justification on part of the department to insist for claiming remission under Rule 21 of the Rules in respect of exemption of excise duty on 0.5% of the tolerance limit permitted in the circulars. The circular dated 8.9.1971 in plain and simple language provides that after careful examination of the matter regarding breakage of bottles of aerated waters occurring due to handling it has been considered proper to allow exemption 0.5% of the aerated waters produc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fair enforcement of the provisions of the Act and has the effect of toning down the rigour of law keeping in mind the practical aspect that during handling and movement of excise goods like aerated waters, breakage is unavoidable leading to certain percentage of loss. The said circulars as such ensure just, proper and efficient levy and collection of the excise duty and for proper and effective administration of the fiscal law avoiding undue hardship to the assessee. In addition to the above, when the department itself through its staff certifies the loss due to breakage of bottles in handling, their remains no justification for any further investigation in granting exemption to the extent indicated as Rule 21 of the Rules also permits remission subject to satisfaction of the Commissioner. The limited exemption of excise duty provided by the circulars is not in conflict with Rule 21 of the Rules rather it supplements the same. In case the procedure for remission under Rule 21 of the Rules is applied or followed, it would amount to multiplicity of proceedings adding to the burden of the department frustrating the purpose for which the circulars were issued. The above referr....