2004 (8) TMI 203

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.... availed Modvat credit on the inputs used as raw materials and packing materials issued and consumed during trial production in their factory. The goods manufactured on trial production were not within the quality parameters and the same had been destroyed by burying them in the pit. A Show Cause Notice was issued to them denying Modvat credit of Rs. 4,74,050/- said to be availed irregularly and for its recovery under Rule 57-I of Central Excise Rules besides proposing to impose penalty and charge interest. The case was adjudicated by the Joint Commissioner of Central Excise who ordered for reversal of credit of Rs. 4,74,050/- under Rule 57-I and imposed equivalent penalty under Rule 57-I(4) and demanded interest under Rule 57-I(5). The app....

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....7D provides that credit of duty should not be denied or varied where input is contained in any waste, refuse, or by product arising during the manufacture of the final products, or that the inputs have become waste during the course of manufacture of the final product. He said that in this case the inputs have become waste during the course of manufacture of final product. Therefore, as per Rule 57D, the credit is not deniable to them. He also pleaded that in this case, the Show Cause Notice has been issued to them on 1-11-1999 whereas they have made the payment of duty disputed on 31-5-1999 itself, much before the issue of Show Cause Notice. Therefore, penalty under Rule 57-I and interest thereon are not chargeable in view of the Larger Be....

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....l production in their factory and the goods which were manufactured out of these inputs were not up to the quality parameters of the Company and hence, the same were destroyed by them by burying in the pits. The appellants had not shown any production in their records nor given any intimation to the Department regarding the production or destruction of the waste. We find that the appellants had claimed that they are entitled for the credit on the inputs as the same were used in the manufacture of the finished goods but the finished goods were not up to the standard and thus these were considered as waste and goods were destroyed. They agreed that it is a mistake on their part that they have not given intimation to the department regarding p....