Custom, Excise & Service Tax Tribunal
M/S Pepsico India Holdings Pvt. Ltd vs Commissioner Of Central Excise & ... on 15 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
Ex. Appeal No.2378/07
Arising out of O/A No.106-CE/ALLD/2007 dated 22.05.2007 passed by Commr. (Appeals) of Central Excise & Customs, Allahabad.
For approval and signature:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)
HONBLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982? : No
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? : Yes
3. Whether His Lordship wishes to see the fair copy
of the Order? : Seen
4. Whether Order is to be circulated to the Departmental
Authorities? : Yes
M/s Pepsico India Holdings Pvt. Ltd.
APPELLANT(S)
VERSUS
Commissioner of Central Excise & Customs, Allahabad
RESPONDENT (S)
APPEARANCE Shri Atul Gupta, Advocate for the Appellant (s) Shri Pawan Kumar Singh, Supdt. (A.R.) for the Department CORAM:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HONBLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) DATE OF HEARING & PRONOUNCEMENT : 15. 06. 2016 FINAL ORDER NO.-70341/2016 Per Mr. Anil Choudhary :
The issue in this appeal is whether the appellant are manufacturer of aerated water and availing benefit of modvat credit/ Cenvat credit and have contravened the provisions of Rule 9(1), 52-A, 173-B and 173-G of CER, 1944 and/or Rule 4, 5, 6, 8, 11 and 12 of the successor Central Excise Rules, 2002, rendering themselves liable for penal action by taking out 102121 number of aerated water bottles as samples for testing, valued at Rs.4,13,491/- and have evaded Central Excise duty amounting to Rs.1,44,005/- during the period January, 1999 to September, 2003.
2. The brief facts are that the appellant during the course of manufacturing and bottling of aerated water, few bottles are being taken out at regular intervals from the manufacturing line for testing in the in house laboratory. Such samples are neither being accounted for in daily production/stock records nor Central Excise duty is being paid on them. Show cause notice dated 16/12/2003 was issued for the period January,1999 to September,2003 invoking the extended period of limitation. The appellant contested the show cause notice and filed reply stating that the aerated water manufactured by them is strictly regulated by provisions of the Prevention of Food Adulteration Act (PFA Act) 1954 and the Rules made thereof. The PFA Rules prescribes standards required to be followed by a manufacturer of food products. Any violation of these provisions would invite criminal prosecution and it may be noted that mens rea is not a pre-condition for punishment and penalty under the PFA Act. The food products (aerated water) is marketable only when such product is tested and confirmed to the standards of the PFA Act and the Rules made thereunder.
3.1 The SCN was adjudicated vide OIO dated 16/12/2005 by the Dy. Commissioner, who was pleased to drop the SCN observing that the sample is drawn for testing purposes are not fully manufactured goods, since the procedure of testing is mandatory requirement for quality control purposes to make the goods marketable. Since the said samples are not in marketable condition, hence, are not covered under the definition of manufacture under Section 2 (f) of Central Excise Act, 1944. Therefore, the samples drawn for testing purposes, are not liable to Levy of Central Excise duty.
3.2 The revenue being aggrieved, preferred appeal before the ld. Commissioner (Appeals) who vide the impugned order dated 22/5/2007, allowed the appeal of Revenue setting aside the order of the Deputy Commissioner observing that the samples under question were removed for testing only after all process of manufacturing were completed, and duty had to be paid on such samples as they were removed after they were fully manufactured.
4. Heard the parties.
5. It is observed that similar issue in the appellant's own case have been considered by this Tribunal and decided in favour of the appellant by Division Bench vide a Final Order dated 29/11/2007 reported at 2008 (224) ELT 253 (Tri.-Mumbai), wherein it has been held as under:
6.?We have considered the submissions. We find that it is an undisputed fact that the samples after testing both in the laboratory and for shelf-life were destroyed by draining or were rendered unfit for use. It is also a fact that these samples were duly accounted for in the private register of the appellant and in fact the revenue has quantified the duty on the basis of the quantity shown in these private records. Therefore, the quantity of the samples and the fact of destruction is undisputed. Therefore, though we agree that once the samples were in fully finished condition they should have been entered in the RG1 register and a proper statutory account should have been maintained for sending them for testing and in case of destruction or goods being unfit for use, remission of duty should have been sought in the absence of any exemption notification in respect of samples drawn for testing. However, looking into the facts that the samples were admittedly destroyed/unfit for use and would have therefore been eligible for the remission of duty, we hold that duty cannot be demanded as has also been conceded by the revenue in the ITC case where in Para 18 it has been clearly stated that revenue could not dispute the proposition that the quantity of the cigarette sticks that is destroyed in the quality control test is not liable to any duty. In the ITC case the duty was demanded in respect of destroyed samples also because of the inability of the assessee to arrive at the particular quantity of the samples which was actually destroyed which is not so in the present case.
7.?We accordingly set aside the impugned orders of the Commissioner (Appeals) and allow the appeals.
6. Having considered the rival contentions, we hold that the issue is squarely covered on all four in the appellant's own case (supra). Accordingly, we allow the appeal with consequential benefits and set aside the impugned order-in-appeal.
(Operative part of the order was pronounced in the open Court)
Sd/ Sd/
(ANIL G. SHAKKARWAR) (A.CHOUDHARY)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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Ex. Appeal No.2378/07