Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Central Excise vs Pepsico India Holdings Ltd. on 1 December, 2003
Equivalent citations: 2004(168)ELT74(TRI-MUMBAI)
ORDER K.D. Mankar, Member (T)
1. Heard both sides.
2. This is the department's appeal against the order-in-appeal passed by the Commissioner (Appeals). The brief facts are that the respondents M/s. Pepsico India Holdings Ltd. had, while preparing the mix of Pepsi for manufacture of the final product, "aerated water", noted that the mix so prepared was not up to the standard, and disposed of the same after intimation to the department. Thinking that the duty has to be paid on the quantity of inputs so wasted during the preparation of mix, they reversed the Modvat credit. However, subsequently they filed a refund claim for Rs. 83,443/- before the Divisional Deputy Commissioner. The refund was rejected on the ground that the disposal of the mix was not carried out in the presence of Central Excise officer. Since no duty was demanded by the department and the assessee had debited the amount on their own volition, this amount becomes a deposit and not duty.
3. The Commissioner (Appeals), while reversing the order of the Deputy Commissioner, had held that there is nothing in the scheme of Rule 57D that the waste products should arise only at the stage when the final product emerges. The challenge to this finding in the Revenue's appeal is on the ground that if such a refund claim is granted, it will be a bad precedent as there was no intimation to the Central Excise officer for disposal of such waste, which was necessary. It is also claimed that, the inputs were not wasted during the regular course of manufacture and the wastage occurred due to the company's negligence in mixing the inputs together.
4. On going through the facts and circumstances of the case, I find that the interpretation of the provisions of Rule 57D, as suggested in the department's appeal is totally unwarranted and unsubstantiated. Rule 57D talks of non-denial of credit on the ground that part of the input is contained in any waste or the inputs themselves become waste during the course of manufacture of the final product. The rule does not specify as to the circumstances through which the waste has to arise. The only requirement is that the inputs have to be taken up for the manufacturing process and once it is demonstrated that the waste has occurred during the process of manufacture, even though it may be negligent act of even a faulty mixing or otherwise, the denial of credit is not justified. It is brought on record by the respondents that they had intimated the fact of loss of inputs due to faulty mixing, vide their letter dated 14th July, 1999 with reference to the process of syrup preparation on 13th July, 1999. There is no comment in the Revenue's appeal as to whether the facts communicated through this letter are disputed and also there is no allegation of clandestine removal of the inputs.
5. Accordingly, I find no merit in the appeal of the Revenue. The same is rejected.