2012 (12) TMI 795 - AT - Central Excise

Breakage of glass bottles during the manufacture of aerated beverages - denial of credit relying on Boards circular dated 9.7.2010 - Held that - The period of demand in the present case is November 2009 to June 2010 i.e. prior to the issue of the circular dated 9.7.2010 to be treated as prospective in nature and cannot be held to be retrospective. During the period in dispute, there was a Board circular dated 17.9.1975 which clarifies that the breakage of bottles in the manufacture of aerated beverages upto 0.5% is condonable and manufacturer is not liable to reverse the credit - in favour of Appellant.

Summary

Issues: Interpretation of notification regarding credit for breakage of glass bottles during the manufacture of aerated beverages.

Analysis:
The appellant filed an application for the waiver of pre-deposit of duty, interest, and penalty amounting to Rs 45,922. The demand was confirmed by denying credit for breakage of glass bottles during the manufacture of aerated beverages. The Revenue relied on a circular dated 9.7.2010, withdrawing an earlier circular, to support their decision. The issue revolved around the interpretation of the notification regarding the credit for breakage of bottles, specifically focusing on the applicability of the circular dated 9.7.2010.

The applicants, engaged in the manufacture of aerated beverages, were availing credit for duty paid on inputs, including glass bottles. The breakage of glass bottles during manufacturing was less than 0.5%. The Revenue's contention was based on the withdrawn circular dated 9.7.2010, which led to the confirmation of the demand by denying credit for breakage of bottles. However, during the period under dispute (November 2009 to June 2010), a circular dated 17.9.1975 was in effect. This circular clarified that breakage of bottles up to 0.5% in the manufacture of aerated beverages was condonable, and the manufacturer was not required to reverse the credit.

The Tribunal noted that the circular dated 9.7.2010, relied upon by the Revenue, should be considered prospective and not retrospective. Since the circular dated 9.7.2010 withdrew the benefit given to the assessee, it could not be applied retrospectively to the period in question. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The decision was based on the interpretation of the notification and the retrospective application of circulars affecting the credit for breakage of glass bottles during the manufacturing process of aerated beverages.