TMI Blog1998 (10) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case briefly stated are that the appellants are engaged in the manufacture of aerated waters. Modvat credit became admissible on glass bottles as inputs for the manufacture of aerated waters from July, 1991. Intelligence report indicated that the assessee was selling glass bottles after availing and utilising modvat credit. Scrutiny of the records submitted by the assessee also revealed that the glass bottles were sold on higher rate in comparison to purchase rate which indicated that the glass bottles sold were in good condition and were of usable nature. It also revealed that the sold quantity of a particular branded bottle is more than purchased quantity. It was also noticed that neither the duty was paid nor modvat credit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was impossible to maintain such identification marks in view of the fact that the bottles were being handled in different processes by different persons. The ld. Counsel submits that on the basis of balance sheet as on 31-3-1994, the appellants had a stock of 85,92,260 of bottles; that the bottles according to the balance sheet as on 31-3-1991 were 66,80,263. The ld. Consultant submits that the whole of this stock plus some more bottles purchased during 1-4-1991 to third week of July, 1991 was pre-modvat stock; that without these bottles, they could not have achieved a turnover of 3 crore of filled bottles during 1991-92 which were cleared on payment of duty. Ld. Consultant submits that taking life span of aerated water bottles as five ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks out to Rs. 2.50 per bottle as against the bottle cost Rs. 4.80 per bottle. 5. Explaining further, ld. Consultant submits that `Citra brand was launched in 1991-92 and before launching, adequate preparation by way of proper stocks of bottles was undertaken. He submits that during 1991-92, they had sold 69 lakh bottles of 250 ml; that for sale of this quantity, they required a minimum of 23 lac bottles; that this clearly indicates that at the time of launching Citra in 1991-92, they had a stock of more than 23 lac bottles of Citra; that this showed that the tocal sale of 250 ml of Citra of 14,98,015 bottles were out of pre-modvat stock of Citra 250 ml bottles. 6. Ld. Consultant submits that the allegtion is that the appellants sold bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rap Bill Book inasmuch as for the appellants they were scrap as they were not fit to be used in the sophisticated market of metro cities. Relying on the judgement in the case of Ashok Leyland Limited [1996 (83) ELT 364], ld. Consultasnt submits that in this case the Tribunal held that In case an input has been held to be eligible and which is used in the final products and it became defective because of use in conjunction with the final products by virtue of that use became unusable that has to be treated as waste. He submits that in view of the above findings of the Tribunal, they had rightly treated old chip neck and disfigured bottles as waste and scrap. 8. On the question of penalty imposed on Shri Sethi, ld. Consultant submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For this turnover, at least 23 lac bottles of Citra were necessary. Citra was introduced in 1991-92. During the year 1991-92, 5.29 lac bottles of Citra were purchased. Thus at least 10 lac Citra bottles of 250 ml. were available with the appellants. During the year the appellants sold 8,16,415 bottles of Citra. Since Citra bottles of the order of 18 lac were with the party prior to introduction of Modvat credit, therefore, sale of 8,16,415 could possibly be out of pre-Modvat stock, so also can be said on the sale of these bottles in 1994-95. Simply because relying on the evidence of S/Shri B.S. Negi and Ashok Chawla that some bottles might be of the period when Modvat credit was taken is only an assumption. The department has not been able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion, therefore, we, reduce the penalty to Rs. 5 lac on the assessees. 16. Insofasr as the imposition of penalty on Shri Ashish Sethi, Director is concerned, there is sufficient evidence on record that the old disfigured and chip neck bottles were cleared at the directions of Shri Ashish Sethi. Since during the material period Modvat credit was admissible on glass bottles, therefore, it was the duty of Shri Ashish Sethi to take permission of the Commissioner before clearing the goods without payment of duty which he did not do, therefore, imposition of penalty is sustainable. However, looking to the facts and circumstances of the case, we find that the penalty of Rs. 3 lac is on the higher side, the same is reduced to Rs. 50,000/-. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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