TMI Blog2014 (7) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The authorities were wholly incorrect and misdirected itself in coming to the conclusion that since these under filled, overfilled, badly crowned bottles were not entered in R.G.1 register, it amounts to clandestine removal of goods without payment of excise duty, is patently erroneous. - Demand set aside - Decided in favor of assessee. - Central Excise Appeal No. 11 of 2005 - - - Dated:- 18-7-2014 - Hon'ble Tarun Agarwala And Hon'ble Dinesh Gupta,JJ. ORDER (Per: Tarun Agarwala,J.) The appellant is a Public Limited Company engaged in the manufacture of aerated water falling under sub-heading No.2201.20 and 2202.00 of the First Schedule to the Central Excise Tariff Act, 1985. It transpires that on 1.3.2000 the Central Excise Officer visited the factory of the appellant and, upon investigation, on the basis of the production format/register maintained by the appellant, found that the maintenance of the production format was not disclosed by the appellant as required under Rule 173-G(5) of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) and that the appellant was draining out the aerated water without entering it first in the R.G.-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Rules along with interest under Section 11-AB of the Act. The authority further imposed a penalty of the same amount under Section 11-AC of the Act read with Rule 173-Q of the Rules. The Additional Commissioner in its order held that the production format maintained by the appellant was not declared under Rule 173-G(5) of the Rules and, therefore, cannot be termed as an authentic record. The Additional Commissioner further observed that the bottles which had been under filled or over filled or were badly crowned caps were manufactured goods and even if the said bottles were unfit for human consumption, nonetheless, it was required to be entered in R.G.1 and register and thereafter the assessee should have applied for remission, which was not done. The Additional Commissioner further found that the appellant had not brought to the notice of the department the factum of draining out of aerated water and drawl of sample for the laboratory test and, consequently, suppressed the above facts from the department, which leads to an inference that there has been clandestine removal of the goods without payment of excise duty. The appellant, being aggrieved, filed an appeal before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excise authority by its letter dated 8.8.1996 with regard to the records maintained in their factory as per Rule 173-G(5) of the Central Excise Rules. A perusal of this document indicates that production book has been mentioned at Sl.No.15. The authorities refer in the impugned orders to the production format produced by the appellant before the inspection team. This production format is nothing else, but the production register or the production book maintained by the appellant indicating the production of the aerated water in their production line. We further find that the show cause notice and the presumption drawn that there has been an evasion of payment of duty on the aerated water which has been drained out is based on the information derived from the production register. Consequently, we are of the opinion, that all the authorities including the Tribunal were not justified in holding that the appellant had not disclosed its production register under Section 173-G(5) of the Rules to the Department. This finding is perverse and is against the material evidence on record. Further, we find that the Additional Commissioner was not justified in holding that the producti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied and collected on manufactured goods, which is marketable. The Supreme Court held that under Section 3 of the Excise Act, exigibility of duty is on the goods which are produced or manufactured and brought and sold in the market. The Supreme Court held that the marketability of the goods is an essential ingredient of excisable goods for being subjected to excise duty. Where a product is manufactured but is not marketable, no excise duty would be leviable. The law requires the appellant to provide a screening test before it can declare the manufacture product as a finished product, which is marketable. If the product does not pass the test for the reasons of being contaminated under filled or over filled or where the bottle has a badly crowned cap, such bottles are not manufactured finished goods which are marketable and, consequently, are not required to be entered in R.G.1 register. We are of the opinion, that in R.G.1 register only a finished product is required to be entered. In our opinion, a finished product is a manufactured goods which is marketable. In the instant case, we find from a perusal of the show cause notice that the drainage of the aerated water from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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