Full Judgment
Three show cause notices were issued alleging that on scrutiny of the RT-12 return for the month of February 1999 to March 2000, it was noticed in col. 8 of RT-12 that the appellant sold bottles of aerated water as burst and no duty was paid on the said goods. In reply to show cause notices, the appellant explained that the burst of the bottles were beyond the human control. The adjudicating authority confirmed the demand of duty and imposed penalty holding that aerated water bottles have been burst while handling the same in the bonded storeroom. The Commissioner (Appeals) upheld the adjudication order.
2. The representative of the appellant submits that the entire loss is within 0.5% and therefore, in terms of the Board Circular dated 08.09.1971, the payment of duty thereon shall be condoned. He further submits that the finding of both the authorities below that bottle burst while handling the same in store room is beyond the scope of the show cause notice. He also relied upon the decision of the Tribunal in the case of Pepsico India Holdings Pvt. Ltd. v. CCE. Meerut-II reported in 2006 (201) ELT 0069 (Trib.) and in the case of Kisan Sahkari Chini Mills v. CC 3. Learned authorised representative (DR) on behalf of the Revenue reiterates the findings of the Commissioner. He submits that in this case, the Commissioner of Central Excise already rejected their remission application which was not contested by them and therefore, demand of duty is justified.
4. After hearing both the sides and on perusal of the records, it is seen from the reply to show cause notice that the appellant explained the reason for burst as under: It may be appreciated that aerated water contains CO2 and due to heat and other atmospheric condition, the gases expand & the bottles get burst. On this phenomena, we have neither any control nor can be forsee as to when the bottle will get burst resulting in destruction of the product 5. The appellant also contended that vide Board Circular F. No.ID/3/70-CX8 dated 8.9.71, the Board had advised adjustment of breakage within 0.5%. Learned representative drew the attention of the bench the statement of losses during the material period is 0.5%, which is within the permissible limit as per board circular. On perusal of the adjudication order, it appears that the adjudicating authority did not dispute the contention of the appellant. He confirmed the duty on the ground that the bottles have been burst while handling the same in the bonded storeroom, without any evidence of material and therefore, such finding is not sustainable. The Tribunal in the case of Pepsico India Holdings Pvt. Ltd., (supra) held as under: The quantities claimed as lost due to breakage by the assessee are very insignificant and not even a fraction of a norm fixed in the Board circular. Therefore, prima facie, the claim of the appellant looks bona fide and correct. As already noted, the Board's circular makes it clear that breakages should be checked from the records during inspection. Delay in filing the claim therefore, does not make much difference. In the case of the present assessee, it is seen that similar applications have been allowed in regard to their units at Chennai, U.P. There is no reason for treating the present claim differently. The appeal is, therefore, allowed after setting aside the impugned order. The appellant shall be entitled to consequential relief.
6. In the present case, it is revealed from the record that demand of duty on the burst bottles were set-aside by the Commissioner (Appeals) and the Deputy Commissioner of the appellants' other unit situated at different parts of the country. At any event, demand of duty was not on the basis of rejection of remission application and it has no consequence and therefore, the rejection of the application for remission of duty has no effect. Therefore, the impugned orders are set-aside and appeal is allowed with consequential relief.