PEPSICO INDIA HOLDINGS PVT. LTD. Vs. CCE

JUDGEMENT

(1.) IN this case the appellants are challenging the impugned order -in -appeal whereby part of the Modvat credit availed, has been denied to them. Heard both sides.

(2.) THE brief facts of the case are as under: The appellants, M/s. Pepsico India Holdings P. Ltd., received Diet Pepsi Concentrate falling under Heading No. 2108.10 of the Central Excise Tariff, under Invoice No. 887 dated 17.5.2000 from M/s. Pepsico India Holdings P. Ltd., Bharuch. The Bharuch unit had cleared the same on payment of Basic Excise Duty of Rs. 33370/ - and Special Excise duty of Rs. 50054/ - totaling Rs. 83,424/ -. The said clearance was in terms of provisions contained in Rule 57F(1)(ii) which requires that inputs cleared as such are permitted to be cleared on reversal of credit amount which is not less than the amount originally taken, at the time of receipt of such inputs in the factory. The appellants availed the entire credit of Rs. 83,424/ - i.e. representing both the portions namely, basic as well as special. As per Sub -rule 1(2) of Rule 57AB and Rule 57A1, the credit of "Special Excise duty" can be taken only in respect of goods specified in the aforesaid rules. Since the goods falling under Chapter heading No. 2108.10 were not specified in the said Rule, at the point of taking credit the appellants were issued a show -cause notice dated 23.5.2001 for denying the CENVAT Credit representing the amount of Special Excise Duty. The Deputy Commissioner disallowed the CENVAT credit of Rs. 50054/ - and the said order was confirmed by Commissioner (Appeals), since after 1.3.2000 vide. Notification No. 22/2000 -CE dated 1.3.2000 concentrates supplied to bottling company were charged to NIL rate of SED.

(3.) IT is noticed that for the purposes of complying with the requirements contained in Rule 57F(1)(ii) reversal of credit equivalent to the credit taken on the inputs at the point of receipt of such inputs in the factory is mandatory, while effecting clearance of such inputs outside the factory. In such an event whether, the entire payment comprising basic plus special duty, can be categorized as Basic duty is an issue. It is not in dispute that the credit taken at the point of receipt of inputs comprised of two components namely basic and special. The characters of these two levies i.e. Basic and Special cannot alter when the inputs are cleared as such from the user/recipient factory. The classification of each component namely basic and special, therefore, remains intact. It is another matter that, in terms of express provisions contained in Rule 57F(ii), the amount of reversal has to cover both the components. However, for that reason the entire reversed amount cannot become a payment under the First Schedule. The identity of each category of payment remains intact. When the duty paying document of such nature reaches the user factory the credit pertaining only to Basic duty component can be permitted as credit and special excise duty component, not being chargeable on the finished goods has to be left untouched. Therefore, there can be no question of utilizing this component in terms of the rules and therefore should lapse. There is no provision in the law to change the Character of Special excise duty component to basic duty as attempted by the appellants. The case law cited by the appellant to suggest that: