ACE GLASS CONTAINERS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are in appeals against the impugned order wherein transitional credit was denied along with interest and penalties on both the appellants have also been imposed. Brief facts of the case are that the main appellant is engaged in the activity of printing the Glass Bottles from plain bottles. Levy of excise duty on the activity of printing on the glass bottles came into effect from 3 -8 -1998. Prior to that printed bottles were exempted from payment of excise duty as the activity of printed bottles does not amounts to manufacture. On the date of levy of excise duty on printed bottles, certain stocks of printed bottles were lying in the appellants' factory and certain bottles were lying in their godown. The appellant filed a declaration under Rule 57G of the Central Excise Rules, 1944 on 3 -8 -1998 and also filed a declaration under Rule 57H on 19 -8 -1998. The finished goods lying in their godown were cleared by the appellants on payment of duty and taken transitional credit on the inputs which has gone into manufacture of these finished goods lying in the stock under Rule 57H of Central Excise Rules, 1944. Revenue was of the view that as the finished goods were lying in their go -down and the same were cleared from their factory prior to 3 -8 -1998 therefore, they are not required to pay duty on these goods and when the appellants are not liable to pay duty on the finished goods they are not entitled for credit on inputs which have gone into manufacture of the final product which were lying in their godown prior to 3 -8 -1998. Therefore, a show -cause notice was issued to the appellants on 25 -7 -2001 for the period August 1998. The show cause notice was adjudicated and the demands were confirmed against the main appellant along with interest and also imposed penalties on both the appellants. Aggrieved by the said order, the appellants are before us.

(2.) HEARD both sides. Shri A. Hidayutullah, learned Sr. Advocate appearing for the appellants submits that as per Rule 57H of Central Excise Rules, 1944 they are entitled to take transitional credit on the inputs which have gone into manufacture of finished goods and cleared after 3 -8 -1998 as they have paid excise duty after 3 -8 -1998. It is also submitted that they have complied with the condition of Rule 57G and 57H of Central Excise Rules, 1944. He also submits that the contention of the Revenue that as the finished goods have been cleared prior to 3 -8 -1998 therefore, the appellants are not required to pay duty thereon. In those circumstances, the duty paid on the goods (on which the duty was not required to be paid as per Revenue) may be treated as reversal of credit on the inputs.

(3.) ON the other hand, Shri Rakesh Goyal, learned A.R. submits that it is an admitted fact that the finished goods have been cleared from their factory prior to 3 -8 -1998 before filing the declaration under Rules 57G and 57H of CER 1944. When the goods have been cleared prior to levy of Central Excise duty on the finished goods, the appellants are not entitled to take Cenvat credit on the inputs gone into manufacture of final products. If they have paid duty, they should have filed a refund claim of the duty paid by them but they cannot take credit on the inputs.