Facts –

• The Appellant, M/s. PepsiCo (I) Holdings Pvt. Ltd., engaged in the manufacture of “Aerated Waters" at Roha plant.
• The aerated water manufactured by them is bottled in glass bottles. In their store the goods manufactured by them as well as other units (received on payment of duty) are stored.
• During course of handling and storage some of the glass bottles break which are removed to scrap yard. 
• Appellant reversed amount of Rs 5,47,217/- in September 2010 towards the CENVAT credit availed on such breakages.
• The revenue authorities issued show cause notices proposing to recover excise duty for these breakages treating them as finished goods beverages, along with interest and penalty.
• Aggrieved appellants have filed these appeals.

Issue –

• Whether the revenue authorities can recover excise duty along with interest and penalties on broken bottles of beverages?

Order –

• The Tribunal observed that the reliance placed by the Commissioner (Appeal) on the Circular dated 09.07.2010 to decide the issue against the appellant for the period prior to issuance of the said circulars is contrary to the fact that during the period of dispute there were two circulars of 1971 and 1975 which have been followed by the appellant.
• It is not even stated in the impugned order that these two circulars were not applicable to the appellant. It is also noted that the MODVAT credit scheme was introduced in the year 1986 and CENVAT credit scheme is refined form of the said scheme. These circulars continued to hold field throughout till 09.07.2010.
• Further, substantial compliance with the circular of 2010 has been made by the appellant by reversing the CENVAT Credit on the inputs used in respect of the finished goods contained in the breakages.
• The Tribunal thus ruled that impugned Order is not sustainable.