The present appeal is against the Order-in-Original No. 20-MP/Commissioner/2002 dated 22.1.2002 passed by the Commissioner of Central Excise, Patna, vide which he has confirmed the demand of duty of Rs. 50,95,236.00 (Rupees fifty lakh ninety-five thousand two hundred and thirty-six) against the appellants by disallowing them the benefit of the CENVAT Credit in respect of Glass Bottles and Plastic Crates lying in their factory as on 1.4.2000. In addition, the Commissioner has also imposed personal penalty of Rs. 20,00 lakh (Rupees twenty lakh) on the appellants.

2. The appellants are engaged in the manufacture of Aerated Waters and Fruit Pulp Based Drinks classifiable under Chapter 22 of the Central Excise Tariff Act, 1985. Prior to 1.4.2000, the appellants were not entitled to avail any Credit of Duty paid on the Glass Bottles and Plastic Crates used in the manufacture of Aerated Waters in terms of the provisions of Rule 57B (2) (iv) and as such, no Credit was being availed by them. With effect from 1.4.2000, the MODVAT Scheme was replaced by CENVAT Scheme and the MODVAT provisions were replaced by a new set of Rules from 57AA to 57AK. With the introduction of the said Rules, the appellants became entitled to the CENVAT Credit of Duty paid on the Glass Bottles and Plastic Crates, inasmuch as the definition of inputs as contained in Rule 57AA specifically included the packaging materials. There is no dispute about the legal position of availing of credit in respect of bottles and crates with effect from 1.4.2000. The dispute in the present appeal relates to the appellants' claim of credit in respect of the bottles and crates which were lying in their factory on 1.4.2000, either as such or in the shape of the final product or in the shape of under-process goods.

3. As per facts on record, the appellants vide their letter dated 30.10.2000 addressed to the Assistant Commissioner of Central Excise Division, Muzaffarpur, claimed the benefit of Credit of Rs. 37,24,475.79 in respect of bottles and Rs. 13,70,759.98 (Rupees thirteen lakh seventy thousand seven hundred fifty-nine and paise ninety-eight) in respect of the plastic crates which were lying in stock as on 1.4.2000. On the same day, they made entry of the said Credit in their RG-23A Part-II Register. The Deputy Commissioner of Central Excise, Muzaffarpur, considered the above declaration of the appellants and vide its letter dated 24.1.2001, allowed the appellants to take the CENVAT Credit of the duties paid on the said inputs lying in stock on 1.4.2000, subject to production of evidence showing payment of Central Excise Duty on the same. Subsequently, on 30.1.2001, the appellants placed all the invoices before the authorities. However, the Deputy Commissioner vide his subsequent letter dated 15.5.2001 intimated the appellants that they were not eligible for CENVAT Credit inasmuch as the inputs were brought to their factory on or before 28.2.2000. The appellants filed an appeal against the said letter of the Deputy Commissioner, which was dismissed by the Commissioner (Appeals) as infructuous, vide its Order dated 31.1.2000. The appeal thereagainst was also rejected by the Tribunal vide its Order dated 16.12.2002.

4. Thereafter, the appellants were issued a show cause notice dated 11.9.2001 proposing to disallow the CENVAT Credit so taken by them on the ground that the inputs were received in the appellants' factory prior to 1.4.2000 and as such, they were not entitled to take the Credit in respect of the same. The notice accordingly proposed disallowance of the Credit along with the confirmation of interest and imposition of penalty. The said notice culminated into the impugned Order passed by the Commissioner of Central Excise, Patna. Hence the present appeal.

5. Shri S.K. Bagaria, learned Advocate for the appellants has challenged the impugned Order on various grounds. It is his contention that the Credit having been allowed by the Deputy Commissioner vide his letter dated