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2019 (10) TMI 680 - AT - Central ExciseLevy of Central Excise Duty - final products viz Zarda Scented Tobacco packed in pouches - Rule 6 of the Chewing Tobacco Rules - availability of CENVAT Credit - applicability of N/N. 17/2010 – CE (NT) dt. 13.04.2010 - HELD THAT:- The Chewing Tobacco and Unmanufactured Tobacco Packaging Machines (Capacity Determination & Collection of Duty) Rules which came into effect from 08.03.2010 were made applicable to Zarda scented Tobacco also. The chewing tobacco rules provided for availment of cenvat credit on chewing tobacco procured in bulk and used in packing of Tobacco pouches with the aid of packaging machines. When the Chewing Tobacco and Unmanufactured Tobacco Packaging Machines (Capacity Determination & Collection of Duty) Rules also become applicable to Zarda scented tobacco, it was just obvious that the Zarda scented tobacco came at par with chewing tobacco in terms of levy of duty as well as availment of cenvat credit. The Appellant’s representation to the authorities led to explicit mention of Zarda Scented Tobacco in Rule 16 so as to make it eligible for availing cenvat credit. In our view when the Chewing tobacco rules were made applicable to the Zarda Scented Tobacco, it explicitly meant that whatever duty liability and manner of levy alongwith facility of credit was applicable on chewing tobacco was also applicable to Zarda scented tobacco. Pertinently when the legislation wanted to keep Zarda scented tobacco in same category as chewing tobacco, it also meant that the cenvat credit as available to chewing tobacco would also be available to Zarda scented Tobacco. Extended period of limitation - HELD THAT:- There is no reason to allege malafide intention/ suppression or deliberate action on the part of Appellant to avail alleged ineligible cenvat credit. From the facts it is apparent that the Appellant were under bonafide belief that being their goods at par with the chewing tobacco, the cenvat credit is available to them. They even made representation with the department and ultimately the goods become eligible for cenvat credit. Therefore there is no reason to hold the Appellant responsible of any deliberate act to evade duty or avail ineligible cenvat credit. Penalty - HELD THAT:- Even if it was assumed that the Appellant are not eligible for credit than too, there was no reason to impose penalty upon them - Penalty set aside. Appeal allowed - decided in favor of appellant.
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