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M/s. Satyapal Shivkumar, M/s. Dharampal Premchand Ltd., M/s. Dharampal Satyapal Ltd. Versus Commr. of Central Excise & Service Tax, Shillong

2015 (9) TMI 40 - CESTAT KOLKATA

Availment of exemption on chewing tobacco under Notification No. 8/2004-CE dated 21/01/2004 - whether the appellants are eligible for exemption on compound under Notification No.52/2002, as their finished products i.e. chewing tobacco are wholly exempt under Notification No. 8/2004 - Held that:- Notification exempts all goods falling under tariff item 21069020 and chapter 24 of the first schedule to the CETA, 1985 manufactured in a factory and used within the said factory for manufacture of fina .....

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ellants that by adopting the above methodology, duty payable for the purpose of investment works out to excise duty payable on the final products but for the said exemption and the said amount is already invested and therefore, no duty is leviable on the compound.

The facts were however, not available before the adjudicating authority while passing the order. It is the contention of the appellants that notification 52/2002 is not applicable to the inter-mediate products where the fina .....

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r, JJ. For the Petitioner : Sri T.R. Rustagi, Advocate For the Respondent : Sri A.K. Raha, Special Counsel ORDER Per : DR. I.P. LAL, As directed vide order dated 6/05/2015 passed by the Honble High Court of Tripura, Agartala, in case of C M application No. 200 to 202 of 2015, in CE. REF. No 1 to 3 of 2014, the impugned appeals are taken up for disposal. 2.1 Brief facts of the case are that appellants are manufacturer of chewing tobacco and availed of exemption from excise duty under Notificatio .....

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manufactured the inter mediate product called compound (like additive mixtures, kimam and balties) which was used for captive consumption in the same factory. 2.3 The dispute was raised by the Department that compound were not eligible for exemption, as finished product i.e. chewing tobacco manufactured out of the said compound were exempt from whole of excise duty under Notification No.8/2004-CE Dated-21/01/2004. 2.4 Accordingly, show cause notices were issued to the appellants and were adjudic .....

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/- Do 3) M/s. Dharampal Satyapal Ltd. (E/A/573/2012) Duty : ₹ 101,83,69,342/- Penalty : ₹ 101,83,69,342/- Do 3.1 Assailing the order, Ld. Advocate Shri T.R. Rustogi submitted that the compounds fall under the chapter sub-heading specified in Notification No. 8/2004, the eligibility conditions is, therefore, satisfied. He submits that the said notification exempts all goods falling under specified sub-headings from whole of the duties of excise. However, as per condition under Sl. No. .....

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en finished tobacco is dutiable, no duty is payable on compound by virtue of the fact that compound, having been used for captive consumption in the manufacture of dutiable finished chewing tobacco would attract exemption under Notification No. 52/2002-CE. 3.3 He submits that as amount payable on the compound becoming zero, the investment condition by investing the amount equal to excise duty of finished product i.e. chewing tobacco, the investment condition provided in Notification No. 8/2004 g .....

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the same factory was duly intimated by the appellant vide letter dated 9/3/2001. The unit was also audited in January, 2005, 2006 and March, 2007 and therefore, there was no suppression involved in this case. He submits that Ld. Commissioner has not considered these submissions of the appellant. Since the entire fact was in the knowledge of the Department, so the demand is time barred. 3.5 He submitted the intent behind the issue of Notification No. 8/2004 is to promote the investment in North E .....

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in the manufacture of coated and uncoated paper. The department demanded the duty on the uncoated paper and paper Boards manufactured by the assessse and consumed captively for the manufacture of coated paper and paper board for the reason that assesse had cleared final products i.e. coated paper at nil rate of duty under Notification No. 3/01-CE dated 1/3/2001.The Hon ble Court observed that if the interpretation sought to be given by the Revenue is accepted, it will defeat the very objective. .....

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Notification No. 8/2004-CE dated-21/01/2004 is conditional. He submits that Notification 52/2002 does not exclude the intermediate product from exemption where the final products are exempt subject to certain conditions. It is the submission that these notices are sub-judice before the Hon ble Supreme Court. 4.1 As per contra, the Ld. Special Counsel Shri A.K. Raha for the Revenue submitted that dutiability of the inter-mediate product i.e. Compound in Balti is no longer res integra, in view of .....

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e duty was utilized for the purposes specified in the said notification but in the present case, the appellants neither declared about manufacture of compound nor maintained any records and submitted any return, nor claimed the benefit of said notification nor fulfilled the conditions of investment as provided in the Notification No. 8/2004 and therefore, at this stage, their plea that the said compound deemed to have been covered by the conditional Notification No. 8/2004-CE is unacceptable. 4. .....

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did not disclose to the Department about the manufacture and dutiability of compound. He submits that the plea of the appellants that duty has been demanded on the finished products for non-fulfillment of conditions of the Notification No. 8/2004 is not applicable to the present case as if part of the exemption availed is recovered from them, it cannot regularize the issue of levy of duty on the compound as a whole. 5. In the rejoinder, the Ld. Advocate Shri T.R. Rastogi submitted that no declar .....

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compound and cleared them without payment of duty for captive consumption in their own factory for manufacture of chewing tobacco which is wholly exempt under Notification No. 8/2004-CE dated 21/01/2004. The said compound classifiable under Chapter Heading 2404.41 of CETA, 1985 and under 24039930 after 28/02/2005, is specified in the Notification No.8/2004 and there is no dispute about this. 7.3 The issue involved is whether the appellants are eligible for exemption on compound under Notificati .....

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n of the appellants that since the notification No.8/2004 is a conditional one and not an absolute exemption, therefore, the benefit of Notification No. 52/2002-CE cannot be denied to their inter-mediate products i.e. compound used in the manufacture of chewing tobacco which is dutiable but for exemption notification No.8/2004. It is submitted that the Department has already raised the demands to the appellant denying the benefit of exemption notification No. 8/2004. This clearly shows that the .....

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