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2016 (10) TMI 610 - CESTAT CHANDIGARH

2016 (10) TMI 610 - CESTAT CHANDIGARH - TMI - Manufacture - Intermediate products - captive consumption - marketability - nature of preparation of Additive mixture for manufacturing of branded chewing tobacco - notification No. 52/02-C.E. issued on 17-10-02 - Demand of duty and NCCD - Held that: - By going through the entire process of manufacture at no stage the goods can be called captively consumed. Moreover, there is no allegation in the show cause notices that additive mixture is marketed o .....

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ught to be demanded only on the basis of assumption and presumption. - The additive mixture arose only as an intermediate product in the course of manufacture of finished chewing tobacco. As chewing tobacco has not been manufactured till the stage of final manufactured chewing tobacco, therefore, additive mixture cannot be called as chewing tobacco or preparation of chewing tobacco. As it is not chewing tobacco therefore, the respondents are not liable to pay duty thereon. - Whether the .....

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as in the case the basic excise duty and AED after the imposition of NCCD also, there would be no additional burden of NCCD for captive use of compound. Otherwise it would be anomalous that if the use is outside the factory, the impact is nil by virtue of Cenvat Credit being admissible from 1.3.2001 but for use within the factory, NCCD is payable. - no NCCD payable on the additive mixture for the earlier period even though notification no. 52/02 has been issued only on 17/10/2002. - Whether .....

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n the show cause notice, the value/qunatity of the goods has been taken as approximate basis which is patent error in the show cause notice and on the basis of assumption and presumption, the duty cannot be demanded from the assesssee. - the show cause notices issued to the respondents are defective. - Appeal dismissed - decided against Revenue. - E/634, 2109-2111/2005-Ex(DB) - ORDER NO 61162-61165/2016 - Dated:- 23-8-2016 - Mr. Ashok Jindal, Member (Judicial) and Mr. V.Padmanabhan, Member ( .....

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products? (ii) Whether the exemption under Notification No. 121/94CE dated 11.8.04 is available to NCCD during the period 1.3.2001 to 16.10.2002? (iii) Whether the revenue neutral situation comes in the instant case and consequently, the entire exercise is academic? and held that this Tribunal in the earlier order has not decided the issue No.1 and No. 2 and shifted directly to the issue No.3, therefore, the matter was remanded back to the Tribunal to address all the issues. In a consequent to .....

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m basic excise duty as well as additional excise duty leviable under Additional duty of excise (Goods of Special Importance) Act, 1957 [hereinafter referred to as AED (GSI] under Notification No. 67/95-C.E., dated 16-3-95. The National Calamity Contingent Duty (NCCD) which was levied by Section 136 of the Finance Act, 2001, w.e.f. 1-3-2001 was leviable on "Chewing Tobacco and preparations containing Chewing Tobacco", falling under heading 2404.41 of the tariff. There is no dispute that .....

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exempting NCCD and such a notification No. 52/02-C.E. was issued only on 17-10-02. In view of this, various show cause notices were issued to the respondents for demanding NCCD on Additive mixture cleared during the period in dispute alongwith interest and for imposition of penalty on the respondent. These show cause notices were adjudicated, demand of duty alongwith interest was confirmed and penalties were also imposed. On appeal to Commissioner (Appeals), the Commissioner (Appeals) allowed th .....

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r (Appeals), the Revenue filed the appeals before this Tribunal. This Tribunal set aside the order of the Ld. Commissioner (Appeals) and allowed the appeals filed by revenue. Against that the respondent approached before the Hon'ble High Court of H.P. wherein the Hon'ble High Court remanded the matter to this Tribunal to decide the issues framed as stated in para 1 hereinabove, Hence, these appeals. 3. Learned AR submitted that as the additive mixtures have been consumed by the responden .....

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that at which stage precisely intermediate product come comes into existence and its compositions were not indicated, therefore, in the absence of specific stage at which NCCD is sought to be demanded, the proceedings are not sustainable. He further submits that the quantity used and value adopted on assumption and presumption by showing approximate of value and approximate of quantity. In that circumstance, without any specific quantity/value, the show cause noticed are defective.. He further s .....

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the respondents. He further submitted that the charging excise on intermediate for captive use is against Cenvat Scheme. Therefore, NCCD is not payable on intermediate product in terms of Notification No.121/94-CE dated 11.8.94. He further submits that there is revenue neutral situation as whatever duty of NCCD is paid by the respondent is eligible for credit to the respondents. Therefore, there is revenue neutral situation, they are not liable to pay duty. In the circumstances, there is no infi .....

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he instant case and consequently, the entire exercise is academic? (IV) Whether the show cause notices were issued to the respondents are sustainable or not having patent error and when no specific value and quantity of the goods have mentioned Issue No.(l) 7. The claim of the respondent is that the process of manufacturing is integrated and culminated and additive mixtures which is alleged to be manufactured captively have neither been removed nor transferred or sold to anybody, in that circums .....

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in bucket. The tobacco kept in the tray is then mixed well with the compound manually, which gives it the desired flavoured aroma. Also, shredded silver is mixed with the tobacco in some cases. The type of mixing and the quantity of compound and silver combination leads to a particular variety of product. Once the mixing is achieved further test is conducted to determine the right ratio, the right proportion of blending of compound. Then it is filled into pouches and tin cans by the use of auto .....

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show cause notices that additive mixture is marketed or has been transferred or sold by the respondents, in that circumstance, the test of excisability fails in the light of decision of the Apex Court in the case of Ambalal Sarabhai Enterprises-1989 (43) ELT 214 (SC). Therefore, we hold that as the alleged additive mixture is not capable of marketing, in that circumstance, the additive mixture is not excisable to duty. 10. We also take note of the fact that in the earlier order of this Tribunal .....

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applicable to the facts of this case. The department in this case has failed to produce any evidence to confirm the test of marketability, in that circumstance also, we hold that the product is not excisable product. 11. We further note that the additive mixture (compound) is not chewing tobacco nor preparation containing chewing tobacco. We find that additive mixture is not known, recognised or marketed as either chewing tobacco or preparation containing chewing tobacco. Admittedly, additive mi .....

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s chewing tobacco. The additive mixture arose only as an intermediate product in the course of manufacture of finished chewing tobacco. As chewing tobacco has not been manufactured till the stage of final manufactured chewing tobacco, therefore, additive mixture cannot be called as chewing tobacco or preparation of chewing tobacco. In the circumstances, we hold that as it is not chewing tobacco therefore, the respondents are not liable to pay duty thereon. Issue No.(II) 12. The contention of the .....

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