TMI Blog2016 (10) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... ermediate 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 exemption under Notification No.121/94-CE dated is available to NCCD during the period 1.3.2001 to 16.10.2002? - Held that: - no basic excise duty and AED & GIS was payable on intermediate product and if NCCD is paid on intermediate product on which the duty is paid, the same is available as credit e to the respondent at subsequent stage. - the respondents are not liable to pay NCCD. Exemption on NCCD was granted vide Notification No. 52/02 dated 17.10.2002. The policy intention was that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chewing tobacco. In the course of manufacture of branded chewing tobacco, it was essential to add Additive mixture, comprising of kimam, perfumes, essences, etc. is prepared which in turn is used in the manufacture of branded Chewing Tobacco. The Additive mixture manufactured and used captively was exempt from 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 NCCD was payable on Chewing Tobacco manufactured and cleared by the respondent during the period of dispute. The point of dispute is as to whether during the period from 1.3.01 to 16.1.-02, NCCD was chargeable on the Additive mixture manufactured and captively consumed by the respondent in manufacture of Chewing Tobacco. The department is of the view that during the period from 1.3.01 to 16.10.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted 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 submits that the compound is not goods. He explained the manufacturing process which involves different stages of processes and no intermediate products were removed/ transferred or sold to any one and the process of manufacturing of branded chewing tobacco was integrated and culminated into manufacture of chewing tobacco as the final products, which alone was cleared on payment of duty including NCCD. Therefore, no intermediate stage of the product has emerged, therefore, NCCD is not payable by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, the Revenue has relied on the decision of the Dharamapal Satyapal Sons (Pvt.) Ltd.-2011 (270) ELT 670 (Tri.-Del.) to say that additive mixture is captively manufactured goods and liable to duty0 The said case is not relevant to the facts of the case in hand. In the said case, captively manufactured goods/compound was transferred to other three factories of the said appellant. There is no such allegation against the respondents in this case, therefore, the said decision of this Tribunal is not applicable to the facts of this case. The departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y virtue of Cenvat Credit being admissible from 1.3.2001 but for use within the factory, NCCD is payable. Hence, we have already taken the view that no NCCD will be payable on the additive mixture for the earlier period even though notification no. 52/02 has been issued only on 17/10/2002. Issue No. (III) 14. We take note of the fact that if the respondents paid duty on additive mixtures, the same is available as credit to them immediately. In the circumstances, we hold that there is revenue neutral situation in view of the decision of the Larger Bench of the Tribunal in the case of Jay Yuhshin Ltd.- 2000 (119) ELT 718 (Tri. LB). Therefore, we hold that it is case of revenue neutral situation. In the circumstances, the entire exercise is of academic in nature. Issue No.(IV) 15. We find that in 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. Therefore, we hold that the show cause notices issued to the respondents are defective. 16. In view of the above observation, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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