2003 (12) TMI 387 - AT - Central Excise

Summary

Issues:
Whether the value of clearances of intermediate products, captively consumed in manufacturing final products, should be added to claim benefit under Notification No. 67/95.

Analysis:
The case involved a question regarding the requirement to add the value of clearances of intermediate products, captively consumed in the manufacturing of final products, to claim benefits under Notification No. 67/95. The appellants were engaged in the manufacture of Kraft paper, corrugated paperboard, and carton boxes. They contended that the value of clearances of Kraft paper, which was captively consumed, should not be included while computing the total clearances under Notification No. 6/2000-C.E. The department disagreed, asserting that the value of captively consumed Kraft paper should be considered. The dispute centered around whether the appellants had exceeded the limit of 3500 MTs under the notification, leading to confirmed demands by the authorities.

The Tribunal examined the explanation to Notification No. 6/2002, which clarified that clearances of products attracting nil duty or exempt under other notifications should not be included in the aggregate quantity not exceeding 3500 MTs. The Tribunal noted that the Revenue argued for including captively consumed Kraft paper while computing the value of clearances of corrugated boards. However, the Tribunal found the explanation clear and explicit, stating that captively consumed products attracting nil duty should not be added to the total clearances. The Tribunal highlighted that the appellants had not cleared Kraft paper outside their factory and that the explanation aimed to remove doubts, not change the existing practice.

Citing various judgments, including Bharat Metal Industries, Shree Hanuman Metal Industries, Cine Super & Private Ltd., Omkar Textile Mills Pvt. Ltd., and Sulochana Amma v. Narayanan Nair, the Tribunal emphasized that explanations in notifications are clarificatory in nature and should be read to harmonize with the main provision. The judgments supported the view that captively consumed goods should not be included in calculating clearances to avoid duplication in accounting. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, upholding the appellants' arguments regarding the non-inclusion of captively consumed Kraft paper in the value of clearances.

However, the Tribunal directed a verification of the issue raised by Revenue concerning the clearances of 529.581 MTs of cartons without duty payment, beyond the 3500 MTs limit. This verification was necessary to ensure compliance with duty payment obligations. The Tribunal instructed the original authority to reconsider this specific aspect while upholding the appellants' arguments based on the judgments cited.