2008 (11) TMI 581 - AT - Central Excise

Valuation - captive consumption - tobacco essence - Notification No. 121/94 dated 11-8-94 - NCCD on branded Pan Masala

Summary

Issues:
- Exemption of National Calamity Contingency Duty (NCCD) on tobacco essence used for captive consumption.
- Contestation of demand of duty before the Commissioner (Appeals) on excisability of goods and revenue neutrality.
- Application of Tribunal decisions in similar cases regarding revenue neutrality.

Analysis:
The judgment involves appeals related to the manufacture of chewing tobacco and the exemption of National Calamity Contingency Duty (NCCD) on tobacco essence used for captive consumption. The respondents, engaged in manufacturing chewing tobacco, also produced tobacco essence captively consumed in the manufacturing process. The issue revolved around the demand of NCCD on tobacco essence used for captive consumption, as there was no exemption available for NCCD during the relevant period. The adjudicating authority had confirmed the demand of NCCD along with a penalty, which was challenged by the respondents.

During the proceedings, it was argued before the Commissioner (Appeals) that the demand of duty should be contested based on the excisability of the goods and the concept of revenue neutrality. The respondents cited a Tribunal decision in a similar case where the demand of duty was set aside on the grounds of revenue neutrality. The Tribunal's decision highlighted that the exercise of paying duty on the intermediate product was revenue neutral as the duty paid on the final product exceeded the duty payable on the intermediate product. This established the principle of revenue neutrality in such cases.

Furthermore, the Tribunal's decision in another case reinforced the concept of revenue neutrality regarding the demand of NCCD on intermediate products. The Tribunal rejected the Revenue's appeal, emphasizing that the payment of NCCD on the intermediate product and its utilization by the assessee constituted a revenue-neutral exercise. Considering these precedents and the arguments presented, the Tribunal found no reason to interfere with the order of the Commissioner (Appeals) and rejected all the appeals filed by the Revenue. The judgment underscored the importance of revenue neutrality in excise duty matters and upheld the decisions based on this principle.

This comprehensive analysis of the judgment highlights the key issues of NCCD exemption, excisability of goods, and revenue neutrality, providing a detailed understanding of the legal reasoning and precedents considered in reaching the decision.