2011 (2) TMI 1319 - HC - Central Excise

Summary

Issues involved:
1. Whether cut and embossed foil in the manufacture of cigarettes is dutiable.
2. Whether the refund claim of the assessee should be granted according to Section 11B.

Issue 1 - Cut and Embossed Foil:
The appeal was filed by the Commissioner of Central Excise, Mumbai-V challenging the CESTAT's order dated 24-8-2005, which directed the original authority to grant the refund claim of the assessee. The Assistant Commissioner of Central Excise had initially rejected the refund claim on the grounds that embossing and cutting of duty paid aluminium foil constituted manufacture. However, the Commissioner (Appeals) allowed the appeal of the assessee, stating that no marketable commodity emerged from embossing/cutting the foil, and thus duty paid on such activity should be refunded. The CESTAT upheld the Commissioner (Appeals) decision and directed the original authority to handle the refund as per Section 11B of the Central Excise Act, 1944. The Revenue challenged this decision under Section 35G of the Act. The appellant argued that embossing and cutting the foil amounts to manufacturing, but the High Court held that the resulting product did not become a distinct marketable commodity, and therefore, no excise duty is leviable on it.

Issue 2 - Refund Claim and Section 11B:
The High Court ruled that once it is established that the assessee is entitled to a refund, it can only be allowed subject to the provisions of Section 11B of the Central Excise Act, 1944. The Court answered both questions in favor of the assessee and against the Revenue. The appeal was disposed of with no order as to costs.