2005 (5) TMI 632 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 214/86 for exemption on cut tobacco containing tobacco dust/tobacco refuse.

Detailed Analysis:
The case involved manufacturers of Cigarettes sending raw tobacco to another party for processing and receiving back cut tobacco. The authorities imposed a demand, contending that the cut tobacco, containing tobacco dust/tobacco refuse, was not eligible for exemption under Notification No. 214/86. The dispute centered on whether tobacco dust/tobacco refuse should be considered a final product, affecting the duty liability of the cut tobacco used for manufacturing cigarettes.

Upon review, the Tribunal found that the appellants were registered cigarette manufacturers, and the cigarettes were cleared for export. The Tribunal disagreed with the lower authorities' interpretation that tobacco dust/tobacco refuse was a final product. It clarified that the final products were the cigarettes themselves, not the by-products like tobacco dust/tobacco refuse. Consequently, the Tribunal concluded that the assessee was entitled to the exemption on the cut tobacco under seizure as per the notification.

In the final judgment, the Tribunal set aside the earlier order confirming the demand and imposing a penalty. The Tribunal ruled in favor of the appellants, allowing the appeal and granting them the benefit of the exemption on the cut tobacco used for manufacturing cigarettes. The decision emphasized that the final products, in this case, were the cigarettes, and not the by-products like tobacco dust/tobacco refuse, thus entitling the assessee to the exemption under the relevant notification.