2015 (10) TMI 1044 - SC - Central Excise

Benefit of a concessional rate of central excise duty - Notification No. 201/85 dated 2nd September, 1995 and Notification No.78/86 dated 10th February, 1986 - Held that - Tribunal in an exhaustive judgment dated 9th December, 2005 after setting out the terms of the Notification No. 11/83 dated 1st March, 1983 as amended by the Notification No. 78/86 dated 10th February, 1986 ultimately found that the product of the respondents were correctly classifiable under sub-paragraph 2 of the table in the said Notification, and not sub-paragraph 3 as was wrongly held by the Collector. This was done after the Tribunal went into the standards terms and conditions of the business with the wholesale buyers and after appreciating the witness statements made and particularly retractions made from the said statements in cross-examination - Tribunal found that the case of the Department had not in fact been made out. Apart from this, the Tribunal also relied upon the judgment of this Court in ITC Ltd. vs. Commissioner of Central Excise, New Delhi & Anr. 2004 (9) TMI 103 - SUPREME COURT OF INDIA and found that on a reading of the said judgment, the alternative submission of the respondent was also made out. We do not find any error in the said judgment either on fact or on law. - Decided against Revenue.

Summary

Issues:
1. Factual question regarding duty demands and penalty confirmation.
2. Allegations of false declarations and collection of extra money.
3. Classification of the product under Notification No. 11/83.
4. Examination of security deposit scheme and profit calculation.
5. Comparison with previous judgments and alternative submissions.

Analysis:
1. The case involved a factual question arising from three show cause notices confirming duty demands and penalties against M/s. GTC Industries Ltd. for claiming a concessional rate of central excise duty on cigarettes. The Department alleged that false declarations were made regarding the retail prices of cigarettes, leading to the collection of extra money from retailers and wholesale dealers.

2. The Collector of Central Excise found in a detailed order that the Department's case was supported by statements from 44 witnesses, including wholesalers and retail purchasers. However, the Tribunal later disagreed with the Collector's classification under Notification No. 11/83, determining that the product was correctly classifiable under a different sub-paragraph, based on witness statements and business terms with wholesale buyers.

3. Regarding the security deposit scheme, the Tribunal observed that the profit of super buyers could not be directly linked to the deposit amount, as the turnover significantly exceeded the deposits made. The Tribunal found no connection between the deposit scheme and the alleged extra collections, citing examples of similar practices by other companies and previous judgments.

4. The Tribunal also referred to a previous judgment involving ITC Ltd. vs. Commissioner of Central Excise, New Delhi, where an alternative submission by the respondent was considered valid. Ultimately, the Tribunal dismissed the appeal, stating that the Department's case was not established, and there were no errors in the judgment based on facts or law.

In conclusion, the judgment addressed issues related to duty demands, false declarations, product classification, security deposit schemes, and legal precedents, ultimately ruling in favor of the respondent and dismissing the appeal for lacking merit.