2008 (3) TMI 119 - AT - Central Excise

Assessee captively consumed unbranded chewing tobacco (UCT), in the mfg. of branded chewing tobacco (BCT) without paying NCCD on UCT - original authority demanded this amount of NCCD (National Calamity Contingent Duty) - Commissioner (Appeals) found that if assessee paid the NCCD on UCT, they would have taken Cenvat credit of the same and utilized the same to pay NCCD on the BCT - revenue neutral exercise demand, interest & penalty are set aside

Summary

Issues:
- Appeal filed by Revenue against the Commissioner (Appeals) allowing appeals against demand of National Calamity Contingent Duty (NCCD) not paid during material periods.

Analysis:
1. The appeals filed by the Revenue were against the Commissioner (Appeals) allowing appeals by the respondents related to the non-payment of National Calamity Contingent Duty (NCCD) during specific material periods. The issues in both appeals were found to be identical.

2. In the case of Appeal E/619/05 concerning M/s. Kulavi Tobacco Industry (KTI), it was observed that KTI manufactured unbranded chewing tobacco (UCT) for captive consumption in the production of branded chewing tobacco (BCT). While UCT was exempt from Basic Excise Duty and Additional Excise Duty, it was not exempt from NCCD until a certain date. The original authority demanded payment of NCCD, interest, and imposed a penalty on KTI for clearing UCT without paying NCCD. The Commissioner (Appeals) noted that if KTI had paid NCCD on UCT, they could have utilized Cenvat credit to offset NCCD on BCT. Consequently, the demand and penalty were vacated.

3. Despite the absence of representation from the respondents, the Tribunal, after considering the submissions by the Revenue, agreed with the Commissioner (Appeals) that the order did not require any interference. Therefore, the appeal by the Revenue was dismissed for lacking merit.

4. Appeal No. E/688/05, filed by the Revenue, covered a different period with a specific amount demanded from M/s. Omega Traders. However, no additional grounds were presented by the Revenue in this appeal. As a result, this appeal was also dismissed by the Tribunal.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) in both appeals, dismissing the Revenue's claims due to the revenue-neutral nature of the exercise and lack of merit in the appeals.