2008 (7) TMI 315 - AT - Central Excise

Confirmation of National Calamity Contingent Duty (NCCD) on unbranded pan masala used captively in the manufacture of branded pan masala on the ground that Not. No. 67/95-CE, which exempts unbranded pan masala from payment of duty on account of captive consumption does not specify NCCD as one of the duties - whatever duty was payable on the unbranded pan masala was available as Credit to be utilized for payment of NCCD on branded pan masala - revenue neutral position- demand set aside

Summary

Issues:
Interpretation of Notification No. 67/95-CE dated 16-3-95 regarding National Calamity Contingent Duty (NCCD) exemption for captive consumption of unbranded pan masala.

Analysis:
The case involved a dispute regarding the confirmation of National Calamity Contingent Duty (NCCD) on unbranded pan masala used captively in the manufacture of branded pan masala. The issue revolved around whether Notification No. 67/95-CE dated 16-3-95, which exempts unbranded pan masala from duty on captive consumption, included NCCD as one of the duties. The appellants argued that the duty should not be confirmed as no exemption for captive consumption in respect of NCCD was specified in the notification.

Upon hearing both sides, the tribunal found that the unbranded pan masala was indeed being used captively in the production of branded pan masala, which attracted payment of NCCD. The tribunal noted that the process of packing unbranded pan masala in polythene pouches with a brand name may not necessarily amount to manufacturing. However, the tribunal emphasized that the overall transaction was revenue neutral. Any duty payable on the unbranded pan masala was available as Modvat credit to the appellant for offsetting the NCCD on the branded pan masala. It was observed that the appellant had actually paid more duty on the branded pan masala than required on the unbranded product.

Consequently, the tribunal concluded that the entire process was revenue neutral, and the demand for duty was unjustified. Therefore, the tribunal set aside the duty demand and allowed the appeal in favor of the appellant, granting consequential relief. The decision was pronounced in open court, bringing an end to the dispute regarding the NCCD on captive consumption of unbranded pan masala in the manufacturing process of branded pan masala.