2016 (10) TMI 865 - AT - Central Excise

Captive consumption - benefit of exemption notification no. 67/95 - further processing of goods after packing into unit container - skimmed milk powder, branded butter and branded ghee - interpretation of the words intended for captive use of intended for sale - the demands raised by recording a finding that the goods were packed in unit containers and were branded and were intended for sale, hence having consumed captively duty liability arises. - Held that - The said goods were packed in unit containers is an accepted fact but at the same time due to exigency i.e. shortage of the said goods, respondent consumed the goods which were manufactured and put up in 20 kgs. Corrugated boxes for captive consumption. - though the goods were intended to be cleared outside the factory, due to shortage of milk and milk products, respondent consumed the same within the factory premises. - there is no dispute that the goods were consumed within the factory premises and as such it cannot be said that there was no exemption available on the said products for captive consumption as notification no. 67/95 does not carve out any exception. It is seen that the inputs and final products in this case are both specified products in the Notification No. 8/98 dated 02/06/98 and in terms of para 4(c) of the said Notification clearances of specified goods captively as inputs are deemed to be exempt from the whole of excise duty. Therefore the clearances of Skimmed Milk Powder and Branded Butter though put up in unit container but used for captive consumption as inputs for regeneration of Milk are not dutiable. Appeal disposed off - decided against Revenue.

Summary

Issues involved:
Interpretation of "intended for captive use" or "intended for sale" in relation to skimmed milk powder, branded butter, and branded ghee under specific chapter sub-headings of the Central Excise Tariff Act, 1985.

Detailed Analysis:

Issue 1: Excise duty liability on captively consumed goods
The dispute revolves around whether skimmed milk powder, branded butter, and branded ghee consumed within the factory premises are liable for Central Excise duty. The lower authorities issued a show cause notice demanding duty as the goods were packed in unit containers, branded, and intended for sale, thus attracting duty liability due to clearance. The Tribunal remanded the matter back to the adjudicating authority for reconsideration. The adjudicating authority confirmed the demands, stating that duty liability arises as the goods were packed in unit containers, branded, and intended for sale. However, the first appellate authority set aside the order, allowing the appeal filed by the assessee.

Issue 2: Interpretation of "intended for captive use" or "intended for sale"
The grounds of appeal by Revenue highlight the failure of the Commissioner (Appeals) to examine whether the goods were in unit containers and intended for sale, as directed by the Tribunal. The key issue lies in interpreting the terms "intended for captive use" and "intended for sale." The classification list indicated that the products attracted a Basic Excise Duty (BED), with the assessee claiming a nil rate of duty for captive consumption. The reliance on a previous judgment was deemed incorrect as it involved goods stored for captive consumption in the future, not intended for immediate sale.

Issue 3: Application of exemption notification
Upon reviewing the records and submissions, it was found that the goods were consumed within the factory premises due to a shortage, despite being intended for clearance outside. The first appellate authority correctly noted that there was no exemption available for captive consumption of the said goods, as per notification no. 67/95. The authority cited a relevant Tribunal decision and the Notification No. 8/98 to support the conclusion that clearances for captive consumption as inputs were exempt from excise duty. Consequently, the demand, interest, and penalty were deemed unsustainable.

In conclusion, the appeal by Revenue was rejected based on the correct findings of the first appellate authority and the applicable legal provisions and notifications. The Tribunal upheld the decision, emphasizing the exemption available for captively consumed goods under specific circumstances.