2017 (6) TMI 41 - AT - Central Excise

Levy of duty - marketability - dummy packs distributed to dealers, free of cost, for the purpose of advertisement - classification - Held that - the dummy packs were not marketable, since they were not capable of being bought and sold in the market because they were advertising material of the assessee who were marketing the same - the dummy packs did not attract Central Excise duty - since the question of dutiability does not arise, the question of classification of the said goods under chapter 48 and 49 does not arise - appeal allowed - decided in favor of assessee.

Summary

Issues involved:
Classification of dummy packs for excise duty, applicability of Central Excise Tariff Act, availing Cenvat credit, determination of marketability, dutiability of dummy packs.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved appeals against orders passed by the Commissioner of Central Excise & Customs regarding the classification and dutiability of dummy packs manufactured by M/s International Tobacco Company Ltd. The main issue in the appeals was whether the dummy packs should attract Central Excise duty and under which chapter of the Central Excise Tariff Act they should be classified.

The Tribunal considered the facts that M/s International Tobacco procured inputs for making packing materials, including dummy packs distributed for advertisement. The Central Excise officer initially instructed the company to pay duty on the dummy packs. However, a subsequent objection was raised regarding the classification of the dummy packs, leading to a show cause notice and demand for Central Excise duty.

The Tribunal analyzed the contentions of both parties. The company argued that the dummy packs were not marketable and, therefore, not excisable. They also highlighted that they were reversing Cenvat credit on inputs used for dummy packs. On the other hand, the revenue contended that the dummy packs should be classified under a specific chapter heading.

After considering the arguments and reviewing the records, the Tribunal held that the dummy packs manufactured by M/s International Tobacco were not marketable as they were used for advertising purposes and not for sale in the market. Consequently, the Tribunal ruled that the dummy packs did not attract Central Excise duty. Therefore, the appeals filed by the company were allowed, and the appeals filed by the revenue were dismissed. The Tribunal also directed the company to continue debiting Cenvat credit availed on inputs used for manufacturing dummy packs.

In conclusion, the Tribunal's judgment clarified the non-dutiable nature of the dummy packs manufactured by M/s International Tobacco and provided a clear decision on the classification and dutiability of such products under the Central Excise Tariff Act. The judgment emphasized the importance of marketability in determining excisability and upheld the company's position regarding the duty status of the dummy packs.