2018 (2) TMI 779 - AT - Central Excise

Liability of duty - dummy packs - 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 - 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 dismissed - decided against Revenue.

Summary

Issues: Classification of dummy packs for excise duty purposes

Analysis:
The case involved multiple appeals against the Order-in-Appeal dated 31.03.2010 passed by the Commissioner of Central Excise & Customs. The primary issue in all appeals was the classification of dummy packs for excise duty purposes. M/s International Tobacco Company Ltd. manufactured cut-tobacco and cigarettes, availing Cenvat credit on inputs used for making packing materials. The dispute arose when the jurisdictional Central Excise officer demanded duty on dummy packs distributed as advertising material. Initially, the officer instructed payment under Rule 6 of Cenvat Credit Rules, 2004. Subsequently, a show cause notice was issued proposing duty payment based on the cost of manufacture of dummy packs. The appeals questioned the dutiability of dummy packs, with the revenue contending classification under chapter Heading No. 48.21.

The Tribunal analyzed the nature of the dummy packs and their marketability. It was established that the dummy packs were not marketable goods but served as advertising material for the assessee. Consequently, the Tribunal held that the dummy packs did not attract Central Excise duty. As a result, the appeals filed by M/s International Tobacco were allowed, and the appeals filed by the revenue were dismissed. The Tribunal also directed M/s International Tobacco to continue debiting Cenvat credit availed on inputs used for manufacturing dummy packs.

In conclusion, the Tribunal's decision focused on the non-dutiable nature of the dummy packs due to their specific purpose as advertising material, leading to the dismissal of revenue's appeals and the allowance of assessee's appeals. The judgment provided clarity on the classification and excisability of such unique goods, emphasizing the importance of the specific characteristics and purpose of the products in question.