1998 (9) TMI 212 - AT - Central Excise

Summary

Issues:
1. Compliance with Central Excise Rules regarding removal and disposal of ripped tobacco.
2. Refund claim rejected by Assistant Commissioner.
3. Interpretation of Circulars issued by the Central Board of Excise and Customs.
4. Duty liability on ripped tobacco sent to another factory.
5. Comparison with previous Tribunal decisions and case laws.

Issue 1: Compliance with Central Excise Rules regarding removal and disposal of ripped tobacco
The ld. Commissioner (Appeals) rejected the appeal as the Appellants failed to comply with essential conditions for removal of ripped tobacco under Rule 196BB. The Appellants cleared the goods under Rule 196A without following the prescribed procedure under Rule 196B(1) after reversing necessary credits. The Commissioner emphasized that the goods were cleared on payment of duty under Rule 196A, indicating surplus to their needs, with no case for refund due to lack of compliance with the rules.

Issue 2: Refund claim rejected by Assistant Commissioner
The Assistant Commissioner rejected the refund claim of Rs. 4,46,512/- stating that duty was correctly charged and recovered as the ripped tobacco was sent for reprocessing, not for use in manufacturing cigarettes under concessional duty rates. The Assistant Commissioner upheld the duty charge and rejected the appeal, a decision affirmed by the ld. Commissioner (Appeals).

Issue 3: Interpretation of Circulars issued by the Central Board of Excise and Customs
The Appellant's counsel referred to Circular No. 58/89-CX. 3, dated 5-11-1989, clarifying the procedure for returning ripped tobacco to the original manufacturer under Rule 196B(i). The counsel argued that the Appellants' case aligned with the Circular's provisions, emphasizing the duty reversal requirement instead of payment at the time of clearance.

Issue 4: Duty liability on ripped tobacco sent to another factory
The Respondent Commissioner argued that duty at the tariff rate of 225% was rightly charged as the ripped tobacco was sent to another factory, justifying the duty deposit requirement. The Commissioner distinguished the case cited by the Appellants, emphasizing the duty liability based on the purpose of sending the ripped tobacco to another factory.

Issue 5: Comparison with previous Tribunal decisions and case laws
The Appellant's counsel cited a previous Tribunal decision where duty recovery was deemed unsustainable due to the ripped tobacco's use aligning with the concession's intended purpose. The Tribunal in the present case held that duty payment was not required at the time of clearance, only credit reversal, based on the Circulars and previous case laws cited. The Appellants were entitled to a refund of duty paid, provided the credit reversal was undertaken.

In conclusion, the Tribunal allowed the appeal, emphasizing compliance with Circular provisions and previous decisions, leading to the Appellants' entitlement to a duty refund upon reversing the credit. The judgment clarified the duty liability based on the purpose of sending ripped tobacco and upheld the Appellants' position in alignment with the Circulars and legal precedents cited.