2000 (8) TMI 319 - AT - Central Excise

Summary

Issues:
Accountal of cut tobacco under Central Excise Tariff, alleged shortages, deduction of weight of tissue paper, losses in manufacture process, permissible tolerance limit, appeal by Revenue, accounting procedure, time-bar plea, legality of deductions, unseen loss, supervision of operations, definition of "lost," evidence of removal or misuse, justification of demand.

Detailed Analysis:

1. Accountal of Cut Tobacco: The case involved the accountal of cut tobacco received at a concessional rate of central excise duty under Chapter X Procedure of the Central Excise Rules by M/s. Tirupati Cigarettes Ltd. Allegations of shortages in accounting for 24,941 kgs. of cut tobacco during a specific period were made by the Revenue.

2. Deduction of Weight of Tissue Paper: The dispute included the deduction of the weight of tissue paper from the recorded weight of cut tobacco to ascertain the actual quantity consumed. The Revenue argued against this deduction, claiming it was irregular.

3. Losses in Manufacture Process: The process of manufacturing cigarettes involved obtaining sorts and broken cigarettes known as making waste, which were ripped open to retrieve tobacco for recycling. The issue of losses in weight during ripping operations, making, and packing was raised, with the Revenue contesting the legitimacy of these losses.

4. Permissible Tolerance Limit: The appellate authority noted that the unseen loss was within permissible limits of 0.50%, 0.45%, and 0.48%. The losses incurred during specific periods were deemed normal and not indicative of illicit removal of cut tobacco.

5. Supervision of Operations: The manual of departmental instructions emphasized the supervision of operations, including the ripping of returned cigarettes and the collection and weighment of tobacco, paper, and refuse by the Factory Officer to ensure accuracy in accounting.

6. Definition of "Lost": The judgment delved into the meaning of the term "lost" as per legal dictionaries, highlighting that loss implies deprivation or damage, and in this context, it referred to a deprivation of the tobacco lost during the manufacturing process.

7. Evidence of Removal or Misuse: The judgment referenced legal precedents to emphasize that demands for duty must be justified by evidence of actual removal or misuse of goods received under specific procedures. Lack of evidence of clandestine removal or misuse could invalidate such demands.

8. Justification of Demand: The decision concluded that in the absence of evidence supporting the Revenue's claims and considering the arguments presented by the respondent, there was no merit in the Revenue's appeal. Consequently, the appeal was rejected, and the demand for duty was deemed unjustified in the circumstances of the case.