2016 (2) TMI 253 - AT - Central Excise

Duty demand on waste/scrap of packing materials cleared from the factory - Held that - The dispute in the present appeal is squarely covered by the decision of the Tribunal in the case of International Tobacco Co. Ltd. vs. CCE, Ghaziabad 2003 (10) TMI 171 - CESTAT, NEW DELHI wherein held that there is force in the submissions of the learned Advocate that no process of manufacture has been taken by them so as to attract the Central Excise duty on such waste of the paper arising during the course of manufacture of the cigarettes. The Revenue has not controverted the contention of the learned Advocate for the appellants that there is no provisions in Cenvat Credit Rules, 2001 providing for payment of duty on waste and scrap, which has arisen during the manufacture of the finished product. Such a provision had existed in the erstwhile Rule 57F of the Central Excise Rules, 1944. In view of this, the impugned order is not sustainable. Accordingly, we set aside the order and allow the appeal. - Decided in favour of assessee

Summary

Issues involved:
Appeal against order-in-appeal upholding order-in-original regarding duty on waste/scrap of packing materials used in manufacturing cigarettes.

Analysis:
The appeal was directed against the order-in-appeal upholding the order-in-original passed by the Commissioner of Central Excise (Appeals), Mumbai-I. The appellant, engaged in manufacturing cigarettes and cut tobacco, availed credit of duty paid on raw materials, including packing materials. The dispute arose when the appellant was issued a show cause notice demanding duty on waste/scrap of packing materials cleared from the factory. The appellant contended that they were not liable to pay duty on waste/scrap, citing a Tribunal decision in a similar case. Despite this, the adjudicating authority confirmed the duty demand and imposed a penalty. The appeal before the Commissioner (Appeals) was dismissed, leading to the present appeal before the Tribunal.

The appellant argued that the dispute was covered by a Tribunal decision in a similar case, emphasizing that the authorities did not provide reasons for not applying the said decision. The appellant also relied on various other decisions supporting their stance. The counsel highlighted that the Tribunal in the cited judgments had ruled that no manufacturing process had occurred to attract excise duty on waste of paper. On the contrary, the Assistant Commissioner (AR) reiterated the findings of the Commissioner (Appeals).

After hearing both parties and examining the material on record, the Tribunal found merit in the appellant's arguments. Referring to the judgment in the case cited by the appellant, the Tribunal observed that no manufacturing process had taken place to attract excise duty on waste of paper. As the Revenue failed to establish how the cited decisions were inapplicable, the Tribunal concluded that the appellant's case aligned with the precedent. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant with any consequential relief deemed necessary.