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TMI Blog2010 (12) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of the Tribunal that in a revenue neutral situation the assessee is not required to pay the duty. - E/2109-2111 of 2005 - 865-867/2010-EX(PB) - Dated:- 16-12-2010 - Shri Justice R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. Shri Sunil Kumar, Authorized Representative (DR) for the appellant. Shri Rastogi, Advocate for the Respondent. Per. Rakesh Kumar :- The facts leading to these three appeals filed by the Revenue are, in brief, as under. 1.1 The respondents are manufacturing branded Chewing Tobacco. In course of manufacture of branded Chewing Tobacco, Tobacco essence, also called Additive mixture, comprising of kimam, perfumes, essences, etc. is prepared which in turn is used in the manufacture of branded Chewing Tobacco. The Additive mixture manufactured and used captively was exempt from basic excise duty as well as additional excise duty leviable under Additional duty of excise (Goods of Special Importer) Act, 1957 [hereinafter referred to as ASD (GSI) ] under Notification No. 67/95-CE dated 16/03/95. The National Calamity Contingent Duty (NCCD) which was levied by Section 136 of the Finance Act, 2001, w.e.f. 1/3/2001 was leviable on Chewing Tobac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant as Cenvat credit and, therefore, the Revenue neutral situation comes about and hence the ratio of Tribunal (Larger Bench)s judgment in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi reported in 2000 (119) E.L.T. 718 (Tribunal LB) would be squarely applicable. The Commissioner (Appeals) also referred to the judgments of this Tribunal in the cases of Gopal Zarda Udyog vs. CCE, New Delhi reported in 2001 (128) E.L.T. 409 (Tri. Del.) and Crompton Greaves Ltd. vs. CCE, Chandigarh reported in 2002 (139) E.L.T. 101 (Tri. Del.) observing that the demand of NCCD on the intermediate products Additive mixture whose credit is available to the respondent for payment of the duty on the final product, is only an academic exercise as the same is totally revenue neutral. It is against this order of the Commissioner (Appeals) that the Revenue has filed these appeals. 2. Heard both the sides. 2.1 The appellant vide the order dated 23/9/10 were also directed to file the written submissions on or before 7th October and thereafter the respondent were to file their written submissions on or before 20th October. Accordingly, both the sides have filed their written submissions. 2.2 Shri Suni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to evade the duty. The Tribunal in this case held that the revenue neutrality being a question of fact is to be established in the facts of each case and not merely by showing the availability of alternative scheme and with reference to Modvat scheme it has to be shown that the revenue neutral situation comes about in relation to the credit available to the assessee himself and not by the way of availability of credit to the buyer of the assessees manufactured goods. Thus in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi (supra), the question of existence of revenue neutral situation had been raised in the context whether the non-payment of duty was deliberate warranting invoking of extended limitation period under proviso to Section 11A (1) or otherwise. It is not the ratio of the Larger Bench of the Tribunal in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi (supra), that no duty would be required to paid on the intermediate product cleared for captive consumption which is not exempt from duty, if Modvat credit of the duty paid is available to the manufacturer for payment of duty on the finished product. Therefore, the Commissioner (Appeals) has wrongly relied upon the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2008 (231) E.L.T. 195 (S.C.) and CCE, Pune vs. Coca-Cola India Pvt. Ltd. reported in 2007 (213) E.L.T. 490 (S.C.) has dismissed the SLPs of the department against the orders of the Tribunal and quashed the demands following the principle of revenue neutrality. (5) Honrable Gujarat High Court in the case of CCE, Vadodara II vs. Indeos ABS Ltd. reported in 2010 (254) E.L.T. 623 (Guj.) has taken the view that the demand raised on the manufacturer when the goods were transferred to sister unit is not maintainable on the ground of revenue neutrality (6) The theory of revenue neutrality has acquired recognition and acceptability over a period of time. In the respondents own case, the Tribunal has allowed the relief and affirmed that no NCCD is demandable on the Additive Mixture used for captive consumption. In this regard, reliance is placed on the Tribunals order in the case of CCE, Chandigarh vs. Dharampal Satyapal reported in 2009 (248) E.L.T. 810 (Tribunal Delhi) and SR Fragrance Ltd. vs. CCE reported in 2009 (235) E.L.T. 877 (Tri. Del.) (7) The department has not seriously contested the setting aside of penalty by the Commissioner (Appeals). The grounds of appeal do not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable on goods under Central Excise Act, 1984 or any other law for the time being in force. Under sub-Section (3) of Section 136 of the Finance Act, 2001, the provisions of Central Excise Act, 1944 and the Rules made thereunder including those relating to refunds and exemption from duties and imposition of penalty shall, as far as may be, apply in relation to levy and collection of NCCD under this Section in respect of goods specified in 7th Schedule as they apply in relation to the levy and collection of duties of excise on such goods under the Central Excise Act, 1944. In the 7th Schedule of the Finance Act, 2001, heading 2404.10, 2404.31, 2404.39, 2404.41, 2404.49 and 2404.50 of the heading 24.04 of the Central Excise Tariff are specified for charging NCCD. Sub-heading 2404.41 covers Chewing Tobacco and preparations containing Chewing Tobacco. Since the goods, in question, - Additive Mixture are classifiable under sub-heading 2404.41 the same would be liable for NCCD also. Since the exemption for NCCD in respect of the goods cleared for captive consumption was granted by Notification No. 52/02-CE dated 17/10/02 and prior to 17/2/02, there was no other exemption exempting from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in 2007 (214) E.L.T. 321 (S.C.), C CE, Pune vs. Textile Corporation Maratwada Ltd. reported in 2008 (231) E.L.T. 195 (S.C.), CE C (Appeals), Ahmedabad vs. Narayan Polyplast reported in 2005, (179) E.L.T. 20 (S.C.) and CCE, Pune vs. Coca-Cola India Pvt. Ltd. reported in 2007 (213) E.L.T. 490 (S.C.). 7.1 In the case of CCE, Jamshedpur vs. Jamshedpur Beverages (supra), the grievance of the revenue was that M/s Jamshedpur Beverages had wrongly availed Modvat credit of Rs. 26,77,320/- and the contention of the party was that the excise duty paid and the Modvat credit were identical and the consequence of payment of excise duty after availing Modvat was revenue neutral and in this background the revenues appeal was dismissed leaving the question of law open. 7.2 In the case of Textile Corporation Maratwada Ltd. (supra), the issue involved was as to whether M/s Textile Corporation Maratwada Ltd. were liable to pay excise duty at each stage bleaching, dyeing, printing, mercerising of textile fabrics. The Hon ble Supreme Court in this case dismissed the departments appeal on the ground that since the assessee would be entitled to the Modvat credit of duty paid, if the duty is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2001, simultaneous with the introduction of NCCD, the exemption from NCCD in respect of goods cleared for captive consumption was not provided by issue of an exemption Notification under Section 5A. Such an exemption Notification No. 52/02-CE was issued only on17/10/02without any retrospective effect. Since this notification has not been given retrospective effect, its benefit cannot be given in respect of the clearances for captive consumption prior to17/10/02. We also find that since in this case, the NCCD had not been paid at the time of clearance of goods for captive consumption and on account of non-payment of NCCD, in addition to the NCCD, the interest on the same under Section 11AB is also chargeable and in the event of payment of NCCD, the Cenvat credit would be available only of the NCCD paid, not of the interest on the NCCD under Section 11AB, this cannot be said to be a revenue neutral situation. 8. We, therefore, hold that the CCE (Appeals)s order setting aside the NCCD demands on the ground of revenue neutrality is not correct. However, since in this case, there was no intention to evade the NCCD, penalty under Rule 25 (1) is not warranted and on this point, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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