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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 ..... inance Act, 2001, w.e.f. 1/3/2001 was leviable on Chewing Tobacco and preparations containing Chewing Tobacco, falling under heading 2404.41 of the tariff. There is no dispute that NCCD was payable on Chewing Tobacco manufactured and cleared by the respondent during the period of dispute. The point of dispute is as to whether during the period from1/3/01to16/10/02, NCCD was chargeable on the Additive mixture manufactured and captively consumed by the respondent in manufacture of Chewing Tobacco. The department is of the view that during the period from1/3/01 to 16/10/02, only the basic excise duty and AED (GSI) were exempt and that there was no exemption notification exempting NCCD and such a notification No. 52/02-CE was issued only on17/10/02. It is in view of this that three show cause notices were issued to the respondents show cause notice dated 19th June 2002 demanding short paid NCCD amounting to Rs. 49,44,419/- on 24,722.096 kg. of Additive mixture cleared during the period from 01/10/01 to 31/3/02 alongwith interest on this duty at the applicable rate and also for imposition of penalty on the respondent under Rule 25 (1) of Central Excise Rules, 2002; show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, both the sides have filed their written submissions. 2.2 Shri Sunil Kumar, the learned Departmental Representative made the following oral as well as written submissions. (1) The product, in question, Additive mixture is liable to duty as preparation containing Chewing Tobacco under sub-heading 2404.41 of the Tariff and in this regard reliance is placed on Honrable Supreme Courts judgment in the case of Dharampal Satyapal vs. CCE, New Delhi reported in 2005 (183) E.L.T. 241 (S.C.) and Gopal Zarda Udyog vs. CCE, New Delhi reported in 2005 (188) E.L.T. 251 (S.C.). Since this product is excisable the NCCD which was introduced by Section 136 of the Finance Act, 2001 w.e.f.1/3/03 would be chargeable on the goods. The exemption Notification No. 52/02-CE exempting the goods, in question, from NCCD if cleared for captive consumption was issued only on17/10/02and, therefore, during the period from1/3/01to16/10/02there was no exemption from the NCCD for the goods in question. (2) The Tribunal in the case of Khatri Kimam Co. P. Ltd. vs. CCE, Lucknow reported in 2010 (253) E.L.T. 157 (Tri. Del.) has held that a notification cannot have retrospective effect. (3) Notification No. 67/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the Commissioner (Appeals) has wrongly relied upon the Tribunal judgment in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi(supra). 2.3 Shri T.R. Rastogi, Advocate, the learned Counsel for the respondent made the following oral as well as written submissions. (1) The additive mixture, in question, manufactured by the respondent was used entirely for captive consumption and there is no evidence adduced that it was marketed or sold to any one. As such, the intermediate stage product did not attract NCCD and NCCD was payable only on the finished product Chewing Tobacco (2) During the period of dispute the intermediate product, that is, additive mixture on which NCCD is demanded by the department and the finished product namely Chewing Tobacco, fell under the same sub-heading 2404.41 of the Tariff with the description Chewing Tobacco and preparations containing Chewing Tobacco. Thus, for the purpose of excise classification and charging duty, Additive Mixture is to be construed as Chewing Tobacco. Additive mixture arose only as intermediate product in the course of manufacture and of finished Chewing Tobacco. Since, both the products for the purpose of excise classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty by the Commissioner (Appeals). The grounds of appeal do not contain any specific prayer in this regard. In any event penalty is not imposable in these cases which concern the question of interpretation of law. 3. We have carefully considered the submissions from both the sides and perused the records. 4. The respondent manufacture branded Chewing Tobacco chargeable to Central Excise Duty under sub-heading 2404.41 of the Tariff and also an intermediate product Additive Mixture consisting of kimam, perfumes, essences, etc. also classifiable under sub-heading 2404.41 of the Tariff and which is cleared captively for use in the manufacture of branded Chewing Tobacco. The point of dispute in this case is as to whether during the period from1/3/01to16/10/02the Additive Mixture was liable to NCCD payable under Section 136 of the Finance Act, 2001. There is no dispute that during the period of dispute the exemption Notification No. 67/95-CE in respect of intermediate products cleared for captive consumption exempted such intermediate products only from the whole of the basic excise duty and AED (GSI) and this exemption Notification did not provide exemption in respect of NCCD f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/02 and prior to 17/2/02, there was no other exemption exempting from NCCD the goods of Chapter 24 cleared for captive consumption, during the period of dispute there was no exemption from NCCD in respect of the goods, in question, cleared for captive consumption. In view of this, during the period of dispute NCCD was chargeable on the Additive Mixture cleared for captive consumption. 6. The lower Appellate Authority has set aside the demand of NCCD in respect of the clearances of Additive Mixture for captive consumption relying upon the Tribunals judgment in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi (supra) observing that even if the NCCD is paid, its Cenvat credit would be available to the respondent and the whole exercises of charging NCCD, and then giving its Modvat credit is revenue neutral and hence there is no need to charge NCCD. However, we find that the issue decided by the Larger Bench of the Tribunal in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi (supra) was that in a case where the department alleges intention to evade the payment of duty, whether it was sufficient if the assessee shows that he had an alternative procedure available to him, which, if follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would be entitled to the Modvat credit of duty paid, if the duty is paid at each stage of manufacturing and the entire exercise would be revenue neutral. The Honrable Supreme Court while dismissing the departments SLP also that observed earlier the Tribunal in the case of Indian Rayon and Industries Ltd. vs. Calcutta IV reported in 2000 (119) E.LT. 636 (Tribunal) had decided this issue against the revenue and no appeal had been filed by the revenue against that judgment. 7.3 In the case of CE&C (Appeals), Ahmedabad vs. Narayan Polyplast (supra), the issue was as to whether the assessee was bound to avail duty exemption or could forgo the same and pay duty in order to avail Modvat credit. Honrable Supreme Court in this case observing that the earlier order of the Tribunal on the same issue was not challenged and the entire exercise is revenue neutral, dismissed the departments appeal. 7.4 In the case of CCE, Pune vs. Coca-Cola India Pvt. Ltd. (supra), the point of dispute was as to whether M/s Coca-Cola were liable to pay duty on the beverages bases/concentrates supplied by them to the bottlers, who, in turn, were using the same as raw material in the manufacture of bevera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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