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TMI Blog2015 (2) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Hon ble High Court of Bombay in the case of Rallis India Ltd. Vs. Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] where a similar view was taken. Decision of the Tribunal taking a view that tobacco refuse cannot be considered as a final product of the assessee has to be considered and followed. Once we do that the provisions that nothing contained in the notification shall apply to inputs used in or in relation to manufacture of final products which are exempted, would not be applicable to the present case. Therefore just because appellant cleared tobacco refuse without payment of duty, cut tobacco which forms part of such refuse cannot be levied to central excise duty as proposed by the Revenue in these cases. The demands against the appellants, interest thereon and penalties imposed cannot be sustained. - Decided in favour of assessee. - E/MISC/312/2012 in E/3134/2012-DB, E/320/2012-DB, E/28124/2013-DB, E/1664/2011-DB, E/3134/2012-DB, E/320/2012-DB, E/28124/2013-DB, E/1664/2011-DB - Final Order Nos. 22358-22361 / 2014 - Dated:- 3-12-2014 - Shri B. S. V. Murthy And Shri S. K. Mohanty,JJ. For the Appellant : Ms. L. Maithili, Advocate For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a duty of excise. As per the Explanation to the subject Clause inserted with effect from 10.05.2008- For the purposes of this clause, goods includes any article, material or substance which is capable of being brought and sold for a consideration and such goods shall be deemed to be marketable. 3.1.Further, consequent to the amendment to Section 2(d) of the Central Excise Act, 1944, CBEC, vide Circular No. 904/24/09-CX, dated 28.10.2009, clarified that: .the bagasse, aluminium/zinc dross and other such products termed as waste, residue or refuse which arise during the course of manufacture and are capable of being sold for consideration would be excisable goods and chargeable to payment of excise duty . 3.2. Tobacco Refuse has been specified under Chapter Sub-Heading No. 24013000 of the First Schedule to the Central Excise Tariff Act, 1985 hence the same are excisable goods . M/s. VST is selling the Tobacco Refuse for a consideration and hence the said product is marketable. Further, the Tobacco Refuse, being capable of being bought and sold for a consideration, the same are to be considered as goods . 3.3. In view of the above, it appeared that Tobacco Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 23/2010 dt. 06.01.2011 07/2011 dt. 15.12.2011 1,14,40,020/- 15,00,000/- 3 E/3134/2012 O.R. No. 14/2011 dt. 05.12.2011 02/2012 dt. 20.07.2012 1,40,45,842/- 10,00,000/- 4 E/28124/2013 O.R. No. 21/2012 dt. 03.12.12 06/2013 dt. 08.08.2013 1,30,11,933/- with interest 10,00,000/- It can be seen from the above that mandatory penalty also has been imposed in respect of the demand for more than ₹ 4.48 crores on the ground that the appellants have resorted to suppression with an intention to avail the benefit of exemption Notification No. 52/2002-CE dated 17.10.2002. Paragraph 21 of the order-in-original No. 01/2011 regarding suppression is relevant and is reproduced below: 21. I find that the tobacco refuse is generated in the factory at two stages. Firstly, during the course of manufacture of cut tobacco from the tobacco leaf and secondly, during the course of manufacture of cigarettes from the cut tobacco. M/s. VST never informed the Department that the quantity of tobacco refuse which is shown in the ER1 return is the total quantity of tobacco refuse generated at both the stages. I f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co refuse is not correct. 6. The learned AR on the other hand reiterates the observations of the learned Commissioner. He submits that the decision of the Tribunal related to Rule 6 as rightly observed by the Commissioner. In this case the issue is not whether the appellant has to pay 8%/10% of the value of the goods cleared without payment of duty against common inputs have been used but the issue is whether the appellant is eligible for exemption to Cut Tobacco when it is used in the manufacture of exempted final products. As regards the decision of the Tribunal and other decisions cited, the learned AR when the matter was heard on 12.11.2014 sought time to study the issue once again and find out whether there are any contrary decision in favour of the Revenue. Today when the matter was called, learned AR said that he could not find any such decision. 7. We have already reproduced the manufacturing process, the reasons/grounds for commencement of proceedings against the appellant and the basis for confirming the demand by the Commissioner while discussing the statement of facts and therefore we would not like to repeat the same. Quite clearly the issue involved is whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been denied on the ground that tobacco refuse is also excisable goods, marketable, can be considered to have been manufactured and can be sold for consideration. There can be two views about all these issues. But question arises whether it can be considered as a final product of the assessee. Para 3 of the decision in the case of Golden Tobacco Ltd. [2010 (259) E.L.t. 269 (Tri.-Ahmd.)] is relevant and is reproduced below: 3. After hearing both sides, we find no merits in the above distinctions drawn by the appellate authority between facts of the present case and facts as available before Mumbai High Court. In the present case, the reading of the show cause notice clearly shows that the Revenue is treating the Tobacco refuse as a by-product. The original adjudicating authority also confirmed the demand by considering the Tobacco refuse as a by-product. Appellants are not manufacturer of Tobacco refuse and the same emerges as a by-product during the course of manufacture of their final product i.e. Cigarettes and Cut Tobacco. The fact that such Tobacco refuse is a specified item against a particular entry in Central Excise Tariff and has been exempted by virtue o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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