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TMI Blog2017 (2) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... e contended on behalf of the assessee - decided in favor of Revenue. Whether the Board Circulars dated 06/07/1990 and 01/04/1981 and the Trade Notice dated 08/08/1986 did not establish that N/N.355/86 in effect conferred benefit on the manufacturer in the nature of Set Off and the same was not in the nature of an exemption notification simplicitor? - Held that: - the said Circular and the Trade Notices are clarificatory in nature with respect to the procedure to be followed while availing set off /claiming the set off with respect to the amount of excise duty paid on input – Cut Tobaco. The said Trade Notices, as such, cannot be said to be in conflict with the Notification No.355/86-CE dated 24/06/1986. As observed and held hereinabove, N/N.355/86-CE dated 24/06/1986 is a Notification granting exemption on excise duty payable on Cigarettes to the extent of duty paid on the input, namely, Cut Tobaco - decided in favor of Revenue. Whether by virtue of the operation of Notification No.355/86-CE dated 24/06/1986, the appellants had in fact paid the full effective duty on the final products and hence were within their rights to recover the full duty from their customers? - Held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be either issued after unreasonable period or beyond the period of limitation - decided in favor of Revenue. Appeal dismissed - decided against assessee and in favor of Revenue. - TAX APPEAL NO. 539 of 2004 With CIVIL APPLICATION (OJ) NO. 93 of 2005 - - - Dated:- 20-1-2017 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE APPELLANT : M/S TRIVEDI GUPTA, ADVOCATE FOR THE OPPONENT : MR SUDHIR M MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Customs Excise Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as the learned tribunal ) dated 09/06/2004 by which the learned tribunal has dismissed the said Appeal preferred by the appellant and has confirmed the demand of excise duty recovered by the appellant by invoking Section 11D of the Central Excise Act, 1944 (hereinafter referred to as the Act ), the appellant has preferred the present Appeal to consider the following substantial questions of law; (i) Whether Notification No.355/86-CE dated 24/06/1986 is a notification granting Set Off of the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PLA register for making entries relating to deposits debits of Central Excise duty. [2.2] During the course of the checks, Officers noticed that the assessee was availing partial exemption from payment of duty under Notification No.355/86-CE dated 24/06/1986 as amended from time to time in respect of machine rolled cigarettes. The Officers also observed that the assessee was determining their duty liability on the basis of effective rate of duty prescribed under Notification No.3/94-CE dated 01/03/1994 in respect of machine rolled cigarettes manufactured and cleared by them. Under the Notification No.355/86-CE dated 24/06/1986 the assessee was availing exemption from payment of duty on cigarettes of the amount equal to the duty already paid on the Cut Tobaco used in the manufacture of such machine rolled cigarettes. For arriving at consumption of Cut Tobaco in the manufacture of such machine rolled cigarettes, assessee submitted to the Central Excise Department Blend and Brand Information in respect of each brand of cigarettes manufactured by them. On the basis of the formula adopted in such Blend and Brand information , GTC calculated the amount of exemption available t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Notification No.355/86-CE allowed only set off Notification. It was contended that all other duty was paid on the final product by utilizing credit of duty already paid on Cut Tobaco, which was available as set off and such payment has been accepted by the Department. It was contended that Section 11D shall not be applicable. Before the learned tribunal the assessee heavily relied upon Trade Notice No.153/86 dated 02/07/1996 and Trade Notice No.174/86 dated 08/08/1986 in support of their case that Notification No.355/86-CE was set off Notification and not general exemption Notification. It was also contended on behalf of the assessee that in the aforesaid Trade Notices, Department construed Notification No.355/86- CE as set off notification. By the impugned judgment and order the learned tribunal has dismissed the Appeal preferred by the assessee. Hence, the assessee has preferred the present Appeal to consider the above referred substantial questions of law. [3.0] Shri Uday Joshi, learned advocate has appeared on behalf of the assessee and Shri Sudhir Mehta, learned advocate has appeared on behalf of the Department. [3.1] (i) Whether Notification No.355/86-CE da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court in the case of J.K. Synthetics Vs. CCE, Jaipur reported in 1996 (81) ELT 648 . It is submitted that in the case before the Hon ble Supreme Court in the case of H.M.M. Ltd. Vs. Collector of Central Excise, New Delhi reported in 1996 (87) ELT 593 (SC) similar notification, being Notification No.201/79-CE, was for consideration before the Hon ble Supreme Court and it was held to be notification granting set off of duty. Shri Joshi, learned advocate appearing on behalf of the assessee has also relied upon the following decisions of the tribunal; (i) J.K. Synthetics Vs. CCE, Jaipur reported in 1996 (81) ELT 648 dealing with the Notification No.225/86-CE; (ii) CCE Vs. ITC Ltd. reported in 1993 (67) ELT 852 ; (iii) Andhra Pradesh Paper Mills Ltd. Vs. Collector of Central Excise, Guntur reported in 1987 (27) ELT 692. [3.5] Making the above submissions, it is requested to answer question no.(i) in favour of the assessee and against the revenue. [4.0] (ii) Whether the Board Circulars dated 06/07/1990 and 01/04/1981 and the Trade Notice dated 08/08/1986 did not establish that Notification No.355/86 in effect conferred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions, it is requested to answer question no.(iii) in favour of the assessee and against the revenue. [6.0] (iv) Whether the provision of Section 11D of the Central Excise Act, 1944 could be invoked in respect of payment of duty under Notification No.355/86 when the duty collected from the buyer of the finished products was not more than the duty already paid on the input and the duty paid on the finished product at the time of removal cumulatively ?:- [6.1] Now so far as question no.(iv) is concerned, it is vehemently submitted by Shri Joshi, learned advocate appearing on behalf of the assessee that the show cause notice was issued for the period covering January, 1993 to March, 1995 on dated 05/12/2000. It is submitted that therefore the same ought not to have been treated and considered and issued after unreasonable period. It is submitted that when the manufacture, removal and assessment of excise duty on Cigarettes for the period covering January, 1993 to March, 1995 were carried out under the physical control system by the Central Excise Officers followed by the finalization of the said assessment of duty on the finished goods during the said period by them, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of set off of duty paid on input - Cut Tobaco would be enrichment, and therefore, the assessee was not liable to keep the same with it, and therefore, Section 11D of the Act shall be applicable. It is vehemently submitted by Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue that as such Trade Notice No.153/86 dated 02/07/1996 and Trade Notice No.174/86 dated 08/08/1986 cannot be said to be in conflict with the exemption Notification NO.355/86-CE. It is submitted that the Trade Notice No. 153/86 dated 02/07/1996 and Trade Notice No. 174/86 dated 08/08/1986 are clarificatory in nature with respect to the procedure to be followed while claiming the set off of duty paid on input. It is submitted that therefore there is no question of any conflict between Notification No.355/86-CE and Trade Notice No. 153/86 dated 02/07/1996 and Trade Notice No. 174/86 dated 08/08/1986 as sought to be contended on behalf of the assessee. It is submitted that therefore the decisions, which are relied upon by the learned advocate appearing on behalf of the assessee, shall not be applicable to the facts of the case on hand. [7.2] Now so far as the reliance placed upon the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts Cigarettes, falling under sub heading no.2403.11 of the Schedule to the Central Excise Tariff Act,1985 (5 of 1986), from so much of the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944), as is equivalent to the duty of excise leviable under the said Central Excises and Salt Act already paid on Cut Tobaco falling under sub-heading No.2409.90 of the said Schedule and used in the manufacture of such Cigarettes. Explanation: For the purpose of this notification, the expression Cut Tobaco means the prepared or processed cut-to-size tobaco which is generally blended or moisturized to a desired extent, for use in the manufacture of machine rolled cigarettes. [8.1] On fair reading of Notification No.355/86-CE, it appears that the said Notification has been issued in exercise of powers under Sub-Rule (1) of Rule 8 of the Central Excise Rules, 1944 by which the Central Government has exempted the Cigarettes falling under sub heading No.2403.11 of the Schedule to the Central Excise Tariff Act, 1985, from so much of the duty of excise leviable thereon under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on behalf of the appellant that the Department also understood that the Notification No.355/86-CE is a notification granting set off, and therefore, the same shall be binding to the Department, the aforesaid has no substance. On considering the Trade Notices and the Circular, we are of the opinion that the said Circular and the Trade Notices are clarificatory in nature with respect to the procedure to be followed while availing set off /claiming the set off with respect to the amount of excise duty paid on input Cut Tobaco. The said Trade Notices, as such, cannot be said to be in conflict with the Notification No.355/86-CE dated 24/06/1986. As observed and held hereinabove, Notification No.355/86-CE dated 24/06/1986 is a Notification granting exemption on excise duty payable on Cigarettes to the extent of duty paid on the input, namely, Cut Tobaco. Under the circumstance, question no.(ii) is answered against the assessee and in favour of the revenue. [10.0] Now so far as question no.(iii) is concerned, as such, the same shall not arise in the facts of the case. As can be seen from the invoice produced on record that while making payment of excise duty on finished product, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thereupon such person shall pay the amount so determined. (iv) The amount paid to the credit of the Central Government under Sub Section (1) or Sub Section (3) shall be adjusted against the duty of excise payable by the person on finalisation of assessment or any other proceeding for determination of the duty of excise relating to the excisable goods referred to in Sub Section(i). (v) Where any surplus is left after the adjustment under Sub Section (4), the amount of such surplus shall either be credited to the fund or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of Section 11B and such person may make an application under that Section in such cases within six months from the date of the public notice to be issued by the Assistant Commissioner of Central Excise for the refund of such surplus amount. Under the circumstances, question no.(iii) is answered against the assessee and in favour of the revenue. [11.0] Now so far as the question whether the show cause notice was beyond the period of limitation and /or after unreasonable period is concerned, it is the case on behalf of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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