The Customs Appellate Tribunal dismissed the Department's appeal. The Tribunal followed its own earlier decision in ITC Ltd. v. Commissioner of Excise (2002) to hold that there was no justification for reversing Cenvat Credit on cut tobacco, even when removed as waste, thereby upholding the lower authority's order.
Appeal filed by the Department is dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Excise Appeal No. E/212/2009
(Arising out of Order-in-Original No.14/CE/Commr./Kol-VI/2008 dated31/12/2008 passed by the Commissioner of Central Excise, Kolkata-VI).
Commr. of Central Excise, Kolkata
Applicant (s)/Appellant (s)
Vs.
M/s. ITC Ltd.
Respondent (s)
Appearance:
Shri S. Mukhopadhyay, Supdt. (A.R.) for the Appellant (s) Shri K.S. Ravi Shankar, Advocate & Sri N. Anand, Advocate for the Respondent (s)
CORAM:
HON’BLE SHRI JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HON’BLE SHRI V.PADMANABHAN, MEMBER (TECHNICAL)
Date of Hearing/Decision :- 04/05/2018
ORDER NO. F/O 76063/2018
Per Shri V.Padmanabhan
The present appeal is filed by the Department against the order-inOriginal 14/CE/Commr./Kol-VI/2008 dated-31/12/2008 passed by the Commissioner of Central Excise, Kolkata-IV. 2. Brief facts of the case are that the respondent is engaged in the manufacture of cigarettes. For such manufacture, they procured duty paid cut tobacco from outside and availed Cenvat Credit on such cut tobacco. The respondent had declared a certain formula for the quantity of cut
Excise Appeal No. E/212/2009
tobacco used in the manufacture of cigarettes. The Department during verification noticed that a certain portion of the cut tobacco was consumed over and above quantity as per the formula recorded by the respondent. Further cut tobacco was also being cleared without duty payment describing the same as “floor sweeping”. It is the contention of assessee that such floor sweepings are wastes arising during the course of manufacture. The Department took the view that the clearance of the portion of cut tobacco as floor sweeping is to be considered as clearance of cut tobacco as such and hence, the respondent will be liable to reverse proportionate Cenvat Credit in terms of the Cenvat Credit Rules, 2004. Accordingly, show cause notice was issued for demand of duty on cut tobacco as per formula and also for reversal of a part of the Cenvat Credit availed on cut tobacco but Commissioner, in the impugned order dropped such demand and Revenue is in appeal before us mainly agitating the following grounds :
“ i) the Adjudicating Authority has held that the ‘floor sweepings’ are not excisable. In doing so, the Adjudicating Authority has ignored that the ‘floor sweepings’ are nothing but ‘cut tobacco’ that fell down during the process of suction. Just by assigning a different name to the commodity, the nature of the commodity does not change. There is no doubt that ‘cut tobacco’ is an excisable commodity covered under SH No. 2403 99 70 of Central Excise Tariff Act, 1985 and therefore, duty liability on the item should have been discharged.
(ii) The Adjudicating Authority has held that the SCN has wrongly and unlawfully invoked the extended period, being hit by limitation on account of time bar [beyond the normal (applicable) period of one year].
But it has been ignored by the Adjudicating Authority that the removal of ‘cut tobacco’ in the guise of ‘floor sweeping’, was suppressed by the assessee, as could be seen from the contents of the SCN and thus the extended period of limitation was justifiably invoked in the instant SCN.
(iii) The Adjudicating Authority has decided against the merit of the case as the ‘Appendix F’ proforma record, as per Cigarette Manual has not been considered and taken on record as a relied upon document in the SCN, and also because of absence of the authority and methodology of calculation employed for arriving at the cited figure of duty payable.
2
Excise Appeal No. E/212/2009
However, these lapses cannot vitiate the SCN in demanding the Central Excise duty and Education Cess involved on the ‘cut tobacco’ removed from the factory in the guise of ‘floor sweepings’.
(Dictated and pronounced in the open court)
(JUSTICE DR. SATISH CHANDRA) (V.PADMANABHAN) PRESIDENT MEMBER (TECHNICAL)
k.b/-
3
2 issues framed by the court
Whether the removal of cut tobacco in the guise of floor sweepings warrants reversal of Cenvat Credit.
Whether the impugned order dropping the demand by the Adjudicating Authority should be interfered with.
Colour shows how this judgement treated each authority
ITC ltd. Vs. Commissioner of C.E.Followed¶28
ITC ltd. Vs. Commissioner of C.E. [2002 (149) ELT 116 (TriBangalore)]
1 provisions across 1 enactments
Commr. of Central Excise, Kolkata
M/s. ITC Ltd.
SATISH CHANDRA
V. PADMANABHAN
As recorded by the court registry
An appeal in a central excise matter before CESTAT.
2 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
