Customs, Excise and Gold Tribunal - Delhi
Godfrey Phillips India Ltd. vs Commissioner Of C. Ex. on 21 April, 1995
Equivalent citations: 2002(146)ELT639(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. Being aggrieved with the impugned order-in-original passed by the Additional Collector of Central Excise, Bomaby-1, the appellants have filed the present appeal.
FACTUAL BACKDROP:
2. The appellants are the manufacturers of cigarettes falling under Tariff Item 4(11). The Central Excise Officers noticed that loose cigarettes were utilized for the personal consumption in various departments without accounting for the quantity in the statutory account and without payment of Central Excise duty leviable on the cigarettes. As a sequal thereof a show Cause Notice dated 6-11-94 was issued to the appellants to show cause as to why the Central Excise Duty amounting to Rs 1,05,496.88 for the period from 11-4-84 to 30-10-84 be not recovered from them and penalty be not imposed. The appellants contested the show cause notice on different grounds. The Additional Collector after usual adjudication proceedings confirmed the demand and imposed the penalty of Rs. 2,000 under Rule 9(2) and Rs. 1,000 under Rule 52A of Central Excise Rules, 1944 holding that it has been proved on the record that loose cigarette sticks were removed from the manufacturing section for laboratory and empirical testing within the factory and this empirical testing was done by the appellant's personnel by using the loose cigarettes without accounting for the quantity in the statutory accounts and without payment of Central Excise Duty leviable on the cigarettes. Hence the present appeal.
3. Appearing on behalf of the appellants Ms. Amrita Mitra, Id. Counsel submitted that the manufacture is complete only when the provisions of Rule 93 of Central Excise Rules are complied with that is to say till the time the cigarettes are packed in saleable packs and as such loose cigarettes are not excisable products. However, she submitted that in the other case of the present appellants themselves [Appeal No.(s) E/2013, 2014 and E/2607/85-D - Godfrey Philips India Ltd. v. CCE, Bombay]. This Tribunal while dealing with the identical issue has negatived the said contention of the appellants and has held that it amounts to manufacture and duty was leviable vide Order Nos. E/410 to 412/92-D, 1993 (63) E.L.T. 186 (T), dated 24-9-92. She highlighted that while deciding so this Tribunal set aside the penalty imposed therein. In a nutshell her submission was that the penalty may also be set aside in the present appeal. In reply Shri M.K. Jain, Id. SDR submitted that the appellants have no case on merits in view of the said Order Nos. E/410 to 412/92-D, dated 24-9-92, supra. As regards the personal penalty he left the matter to the discretion of the Bench.
4. We have considered the submissions. In the said case of the present appellants the identical issue was involved and the similar contention was raised which were negatived by the Tribunal. For ready reference the relevant portion of the said order Nos. E/410 to 412/92-D, dated 24.9.92 may be extracted as below :
"...It may also be relevant to bear in mind that loose sticks of cigarettes are also bought and smoked by consumers. The panel of employees had, in fact, lighted the cigarettes and smoked them as fully finished cigarettes. As regards the argument that in view of the stipulation in Rule 93 that cigarettes can be delivered from the factory only in packets and that, therefore, loose cigarettes are not to be considered as exciable goods, it may be observed that argument on similar lines had not found favour with the Tribunal in its decision in the case of Jyoti Home Industries. Further, the Rule 93 spells out a requirement at the point of delivery which relation to the collection of duty. Tariff Item. 411 (2) of Central Excise Tariff prescribing the rate of duty on "Cigarettes" does not contain any indication that the cigarettes should be in prescribed packing; the rate of duty is per thousand cigarettes or on ad valorem rate whichever is higher. In this context, it has to be borne in mind that in the Wallace Flour Mills case (supra), the Supreme Court dealt with the two stages, namely, the taxable event and the collection of duty by saying, "It is well settled by the scheme of the Act as clarified by several decisions that even though the taxable event is the manufacture or production of an excisable article, the duty can be levied and collected at a later stage for administrative convenience... the taxable event is the fact of manufacture or production of an excisable article; the payment of duty is related to the date of removal of such article from the factory. This view is in line with the Supreme Court's earlier decision in the case of Union of India v. Bombay Tyre International - 1983 (12) E.L.T.1896 (SC) wherein it was observed by the Supreme Court "...the said tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on manufacture or production is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience." The Supreme Court, further, observed therein. "Where the levy in our country has the status of a constitutional concept the point of collection is located where the statue declares it will be". In such a situation, arguments that in the light of Rule 93, the individual cigarette sticks are not excisable goods, cannot be accepted which conclusion will also follow from the decision of the Tribunal in similar circumstances with reference to the empirical test of bidis in its Jyoti Home Industries decision (supra). Therefore, the demand for duty in respect of cigarettes consumed captively, which is also made in terms of Rule 49 of the Central Excise Rules in the show cause notices, is sustainable and concessional rate can be availed of only if it is shown that the conditions, therefore, in the exemption notification are satisfied and not otherwise". (Page 10-11).
5. Thus, following the ratio of the said decision we uphold the duty. As regards the personal penalty we find that in the said case of the appellants personal penalty was set aside. After taking all the facts and circumstances of the case in hand we set aside personal penalties imposed as we do not find any justification for the same.
6. In the result, except the aforesaid modification, the appeal is otherwise rejected.