Customs, Excise and Gold Tribunal - Tamil Nadu
Vst Industries Ltd. vs Commissioner Of Customs on 2 February, 2001
Equivalent citations: 2001(76)ECC774
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal filed by M/s. VST Industries Ltd. is whether the set off of the duty paid on cut tobacco is to be limited to the quantity of cut tobacco used in the cigarettes cleared on payment of duty or on the entire quantity of cut tobacco cleared for manufacture of cigarettes out of which some cigarettes have been destroyed.
2. Ms. Maithlli, Ld. Advocate, submitted that the Board vide Circular No. 43/90 CX 8 dated 6.7.90 has considered the issue involved in the present appeal and has clarified that set off is to be allowed on that quantity of duty paid excisable goods which have been issued for the manufacture of finished excisable goods and is not to be confined only to the duty on that quantity which has been actually contained in the finished excisable goods. The Board further mentioned in the circular that "in view of this, set off of duty can be permitted on that quantity of cut tobacco which has been issued for the manufacture of cigarettes irrespective of whether some of it is contained in the waste". She further submitted that as the issue has been clarified by the Board, the department cannot take a different stand as has been held by the Supreme Court in many decisions such as Ranadey Micro Nutrients.
3. Opposing the appeal, Shri S. Kannan, Ld. DR, submitted that the Board's instructions do not apply as the issue involved is not waste contained in the cut tobacco but the cut tobacco contained in the cigarettes on which duty is being paid. He also referred to the cross objection filed by the department in which it is mentioned that the appellants are not paying duty oh the oily cigarettes which are not for human consumption and sought the department's permission for destruction of oily cigarettes and accordingly the set off has not to be granted on such quantity of cut tobacco. Reliance was also placed on Board's letter F.No. 210/42/86 CX 6 dated 6.9.88 wherein it was clarified that credit of duty paid on inputs is permissible only if the inputs are actually used for the manufacture of finished product and no credit will be available in respect of inputs which are destroyed before actually being used in the manufacture of final products.
4. We have carefully considered the submissions of both the sides. It has not been disputed by the Revenue that the cut tobacco had been cleared for manufacture of cigarettes and during the process of manufacture, some quantity of cigarettes because of being oily have been taken apart for being destroyed. The Board's Circular dated 6.7.90 is very explicit in clarifying that the set off will be available on the quantity of cut tobacco which has been issued for the manufacture of cigarettes. In this case, the cut tobacco has been issued for manufacture of cigarettes. In the Board's letter dated 6.9.88 relied upon by the Ld. DR as well as in the Cross objection, the inputs have been destroyed before the same have been cleared for manufacture. The situation mentioned in the letter and the situation in the present matter are different. Accordingly, we do not agree with the findings in the impugned order that the set off is to be confined only to the quantity of cut tobacco contained in the cigarettes cleared on payment of duty. We, therefore, set aside the impugned order and allow the appeal and the Cross objection is also accordingly rejected.