Customs, Excise and Gold Tribunal - Delhi
International Tobacco Co. Ltd. vs Cce on 29 October, 2003
Equivalent citations: 2004(165)ELT314(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by M/s. International Tobacco Ltd., is whether duty of excise is payable by them on waste and scrap of paper generated during the manufacture of cigarettes.
2. Shri B.L. Narasimhan, learned Advocate submitted that the appellants manufacture tobacco and cigarettes and during the process of manufacturing, they use modvatable inputs such as cigarette paper, filter road, shells, slides of paper board; that during the process of manufacturing cigarettes, some inputs get deformed, torn, wet and soiled and become unusable and are rejected; that in case of shells the printing design or colour scheme or positioning of letters/words changes hand, therefore, the shells become unusable; that similarly, the slides also become unusable if the month of packing marked on it or the maximum retail price marked on it changes; that the Dy. Commissioner, under the Order-in-Original No. 16./2002 dated 7.6.2002, demanded the duty holding that the waste and scrap of paper generated during the manufacture of cigarettes, is classifiable under sub-heading No. 4702.90 of the Schedule to the Central Excise Tariff Act and confirmed the demand of duty and imposed penalty; that the Commissioner (Appeals) also, under the impugned order, has rejected their appeal. He, further, submitted that the inputs remained the same product as the shells and slides have become unusable only for the reasons mentioned earlier; that there is no provision in CENVAT Credit Rules, 2001 providing for payment of Excise duty on the clearance of waste and scrap arising during the manufacture of finished product.
3. Countering the arguments, Sh. P.M. Rao, Learned D.R. reiterated the findings as contained in both the orders passed by the lower authorities.
4. We have considered the submissions of both the sides. There is force in the submissions of the learned Advocate that no process of manufacture has been taken by them so as to attract the Central Excise duty on such waste of the paper arising during the course of manufacture of the cigarettes. The Revenue has not controverted the contention of the learned Advocate for the appellants that there is no provisions in CENVAT Credit Rules, 2001 providing for payment of duty on waste and scrap, which has arisen during the manufacture of the finished product. such a provision had existed in the erstwhile Rule 57F of the product. Such a provision had existed in the erstwhile Rule 57F of the Central Excise Rules, 1944. In view of this, the impugned order is not sustainable. Accordingly, we set aside the order and allow the appeal.