2012 (7) TMI 827 - AT - Central Excise

Waiver of pre-deposit granted for duty demand on waste & scrap in cigarette manufacturing

INTERNATIONAL TOBACCO CO. LTD. Versus COMMISSIONER OF C. EX., GHAZIABAD

The Appellate Tribunal granted the appellant's application seeking a waiver of the pre-deposit condition for a duty demand related to waste and scrap ... Waiver of pre deposit - Whether duty of excise payable on the waste and scrap generated during the manufacture of cigarettes and sold in the market - Held that:- appellant has a strong prima facie case to justify waiver of condition of pre-deposit. Stay application is allowed and recovery is stayed - Stay granted. Issues:1. Application seeking waiver of pre-deposit of duty demand.2. Whether duty of excise is payable on waste and scrap generated during cigarette manufacturing.Analysis:1. The application before the Appellate Tribunal sought a waiver of the pre-deposit condition concerning a duty demand of Rs. 3,41,204/- with interest and an equal penalty amount.2. The central issue revolved around determining whether excise duty is applicable to waste and scrap produced during the manufacturing of cigarettes and subsequently sold in the market.3. The appellant's counsel argued that the waste paper generated during the cigarette manufacturing process, which arises from using duty-paid paper cut to size for rolling cigarettes, should not attract excise duty. Reference was made to a previous case where a similar issue was decided in favor of the appellant by the Tribunal, emphasizing that scrap paper cannot be considered a product of the manufacturing process liable for excise duty. The counsel also cited a judgment of the Allahabad High Court regarding bagasse generated during sugar manufacturing, drawing parallels to the waste generated in the present case.4. Conversely, the Revenue's representative supported the impugned order and defended the duty demand, contending that the demand was appropriately upheld against the appellant, and there was no basis for waiving the pre-deposit condition.5. After considering the arguments from both sides and examining relevant precedents, including decisions of the Tribunal and a judgment of the Allahabad High Court on excisable bagasse, the Appellate Tribunal found that the appellant had a strong prima facie case for justifying the waiver of the pre-deposit condition. Consequently, the stay application was allowed, and the recovery was stayed.6. Given the recurring nature of the issue, the appeal was scheduled for further proceedings on 23-10-2012, indicating the need for a more detailed examination and resolution of the matter in subsequent hearings.