Tribunal Overturns Excise Duty on Waste and Scrap from Cigarette Manufacturing, Citing Lack of Marketability. The Tribunal allowed the appeal, setting aside the order of the Commissioner of Central Excise (Appeals-I), Mumbai Zone-I, which had confirmed an excise ...
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Tribunal Overturns Excise Duty on Waste and Scrap from Cigarette Manufacturing, Citing Lack of Marketability.
The Tribunal allowed the appeal, setting aside the order of the Commissioner of Central Excise (Appeals-I), Mumbai Zone-I, which had confirmed an excise duty of Rs. 2,45,726/- with interest and penalty on waste and scrap generated during cigarette manufacturing. The Tribunal concluded that such waste and scrap, including rejected and deformed materials, are not excisable articles as they do not meet the manufacturing and marketability conditions required for levying excise duty. The decision aligned with previous rulings in similar cases involving the Appellant. The order was pronounced on 08.02.2024.
Issues Involved: Confirmation of excise duty on waste and scrap arising during the manufacturing of cigarettes for the period from January 2012 to December 2012.
Summary: The appeal challenged the confirmation of excise duty of Rs. 2,45,726/- with interest and equal penalty on waste and scrap like paper/paper boards, corrugated boxes, aluminium foils arising during the manufacturing of cigarettes. The Appellant argued that no process of manufacture had taken place to attract Central Excise duty on such waste and scrap. The Appellant cited previous Tribunal decisions and Supreme Court judgments to support their stance that waste and scrap cannot be subjected to excise duty. The Departmental Representative, however, supported the order passed by the Commissioner (Appeals) by referring to Circulars clarifying that certain waste products are excisable goods.
Upon hearing the submissions and examining the case record, the Tribunal noted that both manufacturing and marketability conditions are required to levy excise duty. It was held that waste and scrap, including rejected, deformed, torn, wet paper/paper boards, corrugated boxes, aluminium foils, are not excisable articles. Referring to previous decisions in the Appellant's own case where duty on such waste products was held to be not leviable, the Tribunal allowed the appeal and set aside the order passed by the Commissioner of Central Excise (Appeals-I), Mumbai Zone-I.
The order was pronounced in the open court on 08.02.2024.
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