1998 (8) TMI 312

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....oner of Central Excise, Baroda. 2. The facts of the case are that the appellants are cigarette manufacturers and Cut Tobacco is the main raw material in the manufacture of cigarettes. Cut tobacco was liable to duty and the duty paid on cut tobacco was set off against the duty payable on cigarettes at the time of clearance of cigarettes under Notification No. 355/86, dated 24-6-1986. Modvat credit was extended to cigarettes under Notification No. 69/95, dated 16-3-1995 and simultaneously notification providing for set off duty was rescinded. The Modvat claim in dispute in the instant case relates to the cut tobacco contained in the cigarette in stock and rip tobacco in stock, (rip tobacco is cut tobacco obtained by slitting of reject....

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....aid on the cut tobacco and therefore Modvat credit was an additional benefit. He submitted that Notification No. 355/86 was an exemption notification exempting cigarettes from the equal amount of duty as had been paid on the cut tobacco contained in the cigarettes under clearance. He, therefore, submitted that the appellant could not have availed himself of the set off in respect of cut tobacco in stock, contained in the cigarette in stock and rip tobacco. As the notification allowing set off was rescinded simultaneously with the introduction of Modvat credit on cigarettes, the appellant could not also have made use of set off benefit after 15-3-1995 with the introduction of Modvat credit. He also submitted that reliance placed by the Commi....