TaxTMI 
TaxTMI 
1996 (12) TMI 346
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....obacco, manufactured by the appellants before being packed in cointainers bearing a brand name, falling under Heading 2404.49 was also required to pay duty. In fact in the absence of a set-off notification, duty was required to be paid at two points. Later, vide Notification No. 14/94-C.E., dated 8-3-94, the provisions of Rule 56A were extended to the chewing tobacco whereby credit of the duty paid on the inputs, namely, unbranded chewing tobacco, could be used at the time of clearance of the branded chewing tobacco on payment of duty. At this stage also, duty was required to be paid at two stages. On 20-5-94, vide notification 23/94-C.E., Rule 56A was omitted. Vide notifcation 24/94-C.E. also dated 20-5-94, the Modvat facility was extended to chewing tobacco. Vide notification 23/94-C.E. (N.T.), sub-rule (4) of Rule 49 and third proviso to Rule 9(1) of the Central Excise Rules, 1944 were also omitted. Even after this amendment, the liability of the unbranded tobacco to pay duty continued. Later, vide issue of Notification No. 121/94, dated 11-8-94, unbranded chewing tobacco, captively consumed in the manufacture of branded chewing tobacco,....
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....on the final product and that paid on the input. Here in this case since full duty had been paid on the end-product, there was no question of short levy as envisaged under Sec. 11A at all. It was submitted that in spite of procedural drawback, the benefit of Modvat scheme was available to them. 6. The order of the Commissioner was deficient. Whereas full duty had already been paid by the assessees, the Commissioner was confirming the demand of duty on the inputs. Even if this duty, if paid by the appellants, was permitted by the Commissioner towards purpose of taking credit, the duty already paid on the final products was paid in excess. The Commissioner should have not confirmed the demand or in the alternative should have ordered refund of the duty already paid on the branded chewing tobacco. It was submitted that the adjudicating authority as well as the Tribunal, at the time of granting stay of recovery and dispensation with the deposit, had accepted that there was no loss of Revenue. The entire proceedings before the Commissioner were, therefore, an excercise in futility. 7. Shri P. Das, ld. S.D.R. stated that the facts are not in disput....
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....or cigarettes and for making of outer wrappers of cigars. Nipani tobacco is acknowledged to be suitable for making biris. But in the lower end of the price spectrum the leaves become inter changeable. At this level even unprocessed leaf merely cut, may be packed and sold as smoking tobacco or chewing tobacco. These may be packed in paper packets branded or otherwise. It is a common sight in South India that long leaves in clusters are sold as chewing tobacco. Thus the term "chewing tobacco" covers a wide distance. Whereas at the prepared compound stage, it may fetch a value of Rs. 50.00 for 20 gms; the air cured leaves may be sold for a few paise. But both would deserve the title, "chewing tobacco." 11. The fact that unmanufactured tobacco is used for the purpose of smoking or chewing is evident from Notification 118/86-C.E. (N.T.), dt. 1-3-86, as amended by Notification 14/95-C.E. (N.T.), dt. 16-3-95. 12. In view of this reality, it is to be held that the preparation of chewing tobacco immediately before being packed in the tin and plastic containers, bearing the appellants' brand name, were marketable and excisable goods appropriately classifiable under Heading 24....
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....or the clearance of final product would be at least incrementally higher than the duty paid on the various goods going in the manufacture thereof. Sh. Narasimhan, ld. Advocate conceded this point but stated that the Tribunal had accepted this position when granting waiver of the duty demanded by Stay order No. 44-45/96-D. We do not think that the interpretation of our stay order as made by the ld. Advocate, is correct. In considering the stay application, we had observed that since the ld. Collector himself had considered that the duty demanded and confirmed by him in these proceedings would be available for use to the appellants for Modvat credit. In this manner, we had held that there was really no loss of revenue to the exchequer. As regards the calculation made by the ld. Counsel, we observed that in Para 2 of his order, when stating the facts, the Collector had held that in calculating the value of the unbranded chewing tobacco backward from the branded chewing tobacco, a remissions of 15% of the price of branded chewing tobacco was claimed by the party on account of packing charges. In his calculation, Sh. Narasimhan, however, has claimed that the value of unbranded chewing t....