2001 (1) TMI 124

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.... penalty have been imposed, is that the appellant who manufacture branded chewing tobacco did not pay duty on the unbranded tobacco during the period from 20-5-1994 to 10-8-1994. 2. Before proceeding further it is to be stated that the Department had no case that the appellant did not pay required duty on the branded tobacco which were cleared during the period from 20-5-1994 to 10-8-1994. 3. For proper understanding of the dispute in this appeal a short survey of the duty structure of tobacco during the relevant period is required. Prior to 1-3-1994 the duty on the products falling under Chapter sub-heading No. 2404.49 was nil. The appellant was not liable to pay any duty on the unbranded tobacco manufactured by him prior to 1-3-1994....

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....om the place where they were manufactured without payment of duty. The notice proceeded on to state that prior to 20-5-1994 no Central Excise duty was required to be paid on excisable goods manufactured in a factory if they are consumed or utilised in the same factory as raw materials for the manufacture of any other commodity. The appellants who are having unbranded chewing tobacco captively consumed in the manufacture of branded tobacco continued the same process in the same factory as they were doing prior to 20-5-1994, for the subsequent period as well. 4. The Department has taken a stand in this case that unbranded chewing tobacco cleared/captively consumed by the appellant during the period from 20-5-1994 to 10-8-1994 was dutiable.....

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....have paid duty on the unbranded tobacco and thereafter claimed the credit. This having not been done the impugned order is valid. We are of the view that this approach made by the Departmental Representative is not warranted because final outcome of the co-ordinate Bench's decision. That Bench remanded the matter to jurisdictional adjudicating authority to reconsider the issues of limitation as well as claim of proforma, credit/Modvat credit. The Bench said that the assessee was entitled to proforma credit/Modvat credit of the duty paid on the unbranded tobacco. The duty levied on branded tobacco is greater than the duty chargeable on the unbranded tobacco. So whatever duty paid on the unbranded tobacco has to be set off from the duty paid ....