Order No. E/410-412/92-D arising from in E/Appeal Nos. 2013, 2014 and E/2607/85-D. Case: Godfrey Philips India Ltd. Vs Collector of Central Excise. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)
| Case Number | Order No. E/410-412/92-D arising from in E/Appeal Nos. 2013, 2014 and E/2607/85-D |
| Counsel | For Appellants: Ms. Amrita Mitra, Advocate and For Respondents: Shri J.N. Jain, JDR. |
| Judges | Shri K.S. Venkataramani, Member (T) and S.L. Peeran, Member (J) |
| Issue | Central Excise Rules, 194 - Rule 93 |
| Citation | 1993 (63) ELT 186 (Tribunal) |
| Judgement Date | September 24, 1992 |
| Court | CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal) |
Order:
K.S. Venkataramani, Member (T), (New Delhi)
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These three appeals have been filed by the same appellants, who are manufacturers of cigarettes falling under T.I. 4 II. In all these cases, various demands of duty have been made and penalty imposed on the ground that the appellants, herein, had cleared loose cigarettes for testing purposes within the factory without accounting for the quantity in the statutory account and without payment of Central Excise Duty leviable on the cigarettes. The Department issued various show cause notices. In Appeal No. 2013/85-D, the show cause notice was issued on 11-6-1984 for an amount of Rs. 1,73,359.11 for the period 20-10-1982 to 10-10-1983. On adjudication, demand was confirmed and a penalty of Rs. one lakh was imposed by the Additional Collector of Central Excise, Bombay-1 in his order No. 1/85, dated 6-6-1985. In Appeal No. 2014/85-D, by a show cause notice issued on 11-4-1984 an amount of duty Rs. 95,906.29 was demanded for the period 11-10-1983 to 10-4-1984. A penalty of Rs. 50,000/- was imposed on the appellants by the Additional Collector in his adjudication Order No. 3/85, dated 6-6-1985 while confirming the demand. In Appeal No. 2607/85-D, a show cause notice was issued on 6-4-1985 demanding duty of Rs. 82,636.14 for the period Nov., 1984 to 31-3-1985. The Additional Collector, by his adjudication order No. 6/85, dated 13-8-1985, confirmed the demand, also imposed a penalty of Rs. 40,000/-. Briefly, the facts relating to these appeals, which are common, except for the periods of demand are that during the course of a survey conducted by the Department, the Central Excise Officers noticed that loose cigarettes were found utilised for personal consumption within the factory on which no duty was paid. On 18-10-1982, the Superintendent of Central Excise, wrote to the appellants to clarify the matter to which they said that loose cigarettes are used for quality test purposes and not for personal consumption. They also said therein that no record of the number of cigarettes consumed in the process of testing has been maintained and that they have had already intimated the approximate quantity of such cigarettes in their earlier letter dated 11-7-1977. The Superintendent, thereupon, required the appellants to furnish a copy of their letter of 11-7-1977 and also to intimate the names and designations of the persons, who are on the panel for testing the cigarettes and the details of cigarettes issued for test purposes. By their letter of 6-3-1984, the appellants said that they use 2500 cigarettes, non-duty paid per day for consumption within the factory. Proceedings were initiated by the issue of various show cause notices, as mentioned above, asking the appellants why the duty on the cigarettes, so removed, be not demanded under Rule 9(2) and under the First Proviso to Rule 49(1) of Central Excise Rules and as to why penalty should not be imposed on them under Rule 9(2). The Additional Collector, on considering their reply and hearing them in the matter, passed the various adjudication orders, referred to above, confirming the demand and imposing penalty.
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Ms. Amrita Mitra, ld. Counsel, appearing for the appellants, contended that the test of cigarettes takes place at a stage after they are rolled and this test is for the purpose of ascertaining moisture content, tar and nicotine level of drag i.e. the amount of tobacco taken in while smoking. The first two tests can be done in a laboratory but the drag test can only be done by empirical testing by taking sample of loose cigarettes and testing them by actual smoking by panel of employees chosen for the purpose. The ld. Counsel referred to Rule 93 of the Central Excise Rules which provides that no excisable tobacco product shall be delivered from any factory unless they are packed in the manner prescribed therein which shows that in the case of cigarette, the manufacture is complete only when the provisions of Rule 93 are complied with. Therefore, the loose cigarettes, which are removed by the appellants for the purpose of testing, have not reached the stage of payment of duty at all. The same conclusion will follow by a reference to Rule 2(f) of Central Excises & Salt Act, 1944 especially Section 2(f)(ia) which says that manufacture in relation to tobacco includes relabelling of containers and re-packing from bulk to retail packs or the adoption of any other treatment to render the...
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