INTERNATIONAL TOBACCO CO. LTD. Vs. CCE

JUDGEMENT

(1.) The issue involved in this appeal, filed by M/s. International Tobacco Ltd., is whether duty of excise is payable by them on waste and scrap of paper generated during the manufacture of cigarettes.

(2.) Shri B.L. Narasimhan, learned Advocate submitted that the appellants manufacture tobacco and cigarettes and during the process of manufacturing, they use modvatable inputs such as cigarette paper, filter road, shells, slides of paper board; that during the process of manufacturing cigarettes, some inputs get deformed, torn, wet and soiled and become unusable and are rejected; that in case of shells the printing design or colour scheme or positioning of letters/words changes hand, therefore, the shells become unusable; that similarly, the slides also become unusable if the month of packing marked on it or the maximum retail price marked on it changes; that the Dy. Commissioner, under the Order -in -Original No. 16./2002 dated 7.6.2002, demanded the duty holding that the waste and scrap of paper generated during the manufacture of cigarettes, is classifiable under sub -heading No. 4702.90 of the Schedule to the Central Excise Tariff Act and confirmed the demand of duty and imposed penalty; that the Commissioner (Appeals) also, under the impugned order, has rejected their appeal. He, further, submitted that the inputs remained the same product as the shells and slides have become unusable only for the reasons mentioned earlier; that there is no provision in CENVAT Credit Rules, 2001 providing for payment of Excise duty on the clearance of waste and scrap arising during the manufacture of finished product.

(3.) Countering the arguments, Sh. P.M. Rao, Learned D.R. reiterated the findings as contained in both the orders passed by the lower authorities.