ITC LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, BANGALORE

JUDGEMENT

(1.) M /s. ITC Limited, the appellants herein, are manufacturers of various brands of cigarettes, falling under Tariff Item sub -heading 2403.11 of the Central Excise Tariff Act and has one of its manufacturing units at Pulikeshinagar, Banswadi Road, Bangalore. In brief, the back ground for the case is : -

(2.) (a) The Directorate General of Anti -Evasion, Bangalore conducted some investigation into the accountal of cut tobacco by the appellant. On the basis of this so called investigation, a show cause notice bearing reference No. V/24/15/173/91 -CI, dated 4 -10 -91 was issued to the appellant alleging as follows :

(3.) WE re -heard both sides, considered the submissions, the calculation charts, the record and find : - (a) The Collector has arrived at a conclusion that the Cigarette Manual is by way of guidelines for control of cigarette factories by the Department and an assessee cannot take shelter under these instructions. In the case of Asia Tobacco Co. Ltd. - 2000 (123) E.L.T. 536 (T) in the Order No. 370/1991, dated 5 -6 -1991 on an identical issue, this Tribunal has held that departments instructions in the Cigarette Manual have to be followed. We also find that any notice issued on excessive consumption, incorrect accounts, normal variance has to be based on data in Appendix F. The Department is bound by their own instruction is trite law. It is an accepted position that there would be variation in number of cigarettes manufactured out of a unit weight of tobacco, even on a day to day basis. Any order of the Collector which was purely based on the theoretical data arrived in that case was set aside. The present show cause notice also proceeds purely on theoretical basis. The Collector has not given a finding and has not relied on Cigarette Manual Appendix F proforma, data on variance in the impugned order. The appellants had in the reply to the show cause notice, dated 10 -1 -92 had brought out the relevance and reliance on Reconciliation of Register as per the Appendix F. Paras 64 and 65 of the Cigarette Manual accepts that the cases for variance could be many, therefore actual quantity of tobacco that goes into each cigarette will also differ. The appellants had also given different range of tobacco weight in cigarettes observed during September, 1991 and submitted that variance is a relative figure and demands purely based on theoretical formula of production compared with actual physical weighment were not tenable nor could be made as per directions in the Department Manual. The Commissioner has not given any clear cut findings on this particular aspect and specific plea made and he has concluded as follows : -