SUMIT ZARDA PVT. LTD. Vs. CCE

JUDGEMENT

(1.) M /s. Sumit Zarda Pvt. Ltd. have filed this appeal against Order -in -Appeal No. 158/2003 dated 23.7.2003 by which the Commissioner (Appeals) has confirmed the confirmation of duty, imposition of penalty, and confiscation of goods with an option to redeem the same on payment of fine.

(2.) SHRI Abhishek Jain, learned Advocate, submitted that the Appellants manufacture chewing tobacco during the process of which the intermediate product, namely kimam comes into existence; that the proportion in which various type of ingredients are mixed to obtain the blend is trade secret which is known only to the blender; that Shri S G Gupta, Managing Director of the Appellant company is the blender and the various ingredients and kimam were sent to him from the factory premises for the purpose of blending various ingredients; that the tempo in which the said kimam was being taken to the Managing Director was intercepted by the Central Excise Officers as the same had been cleared without payment of duty; that this resulted in the adjudication proceedings in which duty has been demanded and penalty has been imposed and kimam has been confiscated; The learned Advocate submitted that the kimam has been used after getting it released from the Excise department in the manufacture of their final product and as such no duty is chargeable thereon as the same has been captively consumed; that the goods are also not liable for confiscation as the goods were being cleared only to the Managing director who know the secret blend and not for any other purpose; that for the same reason no penalty is also imposable on the Appellants. Finally, he submitted that in any case both the amount of penalty and redemption fine are on very high side considering the facts of the case and the total amount of duty which is only Rs.66,559/ -.

(3.) WE have considered the submissions of both the sides. The facts which are not in dispute is that kimam which is an intermediate product in the manufacture of Zarda is itself excisable product. Once the excisable goods are removed from the place of manufacture, duty has to be discharged unless and until the product is exempted from payment of duty. The purpose for which the product has been removed is immaterial for the purpose of levying Central Excise duty at the time of removal of the excisable goods from the factory premises. Accordingly we hold that the Appellants are liable to pay Central Excise duty as kimam has been removed from the factory premises. We, therefore, uphold the demand of Central Excise duty. As the goods have been removed without payment of duty the same are liable for confiscation and penalty is imposable on the Appellants. However, taking into consideration all the facts and circumstances of the case and the amount of duty involved, we agree with the learned Advocate that both penalty and redemption fine are on the higher side. We, therefore, reduce the redemption fine to Rs.20,000/ - and penalty Rs. 10,000/ -. Thus the appeal is partly allowed.