TIRUPATI CIGARETTES LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) IN this appeal M/s. Tirupati Cigarettes Ltd. have challenged the order of the Commissioner (Appeals) Allahabad, dated 18 -7 -1996 by which he confirmed the Assistant Commissioner's Order -in -Original demanding a duty of excise amounting to Rs. 1,40,190.75 on 3440 kgs of cut tobacco under Rule 196 of the Central Excise Rules, 1944.

(2.) APPELLANTS manufacture machine rolled cigarettes falling under Chapter sub -heading 2403.11 as Central Excise Tariff Act for which they received cut tobacco from M/s. Deccan Tobacco Processors Ltd. (DTPL), Hyderabad under Chapter X Procedure at concessional rate of duty.

(3.) THE Department by show cause notice, dated 27 -4 -1994 alleged that a quantity of 3440 kgs of cut tobacco was not entitled to concessional rate of duty under Chapter X Procedure and the normal duty amounting to Rs. 1,40,190.75 had become payable by the appellants. The Department alleged that the appellants after procuring 26,400 kgs. of cut tobacco under Chapter X Procedure at concessional rate of duty from DTPL had returned the said quantity of cut tobacco to M/s. DTPL under Rule 196 -B stating that the said quantity of cut tobacco was damaged/defective. The Department further alleged that after reprocessing only 22,960 kgs. of cut tobacco was received back from DTPL Hyderabad and out of the balance quantity of 3440 kgs. of cut tobacco 2320 kgs. of cut tobacco had been received as tobacco refuse (dust) at nil rate of duty and the remaining 1120 kgs. had been received short resulting in only 22,960 kgs. being used for manufacture of cigarettes by the appellants. The appellants were therefore, required to show cause why the claim of concessional rate of duty under Chapter X Procedure should not be denied to the said quantity of 3440 kgs. of cut tobacco and normal rate of duty amounting to Rs. 1,40,190.75 should not be demanded on the said quantity.