Deepak Gupta JUDGMENT
S. Abdul Nazeer, J.
1. These appeals raise two questions, namely:
(i) Whether the Board's Circular No. 495/61/99-CX.3 : MANU/EXCR/0062/1999, dated 22.11.1999 exempts payment of excise duty on perfumery compound manufactured by the Respondent; and
(ii) Whether actual marketing of the perfumery compound is necessary for the levy of excise duty.
2. The Respondent is a manufacturer of agarbathi perfumes. The agarbathi perfumes are odoriferous compound prepared by the Respondent in its Bangalore unit and then transported to its Mysore unit, where it is applied to agarbathis to complete the process of manufacture of agarbathis. The Respondent was paying excise duty with respect to these odoriferous compounds till March 2001 as this substance is covered under Chapter Sub-Heading 3302.90 of the First Schedule to the Central Excise Tariff Act, 1985. The Central Board of Excise and Customs (for short 'the Board') issued the aforesaid circular which clarified that the odoriferous substance, not capable of being bought and sold in the market in the normal course of trade, is not excisable. The Respondent transferred the odoriferous compounds to its Mysore unit on stock transfer basis. Some part of the compounds was sold to M/s. Tibetan Handicrafts Centre, Bylkuppe, Mysore District.
3. The Additional Commissioner of Central Excise, Bangalore-III, issued show-cause notices calling upon the Respondent to pay excise duty along with penalty and interest at the appropriate rates Under Sections 11A, 11AB and 11AC of the Central Excise Act, 1944 (for short 'the Act') for the period 2001-2002 to 2006-2007. These notices were contested by the Respondent. The Additional Commissioner passed orders holding that the Board's circular dated 22.11.1999 is not applicable to the Respondent and hence the Respondent is liable to pay excise duty, penalty and interest thereon in respect of odoriferous substance prepared by it. These orders were confirmed by the appellate authority in the appeals filed by the Respondent. The Respondent challenged the said orders before the CESTAT, South Zonal Bench, Bangalore. The CESTAT has allowed the appeals and set aside the said orders to the extent they uphold the demand of duty, interest thereon and the penalty imposed on the Appellant for which there was no evidence of sale. The Revenue has challenged the legality and correctness of the said orders in these appeals.
4. Appearing for the Revenue, Sri P.S. Narasimha, learned Additional Solicitor General, submits that the rate of duty to be paid on the perfumery compounds is clearly mentioned under Chapter Sub-Heading 3302.90 of the First Schedule to the Central Excise Tariff Act, 1985 and it is on this rate that the Respondent used to pay duty till March, 2001. The Respondent is, therefore, not entitled to t........