Cum-Duty Benefit Dispute Rendered Infructuous: CESTAT Dismisses Departmental Appeal in Excise Duty Case [Read Order]

The bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, , dismissed an appeal filed by the Department in a central excise duty matter, holding that the very basis of the demand was unsustainable.

The Assessee, Orchid Chemicals & Pharmaceuticals Ltd., Aurangabad, was issued a show cause notice demanding central excise duty, along with interest and penalty, on the ground that the purification of mixed solvents amounted to “manufacture” under Section 2(f) of the Central Excise Act, 1944.

The Adjudicating Authority confirmed the demand through an Order-in-Original dated 30.08.2013, but on appeal, the Commissioner (Appeals) partly allowed the assessee’s claim by extending the benefit of cum-duty and remanded the matter for recomputation. The Department challenged this extension of cum-duty benefit before CESTAT.

Represented by P.K. Acharya, the Department contended that the Commissioner (Appeals) erred in granting cum-duty benefit to Orchid Chemicals. It was argued that such a benefit was not legally extendable. Thus, the Tribunal was urged to uphold the full demand confirmed by the Adjudicating Authority.

Represented by Payal Nahar, the Assessee relied upon the Tribunal’s earlier decision in the assessee’s own appeal, Appeal No. E/85851/2014-Mumbai, decided on 29.03.2017; reported at 2017 (4) TMI 799 - CESTAT Mumbai, wherein the very same order of the Commissioner (Appeals) dated 23.12.2013 had already been set aside. It was submitted that since the Department had accepted that order (vide communication dated 24.01.2025), nothing survived in the present appeal.

The Bench comprising of Dr. Suvendu Kumar Pati, Judicial Member and Anil G. Shakkarwar, Technical Member observed that the legality of the show cause notice itself had been decided in the assessee’s earlier appeal, where it was held that the purification of mixed solvents did not amount to manufacture under Section 2(f) of the Central Excise Act, 1944.

The Tribunal noted the demand itself was held to be unsustainable, the issue of extending or denying cum-duty benefit became infructuous.

Accordingly, the Bench dismissed the Department’s appeal.

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