Authority: Calcutta High Court, Special Jurisdiction (Central Excise)

Order Date: 14 September 2026

Case Overview

  • Appellant: M/s. Kanchan Oil Industries Limited, represented by Mr. N. K. Chowdhury, Mr. Arijit Chakrabarti, and Mr. Nilotpal Chowdhury.
  • Respondent: Commissioner of Central Excise, Haldia Commissionerate, represented by Mr. Bhaskar Prosad Banerjee and Mr. Anurag Roy.
  • Appeal filed under Section 35G of the Central Excise Act, 1944 (CEXA 12 of 2010) against the CESTAT order dated 24 February 2010 (Excise Appeal No. 281 of 2005, Cross‑Objection No. 109 of 2005) which denied exemption under Notification No. 6/2003‑CE.
  • The exemption concerns “Vanaspati” or bakery shortening bearing a brand name and packed in unit containers for retail sale; the notification excludes such goods from duty.
  • Revenue alleged that the appellant removed branded “Vanaspati” bearing the brand “Shiva” from its Jhargram factory, amounting to Rs 28,34,752 and 116.052 MT cleared, and issued a Show‑Cause Notice on 7 April 2004.
  • Commissioner’s order‑in‑original dated 17 February 2005 confirmed duty demand of Rs 37,80,246 under Section 11A(1), imposed an equal penalty of Rs 37,80,246 under Section 11AC, and interest at 15% under Section 11AB.
  • The appellant contended that the brand name appeared only on sale invoices, not on the goods or containers, and relied on Supreme Court precedents (Collector of C. Ex., Hyderabad v. Vazir Sultan Tobacco; Commissioner of Central Excise, Jamshedpur v. Superex Industries) to argue that invoice branding does not attract the exclusion.

Findings

  • The court interpreted Notification 6/2003‑CE to require that the brand name be affixed to the goods themselves and that the two conditions (brand name and unit‑container retail packaging) are cumulative.
  • The burden of proof lay on the revenue; eleven independent distributor letters confirmed that the goods received bore no “Shiva” marking, only the invoices did.
  • The court rejected the revenue’s argument that similarity of language in the letters justified dismissal of their substance.
  • The court held that prior pre‑levy branding does not prove post‑levy branding; suspicion cannot replace proof.
  • Consequently, the exemption was not attracted, and the demand of duty, penalty, and interest were unsustainable.

Final Outcome

  • Both substantial questions of law were answered in favour of the appellant: (i) the Tribunal was incorrect in holding that branded goods were manufactured and cleared without duty; (ii) the penalty under Section 11AC was unlawful.
  • CEXA 12 of 2010 is allowed; the CESTAT order dated 24 February 2010 and the Commissioner’s order‑in‑original dated 17 February 2005 are set aside.
  • The demand of Rs 37,80,246 duty, the equal penalty, and the 15 % interest are quashed.
  • No order as to costs.

Topics: Excise Exemption, Duty Liability, Penalty Quash