CESTAT Remands Dabur Excise Demands for Recalculation Using Special Value Addition Rates

Dabur India Ltd Vs Commissioner of Central Excise (CESTAT Chandigarh)

Summary: CESTAT Chandigarh allowed the appeals filed by M/s Dabur India Ltd. by way of remand, directing the appellate authority to recalculate the disputed excise demands after considering the special rates of value addition fixed by the competent authority. Dabur’s two units had availed area-based exemption under Notification No. 56/2002-CE dated 14.12.2002. Subsequent notifications, including Notifications No. 19/008 dated 27.03.2008 and 34/2008 dated 10.06.2008, restricted refund of excise duty based on value addition and provided for fixation of special rates. Following the Supreme Court’s decision in VVF Ltd. – 2020 (372) ELT 495 (SC), which upheld the validity of the notifications restricting the benefit, Dabur obtained special rates for its products. Meanwhile, demands had been issued for refund/self-credit allegedly availed beyond the prescribed value addition. The Tribunal found that the authorities had confirmed demands without taking the subsequently fixed special rates into account and therefore required the entire exercise to be redone. It also directed examination of Dabur’s contention that, in specified appeals, the Department had duplicated demands by seeking recovery of both excess refund/self-credit and excise duty allegedly paid through such credit. Referring to the appellant’s cited decisions, the Tribunal observed that both amounts could not be demanded together and directed the appellate authority to reconsider the duplication issue. The appeals were accordingly allowed by way of remand. The order was pronounced on 11.08.2026.

Background of the Excise Duty Dispute

M/s Dabur India Ltd. operates two units, Unit-I and Unit-II, and is engaged in manufacturing hair oils, shampoo, perfumes and toiletries. The units had availed the area-based exemption under Notification No. 56/2002-CE dated 14.12.2002.

The source material states that Notifications No. 19/008 dated 27.03.2008 and 34/2008 dated 10.06.2008 subsequently restricted the refund of excise duty based on value addition and provided for fixation of a special rate of value addition.

Dabur had challenged the validity of the notifications before the High Court of Jammu & Kashmir. The proceedings ultimately culminated in the Supreme Court decision in VVF Ltd. – 2020 (372) ELT 495 (SC), in which the validity of the notifications restricting the benefit was upheld.

Following that decision, Dabur approached the Department for fixation of special rates of value addition for its different products. Special rates were subsequently fixed by the competent authority.

Demands for Excess Refund and Self-Credit

During the pendency of the proceedings, show-cause notices were issued alleging that Dabur had availed refund/self-credit beyond the value addition prescribed under the amended notifications.

The demands were confirmed by the respective authorities and subsequently came before the Tribunal in a number of appeals relating to Unit-I and Unit-II.

The appellant’s principal grievance was that the impugned orders did not take into account the special rates of value addition that had been fixed by the competent authority. According to the appellant, those rates were relevant to determining the amount actually recoverable.

Dabur’s Submissions Before CESTAT

Learned counsel for the appellant submitted that the impugned orders had been passed without properly considering the orders fixing special rates of value addition. It was argued that Dabur was entitled to the benefit of the special rates under Notifications No. 19 and 34.

The appellant relied upon the Supreme Court’s decision in VVF Ltd. – 2020 (372) ELT 495 (SC) and submitted that the benefit was not to be determined merely by applying the rates appearing in the notification without giving effect to the requirements and conditions of the amending notifications.

It was further submitted that, in certain appeals, the Department had effectively demanded the same amount twice: first as excess refund/self-credit and again as excise duty allegedly paid through utilisation of that self-credit for subsequent clearances.

For this proposition, the appellant relied upon Rollsprint Packaging Pvt. Ltd. – 1996 (5) TMI 226-CESTAT Mumbai and Gemini Engi. Fab Ltd. – 2019 (9) TMI 242-CESTAT Ahmedabad.

Revenue Agrees to Recalculation

The learned Authorized Representative supported the impugned orders but fairly submitted that the matter could be remanded to the appellate authority for recalculation of the demands after allowing for the special value addition fixed by the competent authority.

CESTAT Finds Special Rates Were Not Properly Considered

After hearing both sides and examining the records, the Tribunal found that the impugned proceedings had resulted from different parts of the Department working without taking the complete position into account.

The Tribunal observed that the Department was justified in protecting revenue where the appellants had availed self-credit in excess of the amounts permitted under the amended notifications. However, it considered that the authorities could also have examined whether applications for fixation of special value addition had been made and decided by the competent authority.

Since the respective orders had been passed without considering the special value addition subsequently fixed by the competent authority, the Tribunal held that the exercise of determining the demands needed to be undertaken afresh.

Duplicate Demand of Self-Credit and Excise Duty

The Tribunal also addressed the appellant’s contention concerning duplication of demand in the specified appeals.

The appellant had submitted that the Department could not simultaneously recover the excess refund/self-credit and the excise duty allegedly paid through utilisation of that credit for subsequent clearances. According to the appellant, confirming both demands resulted in duplication.

The Tribunal accepted that this issue required examination by the appellate authority. Referring to the decisions relied upon by the appellant, it observed that demanding both the excess refund and the amount representing utilisation of credit would amount to double jeopardy for the appellants. The Tribunal therefore stated that one of the two amounts could only be demanded back.

Directions on Remand

The Tribunal did not finally determine the recalculated quantum of the disputed demands. Instead, it allowed the appeals by way of remand with directions to the appellate authority to undertake the exercise afresh.

The recalculation is to take into account:

• the special rates of value addition fixed by the competent authority; and
• the Tribunal’s observations concerning the alleged duplication of demands in the specified appeals.

Thus, the Tribunal’s order requires reconsideration of the demand computation rather than sustaining the amounts confirmed in the impugned orders without modification.

Final Decision

CESTAT Chandigarh allowed the appeals by way of remand. The appellate authority was directed to recalculate the demands after considering the special value addition rates fixed by the competent authority and to examine the issue of duplicated demands in accordance with the Tribunal’s observations.

The order was pronounced in the open court on 11.08.2026.

Cases Discussed

• VVF Ltd. – 2020 (372) ELT 495 (SC)
• Rollsprint Packaging Pvt. Ltd. – 1996 (5) TMI 226-CESTAT Mumbai
• Gemini Engi. Fab Ltd. – 2019 (9) TMI 242-CESTAT Ahmedabad

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

M/s Dabur India Ltd., the appellants, have two units i.e Unit -I and Unit-II and are engaged in the manufacture of hair oils, shampoo, perfumes and toiletries and have availed area-based exemption contained under Notification No.56/2002-CE dated 14.12.2002; Government has issued Notifications No. 19/008 dated 27.03.2008 and 34/2008 dated 10.06.2008 restricting the refund of excise duty on the value addition by the appellant and provided for fixation of special rate of value addition. Along with others, the appellants challenged the vires of the notification before the Hon’ble High Court of Jammu & Kashmir. The proceedings culminated with the decision of the Hon’ble Supreme Court in the case of VVF Ltd. – 2020 (372) ELT 495 (SC) wherein the validity of the notifications restricting the benefit was upheld. Subsequent to such decision, the appellants approached the Department for fixing special rates of value addition for different products and were accordingly fixed.

2. While the above proceedings were in progress, SCNs were issued to the appellants demanding the pay back of refund/ self-credit availed by them over and above the value addition prescribed in the amending notification and were confirmed/upheld by respective authorities. The appeals are as follows:

–

3. Ms. Krati Singh, learned counsel for the appellants, submits that the impugned orders have been passed without keeping in mind the orders passed granting special rate of value addition fixed by the competent authority; the appellants are entitled to the benefit of special rate of value addition in terms of Notification No.19 & 34 as cited above. Hon’ble Supreme Court has also clarified in the case of VVF Ltd. (supra) that refunds are not to be granted merely as per the rates already prescribed in the notification and the authorities should give effect to all the requirement and conditions contained in the amending notifications. She submits that the fact that special rates were fixed in respect of Units-I & II was already communicated to the Appellate Authority; however, the impugned orders have been passed disregarding the submissions and ignoring the special rate of valuation fixed. She submits that as the demand itself is not sustainable, interest is not payable.

4. Learned counsel further submits that in respect of Appeal Nos. E/60460/2024, E/60450/2014, E/60454/2024, E/60455/2024 & E/60453/2024, there is duplication of demand inasmuch as the excess availed refund as well as the refund taken as credit and utilized for subsequent clearances have been demanded; it is erroneous as on the one hand, the self-credit availed by the appellant under the exemption notification has been confirmed and on the other, excise duty paid through self-credit was subsequent clearances has also been demanded; the Department should have demanded and confirmed only one of them as held in Rollsprint Packaging Pvt. Ltd. – 1996 (5) TMI 226-CESTAT Mumbai and Gemini Engi. Fab Ltd. – 2019 (9) TMI 242-CESTAT Ahmedabad.

5. Learned Authorized Representative for the Department reiterates the findings of the impugned order. However, he fairly submits that the matter should be remanded back to the appellate authority to calculate the demands after giving allowance to the special value addition fixed by the competent authority.

6. Heard both sides and perused the records of the case. We find that the impugned proceedings are result of the working of the Department in different silos where the left hand is not aware of what the right hand was doing. While it is understandable that the Department issued demands to protect the revenue’s interest where the appellants have availed excess self-credit than is permitted in the amending notifications. Though, justifiably the Department waited till the final word on the issue was spelt out by the Hon’ble Apex Court, in the case of VVF Ltd. (supra), they could have also taken care to see whether any applications for fixation of special value addition in terms of the notifications cited above were made by the appellant and were decided by the competent authority. Such a step would have gone a long way to reduce litigation at various levels. Be it so, having passed the orders confirming the demands, not keeping in mind the special value addition fixed by the competent authority, the respective authorities are required to re-do the whole exercise. In addition, the issue of duplication of demand as submitted by the learned counsel for the appellants needs also to be looked into. As held in the cases cited by the appellant as above, demanding both the excess refund and utilization of credit amounts to causing double jeopardy to the assessees/ appellants. We are of the considered opinion that one of them can only be demanded back.

7. In view of the above, the appeals are allowed by way of remand to the appellate authority with a direction to recalculate the demands taking into account the special rates of value addition fixed by the competent authority and our observations on duplicity of demand in respect of appeals cited above.

(Order pronounced in the open court on 11/08/2026)