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2019 (6) TMI 265 - AT - Central ExciseClandestine manufacture and removal - clearance of “Afzal” brand Snuff tobacco products falling under Chapter 24 of CETA, 1985 without Central excise registration and without payment of duty - entire case of the Department is based on the test report given by the Chemical Examiner - HELD THAT:- The chemical examiner report cannot be relied upon in the light of the fact that when M/s SEPL had applied for retest of the samples by an independent entity, the department did not accept such request. Also there is no fault of the Appellant if the samples could not be re-tested after 9 years only due to lacuna on the part of the Revenue - We also find from the statement of the directors and supervisors and employees of the appellant as well as M/s SEPL that they were purchasing “Culcutti tobacco / raw tobacco from farmers and undertook during, cutting, crushing and grinding of tobacco and convert the same into “Gadia Powder”, which was packed in 50 kg bags. No evidence has been adduced by the Department to show that the appellants purchased any katha, calcium oxide or flavouring agents. Even the chemical examiner in his report never stated that the goods were fermented and subsistence like calcium oxide, katha were added to the goods in order to hold the goods as chewing tobacco; the process of chewing tobacco is not complete unless it is fermented and liquored. Whereas the report of the chemical examiner says that the same is a coarse brown powder and if the same would have been chewing tobacco, it would not have been coarse brown powder as after mixing of katha and calcium oxide, the product may not remain so. The appellants had requested for cross examination of the chemical examiner as well as the cross examination of persons, under the provisions of Section 9D of the Central Excises Act, whose statements were relied upon. However, no such opportunity was granted to them - When the appellants since the very first day itself were claiming their goods to be tobacco powder, it was imperative for the Revenue to test the samples properly and conduct a market enquiry. It is coupled with the fact that the officers did not find any mixtures or machines in which the process of mixing the tobacco flakes with katha, calcium oxide and flavouring agents takes place. Since the goods has remained un manufactured tobacco, the same cannot be classified under impugned classification. Even the Department had accepted the fact that M/s SEPL are the owner of that goods. It is also not in doubt that the goods were ultimately for exports for which the relevant Bond / LUT were filed by M/s SEPL and evidence of exports was produced duly certified by the jurisdictional Superintendent of M/s SEPL before the adjudicating authority, which shows that otherwise also the goods were for export purpose and not liable for duty. Since the chemical examiner report being inconclusive and the appellants were not granted re-test of the samples, therefore the goods cannot be considered as chewing tobacco. It is coupled with the fact that no machines used for mixing of katha, calcium oxide or flavouring agents were found to be installed in the factory of the appellant, even though the factory was in running condition. The Appellant are merely getting the raw leaves and grinding them and after making powder putting them into 50 Kgs pack which is a bulk pack. The intention is not to market. Hence the nature of product would not take it into category of manufacture. The goods cannot be considered as manufactured chewing tobacco and would merit classification as unmanufactured tobacco falling under CTH No. 2401 since the only operation undertaken in respect of tobacco leaves was drying, cutting and seining - the impugned order holding classification of goods under CTSH No. 2403 99 10 is not sustainable. Appeal allowed - decided in favor of appellant.
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