1990 (9) TMI 107 - HC - Central Excise

Summary

Issues: Interpretation of language in Notification No. 35/79 regarding the weight of chewing tobacco inclusive of sachet and wrapper.

Analysis:

1. The petitioner, a manufacturer of branded chewing tobacco, sought the quashing of orders by the Assistant Collector of Central Excise Division II, Kanpur, along with the consequential demand of duty. The dispute revolved around the interpretation of Notification No. 35/79, which granted partial exemption to chewing tobacco based on its value per kilogram. The petitioner argued that the weight of chewing tobacco should include the weight of the sachet and wrapper, considering the cost of these materials for determining duty and rate of duty. Conversely, the Department contended that only the net weight of chewing tobacco should be considered for determining weight, while the value calculation includes the cost of the sachet and wrapper as per Section 4 of the Central Excise Act.

2. The key question was whether the weight of one kilogram of chewing tobacco, as specified in Notification No. 35/79, should include the weight of the sachet and wrapper. The High Court emphasized that exemption notifications must be strictly construed, and conditions must be met for availing exemptions. While the value of the product includes the cost of packaging, the weight of chewing tobacco itself, excluding the sachet and wrapper, should be considered for determining weight. The Court reasoned that the notification's language did not suggest the inclusion of sachet and wrapper weight in the weight of chewing tobacco, maintaining consistency with the Act's provisions.

3. The Court referred to an unreported decision of the CEGAT, where the Tribunal discussed the value calculation for notification purposes, emphasizing the exclusion of packaging costs. However, the Tribunal's decision did not directly address the specific issue of including sachet and wrapper weight in determining the weight of chewing tobacco. The High Court distinguished this decision and reiterated its interpretation of Notification No. 35/79, emphasizing that the weight of chewing tobacco should not encompass the weight of the sachet and wrapper.

4. Despite the petitioner's failure to exhaust the statutory appeal remedy before filing the writ petition, the Court proceeded to adjudicate the matter on its merits. Ultimately, the Court dismissed the writ petition, ruling in favor of the Department's interpretation that the weight of chewing tobacco for duty calculation purposes should exclude the weight of the sachet and wrapper.