'Cut tobacco' dust arising in the course of separation of dust from seived cut tobacco through air pressure - Classification of - Central Excise - 58/89-CX.3

'Cut tobacco' dust arising in the course of separation of dust from seived cut tobacco through air pressure - Classification of Circular No. 58/89-CX.3 Dated 5-10-1989 [From F. No. 81/7/89-CX.3] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Classification of 'cut tobacco' dust arising in the course of separation of dust from seived cut tobacco through air pressure, winnowing waste arising in the course of seives of cut tobacco, ripped tobacco arising out of the ripping of defective cigarettes - Regarding. Attention is invited to Board's letter F. No. 112/7/89-CX.3, dated the 26th June, 1989 whereunder minutes of the North Zone Tariff Conference held at Simla on 5th and 6th June, 1989 were conveyed. In Point No. 1 of the Tariff points, discussed in the meeting it was intimated that the conference was tentatively of the view that cut tobacco dust arising in the course of separation of dust from seived cut tobacco through air-pressure would be classifiable under heading No. 24.01 as 'tobacco refuse', winnowing waste arising in the course of seiving of cut tobacco would be classifiable under heading No. 24.01 as 'tobacco refuse' and ripped tobacco arising out of the ripping of defective cigarettes would be classifiable under sub-heading No. 2403.13 as cut tobacco. It was also intimated that the matter would be examined further, before a final decision was taken. 2. Accordingly, the matter has been further examined in the Board's office. After taking all the relevant factors into consideration, the Board is of the view :- Ripped tobacco, as stated above, would be appropriately classifiable under sub-heading 2404.13 as 'cut tobacco', since it is nothing but, 'cut tobacco' taken out of the ripped cigarettes. A doubt was raised as to whether such 'cut tobacco' would be classifiable as 'smoking mixtures for pipes and cigarettes'. In this context, it may be stated that the same doubt arose in the context of the old Central Excise Tariff during the period prior to 28th February, 1986 when vide their telex F. No. 109/173/82-CX.3 (PT), dated the 20th September, 1985, the Board had informed all Collectors that the Patna High Court judgment in CWJC No. 4549 of 1982, filed by Messrs. ITC Limited, where the court had held that cut tobacco is not smoking mixtures, was accepted by the Board. Later on, it was also clarified vide Board's letter F. No. 109/173/82-CX.3, dated 11-3-1986 that 'cut tobacco' would be appropriately classifiable under Tariff Item 4-II as 'manufactured tobacco', but, no duty will be leviable as no duty rate had been prescribed for such goods under Tariff Item 4-II. The position remains almost the same under the new Central Excise Tariff. In the new Central Excise Tariff, although 'cut tobacco' has been classified under sub-heading 2404.13 and a definition of cut tobacco has also been given in note 4 of Chapter 24, there is no definition of 'smoking mixtures for pipes and cigarettes'. So. 'ripped tobacco' which is nothing but, 'cut tobacco' cannot be classified as 'smoking mixtures for pipes and cigarettes'. Besides, it may also be stated that one of the considerations leading to the above mentioned Patna High Court judgment, accepted by the Board, was that if a particular product is not defined in the Tariff, it should be understood as per the popular parlance attached to it. There is no definition of 'smoking mixtures for pipes and cigarettes' in the new Central Excise Tariff. So, it should be understood as in popular parlance. In popular parlance, nobody would recognise 'cut tobacco' as smoking mixtures for pipes and cigarettes. besides, it has been reported to the Board that ripped tobacco has been noticed to have been sold outside for use in the manufacture of chewing tobacco. This is also another reason why ripped tobacco cannot be classified as smoking mixtures for pipes and cigarettes. The acceptance of the above mentioned Patna High Court judgment by the Government has ruled out the possibility of classifying cut tobacco as smoking mixtures for pipes and cigarettes atleast so long as the same definition is not adopted in the statute itself for both cut tobacco and smoking mixtures for pipes and cigarettes. Therefore, there would be no doubt that the ripped tobacco, as mentioned above, would be appropriately classifiable under sub-heading 2404.13 as cut tobacco. 3. So far as the disposal of such 'ripped tobacco' (which is nothing but 'cut tobacco' of sub-heading No. 2403.13) is concerned, there would be no question of charging duty once again on such goods if it has already discharged the appropriate duty liability as 'cut tobacco' of sub-heading No. 2404.13 and if it is re-cycled within the factory of its emergence in the further manufacture of machine-rolled cigarettes. 4. Such 'ripped tobacco' or 'cut tobacco' can be sent to another factory for use therein in the manufacture of machine-rolled cigarettes on availment of the concessional rate of duty prescribed in Notification No. 356/86-C.E., dated the 24th June, 1986, as amended, by following Chapter X procedure. If it is sent to another factory for purposes other than for use in the manufacture of machine-rolled cigarettes, duty at the tariff rate of 225% ad valorem will have to be paid on such clearances. 5. In either of these cases, if any credit of duty paid on such 'cut tobacco' has already been utilised as per the provisions of Notification No. 355/86-C.E., dated the 24th June 1986, as amended, such credit will have to be reversed at the time of clearance of such 'cut tobacco' since such 'cut tobacco' has not been used in the manufacture of machine-rolled cigarettes. 6. If such 'ripped tobacco' or 'cut tobacco' arises from 'cut tobacco' received from another factory under Chapter X procedure as per Notification No. 356/86-C.E., dated the 24th June, 1986, as amended, then such 'ripped tobacco' or 'cut tobacco' can be returned to the original manufacturer under Rule 196B(i). However, at the time of such clearance, any credit of duty availed of on such 'cut tobacco' as per the provisions of Notification No. 355/86-C.E., dated 24th June, 1986, as amended will have to be reversed since such 'cut tobacco' has not been used in the manufacture of machine-rolled cigarettes. The original manufacturer will have to clear the concerned goods again on payment of duty at appropriate rates. Such 'ripped tobacco' can also be sent to any place outside under Rule l96BB for reprocessing and return thereafter to the consigner's premises. In this case also, at the time of such clearance, the credit of duty already availed of on such 'cut tobacco' as per Notification No. 355/86-C.E., dated 24th June, 1986, as amended, will have to be reversed since such 'cut tobacco' has not been used in the manufacture of machine-rolled cigarettes. 7. As regards winnowing waste, as mentioned above, it would be appropriately classifiable under heading No. 24.01 as 'tobacco refuse' in view of the HSN explanatory notes on page 180 since the winnowing waste results from the manufacture of cigarettes by using 'cut tobacco' as a raw-material. Moreover, in the HSN explanatory notes as mentioned above, stems, stalks, midribs etc., have been mentioned as 'tobacco refuse'. 8. The cut tobacco dust, as mentioned above, would be appropriately classifiable under 24.01 as 'tobacco refuse' in view of the HSN explanatory notes on page 180 where dust arising out of the process of manufacture of tobacco products has been treated as 'tobacco refuse'. 9. Above guidelines may be brought to the notice of the lower field formations and the trade also may be suitably advised. 10. All pending assessments may be finalised on the above basis.