TMI Blog2010 (3) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... /AHD - Dated:- 25-3-2010 - S/Shri Ashok Jindal, Member (J) and B.S.V. Murthy, Member (T) REPRESENTED BY: S/Shri V. Sridharan, R. Nambirajan, S.J. Vyas and Anand Nainawati, Advocates, for the Appellant. Shri Avinash Thete, SDR, for the Respondent. [Order per: B.S.V. Murthy, Member (T)]. - M/s. Urmin Products Ltd. (hereinafter referred to as the appellants), are inter alia, engaged in the manufacture of goods falling tinder Chapter 24 of the Central Excise Tariff Act, 1985. 2.. With effect from 19-1-05, the appellants started manufacturing 'Baghban chewing tobacco' and classified the same under sub-heading 2404.41 of the Central Excise Act, 1985 which covered "chewing tobacco and preparations containing chewing tobacco". 3. Baghban chewing tobacco is manufactured by the appellants by adding flavours to the tobacco and mixing it with silver foils/leaves. 4. Notification No. 13/2002-C.E. (N.T.) dt. 1-3-02 issued under Section 4A of the Central Excise Act specified chewing tobacco and preparations containing chewing tobacco falling under Heading 2404.41 for the purpose of assessment based on MRP. 5. With effect from 28-2-05, eight digit tariff replaced the existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Notification No. 16/2006-C.E. (N.T.), dated 11-7-06 to include in Sl. No. 28, Item No. 240399.30 also. 11. The appellants vide their letter dated 30-3-2006 informed the Central Excise department as per practice followed in their industry they are classifying their product as chewing tobacco in sub-heading No. 240399.10. 12. Show cause notice was issued on 9-7-07 to the appellant requiring them to show cause as to why Zarda Scented Tobacco manufactured and cleared by the appellant during the period from 1-3-06 to 10-6-06 should not be classified as Zarda Scented Tobacco under Tariff Item No. 240399.30 and levied to excise duty on the basis of value determined under Section 4 of the Central Excise Act since the Zarda Scented Tobacco falling under Tariff Item No. 240399.30 was not specified in Notification No. 2/2006-C.E. (N.T.), dated 1-3-06. After adjudication proceedings, the impugned order has been passed wherein the Commissioner has confirmed the demand for Central Excise duty of Rs. 10,36,98,118/- with interest as applicable and penalty equal to the duty has also been imposed under Section 11AC of Central Excise Act, 1944. In addition, penalty of Rs. 10 lakhs was imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent, the product cannot be classified as Zarda Scented Tobacco. 17. On the other hand, the learned SDR submitted that it was the appellant themselves who had claimed their product to be Zarda Scented Tobacco. Further, only when they found that the Zarda Scented Tobacco was not covered under notification, which covers list of goods to be assessed on MRP basis under Section 4A of Central Excise Act, 1944, they changed their stand and claimed that their product is Chewing Tobacco. Further, he drew our attention to the statement of the factory manager. It was submitted that the factory manager had admitted that their product is consumed by putting it in the pan or in the mixture containing betel nut commonly known as 'Masala' in Gujarat. He had also stated that this product is taken with betel nut, pan masala and in pan. In view of this statement, it is clear that the product is not Chewing Tobacco at all since the Zarda Scented Tobacco cannot be consumed as such unlike Chewing Tobacco. He also reiterated the points mentioned in the show cause notice and adjudication order. Further, he drew our attention to the manufacturing process, flow chart where it has been shown that the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'Flavoured Chewing Tobacco'. Therefore, admittedly the appellant sell the product as 'Zafrani Zarda flavoured chewing tobacco'. The appellant's claim is that the term 'Zarda' used in the tariff is different from the term 'Zarda' used by the appellant. "Zarda Scented Tobacco" would be only classified 240399.30. In support of this claim, they have enclosed a price list of M/s. Gupta Co.(P) Ltd. which lists Zarda Scent among other products. 21. On the other hand, department has not produced any evidence to show that the product is Tobacco Scented with Zarda. In fact, the learned SDR relied upon the process of manufacture in adjudication order. However, the process of manufacture given in the adjudication order in Para 2 is the manufacturing process as noticed by the officers when they visited the factory premises. This is a flowchart prepared by the officers after their visit. However, when we have a look at the statement of the Production Manager Shri Ramesh Narsinghbhai Patel in the flow chart, the Zarda Scented Tobacco in the process of manufacture is missing. Zarda Scented Tobacco figures in the manufacturing flow chart given by Shri Dipak Suryakant Shah only. Further, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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