TMI Blog2014 (9) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... the product produced by the appellant show that the product is described as under: ‘GOPAL 100 ZARDA Deluxe flavoured chewing tobacco’. The instructions on the pouches are that the product is to be chewed and not to swallow but to spit. - the product in question is chewing tobacco and classifiable under Heading 24039910 of the Tariff. Further the Notification No. 2/2006-CE (NT) dated 1.3.2006 is further amended by Notification No. 16/2006-CE(NT) dated 11.7.2006 whereby the chewing scented tobacco classifiable under Heading 24039910 also notified as assessable under Section 4A of the Central Excise Act, 1944. Prior to the period in dispute 1.3.2006 to 10.7.006 the appellants were clearing the product as flavoured chewing tobacco and thereafter also clearing the same by classifying the product under Heading 24039910 of the Tariff and the product in question is marketed as Chewing Tobacco - Decided in favour of assessee. - Appeal No. 1368 of 2008 - EX[DB] - INTERIM ORDER NO. /151/2014-EX(BR) & FO 53229/2014 - Dated:- 8-8-2014 - Ms. Archana Wadhwa (J) and Mr. Manmohan Singh (T) For the Appellant : Shri Vivek Kohli, Advocate For the Respondent : Shri Pramod Kumar, Jt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore and ten lakhs. Hence the present appeal. 4. We have heard both sides duly represented by Shri Vivek Kohli, learned advocate appearing for the appellant and Shri Pramod Kumar, learned Jt.CDR appearing for the Revenue. 5. The appellants have challenged the impugned order on merits as also on limitation. 6. After hearing both sides, we find that the dispute in the present appeal relates to correct classification of the appellants product Gopal Zarda . As per the appellants, the said product is nothing but flavoured chewing tobacco classifiable under heading 2403.99 10. On the other hand, the Commissioner has held the same to be falling under 2403 99 30 as zarda scented tobacco . For better appreciation of the contended entry which were introduced with effect from 28.8.05 the same are reproduced below: 2403 Other manufactured tobacco and manufactured tobacco substitutes; Homogenised or Reconsitituted tobacco; Tobacco extracts and essences. 2403 99 -- Other ; 2403 99 10 -- Chewing tobacco 2403 99 20 -- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry 2403 9930 takes into ambit scented zarda , their product cannot be held to be falling under said entry. Elaborating on the difference between the flavoured and scented they have referred to following definitions. Further the definition of zarda in the Draft Indian Standard - Glossary of terms for tobacco and tobacco products circulated by the Bureau of Indian Standards is as follows: Zarda : It is a coarse variety of surti chewing tobacco. The definition of flavour according to the Compact Oxford Dictionary is a distinctive taste of a food or drink . Adding to this definition, the Encarta and Farlex Dictionary puts is as A distinctive yet intangible quality felt to be a characteristic of a given thing . The definition of scented according to Oxford Dictionary means to give or fill with a pleasant smell or odour 10. It is seen that there is no dispute on the manufacturing process. Goods in question is admittedly a preparation of chewing tobacco which after sieving is mixed with perfumary compound. By taking note of the definition as reproduced above, we note that there is admittedly a difference between flavour and scent. Whereas t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouring material . The additive include exotic substances, saffron, musk etc. In fact, certain preparations were having percentage of tobacco less than 40%. The product was held to be chewing tobacco product . Though the Commissioner has discarded the said decision of the Tribunal by observing that same is not relevant in the context of new tariff items for chewing tobacco introduced from 2005, but we find that the same may be relevant for understanding the type of product. If the product remains chewing tobacco, inasmuch as there is clear entry for chewing tobacco, even in the new tariff, the product cannot be shifted from chewing tobacco to zarda scented tobacco . In the case of Gopal Zarda Udyog vs. Commissioner of Central Excise. New Delhi [ 2005 (188) ELT 251 (SC)] and Dharampal Satyapal vs. Commissioner [2005 (183) ELT 241 (SC)], even the intermediate product likes additive mixture Kimam, parathion menthol, were held to be chewing tobacco falling under erstwhile chapter heading 2404.49. The manufacturing process of the product in those cases was also more or less identical to the manufacturing process in the present case. The entire idea of this reference is that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 30 is different from the term zarda being used by the assessee. For better appreciation we reproduce para 21 of the said order as under: 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 was also brought to our notice that during the period from 19-1-05 to 20-8-05, the appellants had described the product in the classification list as Chewing Tobacco and from 1-3-05, to 31-3-06, it was classified as Zarda Scented Tobacco and from 1-4-06 onwards, the classification descriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppression with intent to evade payment of duty as the entire clearances were being made with the knowledge of Revenue. But he has further observed that inasmuch as the show cause notice is issued within the period, and extended period has not been invoked, there is no question of dealing with the said plea of the appellant on the point of limitation. If that be so, there can also be no question of imposition of any penalty upon the appellant, inasmuch as no malafide intent or suppression stand attributed to them. 18. In view of the above, the impugned order is set aside and appeal is allowed with consequential relief to the appellant. (Pronounced in the open court on) Per Manmohan Singh 19. I have gone through draft order recorded by Hon ble Member (Judicia) holding Gopal Zarda Tobacco - claimed to containing flavoured tobacco will be classifiable under normal chewing Tobacco classifiable under 24039910 and it will not be classifiable under 24039930 as Zarda Scented Tobbacco and will not be assessed under for Section 4 and will continued to be assessed under Section 4A. However I do not agree with the findings and propose to record may separate order. Facts mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco and manufactured tobacco substitutes; Homogenised or Reconstituted tobacco; Tobacco extracts and essences. 240399 - Other; 240399 10 - Chewing Tobacco 240399 20 - Preparations Containing Chewing Tobacco 240399 30 - Zarda Scented Tobacco 4.4 Though these new entries came into force w.e.f. 28.2.2005, the corresponding notification specifying the goods which are to be assessed under Section 4A were not changed. However, the benefit under earlier tariff continued in view of issue of general notifications. Relevant portions for circular No. 802/35/2004-CX read as under:- General Notification No. 1/2005-CE, 2/2005-CE, 5/2005-CE (NT) 7 to 10/2005-CE(NT) all dated 24.2.2005 have been issued so as to substitute any reference to the Chapter, heading or sub-heading of the first schedule or the Second Schedule to the C. Ex. Tariff Act, 1985 (5 of 1986), as the case may be, relating to any goods or Class of goods, wherever occurring in the existing notifications / rules / ad-hoc exemption orders, by corresponding reference to the Chapter, heading or sub-heading or tariff item, of the first schedule or the second schedule to the C. Ex. Tariff Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing tobacco . 23. It is seen that upto 28.2.2005, Chapter 2404.41 comprised of six digits covered Chewing Tobacco and preparations containing Chewing Tobacco. From 1-3-2005, eight-digit tariff was introduced and as a result Chewing Tobacco and preparations containing Chewing Tobacco were separately put under different category. A separate entry under 2403 9930 for Zarda scented tobacco was introduced 2403 99 - Other 2403 99 10 - Chewing tobacco 2403 99 20 - Preparations containing Chewing Tobacco 2403 99 30 - Zarda Scented Tobacco 24. The appellants have at no stage challenged the vires of Central Excise Tariff (Amendment) Act, 2004 by which eight-digit tariff classification was introduced in place of old 6-digit classification. Under six-digit classification, specific entry in respect of the product manufactured by the appellants was : Chapter heading 2404.41. But after amendment, the products were bifurcated into three sub-heads, viz., plain chewing tobacco, preparations which contained it and scented products were separately classified. 25. The notification number 2/2006-CE(NT) dated 1.3.2006 specified that goods falling under chapter heading 24039910 and 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strictly according to the provision of Central Excise Tariff Act. For the purpose of proper classification, it has to be seen as to under which tariff item the product actually falls irrespective of the declaration by the assessee. Now, it is nowhere controverted by the noticee that their product does not contain scent. The noticee is only arguing that they sell their product as flavoured tobacco, and therefore, it cannot be considered as scented. But the facts are different. In fact, it is their own submission that the product is scented. 29. I also agree with the adjudicating authority that there is clear demarcation in the tariff entries 24039910 and 24039930. Whereas former covers plain chewing tobacco without having been added any flavour/scent to it, the later product is restricted to scented items. 30. Rules 3 of the Rules for the implementation of the schedule to the Central Excise Tariff Act reads as under:- 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006. No notification was issued covering this product under the provision of section 4A. It was only on 11.7.2006 with the issue Notification No.16/2006-CE (NT) Zarda secented tobacco under heading 2403 99 30 was specifically brought under section 4A. 34. Reference to judgment of Apex Court in the case of Gopal Zarda Udyog vs. CCE, New Delhi-2005 (188) ELT 251 (SC) and Dharampal Satyapal vs. CCE-2005 (183) ELT 241 (SC) by the appellant are not relevant as these are for the chewing tobacco as it was prior to 1.3.2006. 35. I would like to refer para 4.9 of adjudication order where appellants have submitted that it is matter of common knowledge that all varieties of chewing tobacco being sold in the market are flavoured/secented, as the very purpose of a person taking this product is to enjoy a pleasant flavor/scent/ taste. Appellant also contended that in view of presence of flavoured/scented in all the chewing tobacco will result in chewing tobacco being classified zarda scented tobacco and will result in redundancy or superfluous of the entry of chewing tobacco. However, Commissioner observed that even if the contention of the appellant was accepted, it did not preclude ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to me for decision: (i) Whether Gopal Zarda claimed as flavoured one would be classifiable under T.H. 24039910 as chewing tobacco and it would not be considered as scented chewing tobacco and thus will not eligible for assessment under Section 4 as held by Member (Judicial); OR (ii) Gopal Zarda claimed as flavoured one but found to be scented will be classifiable under T.H. 24039930 and to be classified as scented chewing tobacco and to be assessed under Section 4 during the relevant period as held by Member (Technical). 41. Brief facts of the case are that the appellants are engaged in manufacture of flavoured chewing tobacco i.e. Gopal Zarda and classified the same under Tariff Heading 24039910 of the Central Excise Tariff during the period 1.3.2006 to 10.7.2006 and paying duty as per the provisions of Section 4A of the Central Excise Act, 1944 in view of Notification No. 2/2006-CE (NT) dated 1.3.2006. In view of the provisions of the above Notification, the duty on the product in question was being discharged by the appellant on the basis of Maximum Retain Price. 42. The proceedings were initiated by issuing Show Cause Notice dated 30.3020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of Notification No. 2/2006-CE(NT) dated 1.3.2006. Hence the demand is not sustainable. 45. Revenue relies upon the finding of the lower authority and submitted that as per the manufacturing process which is reproduced in the impugned order, the flavour is added to chewing tobacco. Therefore the product is scented flavoured tobacco. As the product in question is Zarda Scented Tobacco classifiable under Heading 24039930 and this product is not notified under Section 4A of the Central Excise Act, 1944. Hence the demand is rightly made in view of the provisions of Section 4 of the Act. 46. I find that the dispute is for the period 1.3.2006 to 10.7.2006. The appellant is claiming the classification of the product under Tariff Heading 24039910 whereas the Revenue is classifying the same under Heading 24039930 of the Tariff. The relevant entries are reproduced in para 23 of the order. 47. I find that prior to 28.2.2005 the appellants were clearing the product under Heading 2404.41 of the Tariff which covers chewing tobacco and preparations containing chewing tobacco. There is no dispute in this regard. As the Central Excise Tariff is migrated from six digit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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