TMI Blog2018 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... he ultimate consumers of the product. No evidence of procurement of Perfume or Scent as raw material and then use in the product stands produced by the Revenue. No employee of the assessee was examined so as to establish that perfume being used for manufacture of their final product. As such the said factor of marketing of the goods as chewing tobacco leads us to inevitable conclusion apart from other reasons as discussed above, that the product in question is admittedly chewing tobacco and not Jarda scented tobacco. An identical issue was the subject matter of the Tribunal decision in the case of Urmin Products Pvt.Ltd. v. Commisioner of Central Excise, Ahmedabad [2010 (3) TMI 461 - CESTAT, AHMEDABAD], where it was held that both sides not clearly shown whether product Chewing Tobacco or Zarda Scented Tobacco. Label calls the product as Flavoured Chewing Tobacco, no Zarda Scent having been added and not sold as Zarda Scented Tobbaco, appellant s claim that the product is Flavoured is Chewing Tobbaco has to be accepted. The ratio of the said decision is fully applicable to the facts of the present case. We also note that the appellant s request for getting the sample drawn an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them is type of chewing tobacco containing tobacco, Quiwan, Glycerene and flavours. Since no scent is being added by them, their product cannot be considered to be Zarda scented tobacco falling under heading 24039930. The reference to the said heading was an inadvertant mistake on their part. They further clarified that in terms of the Board s Circular No.81/5/87-CX.3 dated 23.06.1987 the raw tobacco crushed in the form of flakes is Zarda only and the difference between Zarda scented tobacco and the goods manufactured by them can be seen from the terms of tobacco and tobacco products defined by IS 10335.2007 (re-affirmed 2012) which defines tobacco products. They also submitted that various types of chewing product tobacco are prepared by adding different ingredients which gives the chewing tobacco its test and essence and the tobacco manufactured by the appellant gets its taste and essence from Glycerine and the Quiwan added to the tobacco. As such they contended that their product falls under sub-heading 240399.10 and the same is manufactured tobacco product and the same would not fall under heading 240399.30. They also made a request that their product be sent to Central Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing process or in the raw materials, the appellants cannot be permitted to file revised declaration. The said Order-in-Appeal is impugned in four appeals. 6. In the above background proceedings were also initiated against the appellant by way of show cause notice dated 04.05.2016 for demand of duty of ₹ 5,74,77,500/- along with interest for late payment of duty which was deposited by the appellant under protest in May 2015 itself. The notice proposed appropriation of the said amount and also proposed confirmation of interest. The said show cause notice culminated into an order passed by the Commissioner being order dated 16/20.03.2017 confirming the demand of duty of ₹ 5,74,77,000 with interest of ₹ 56,12,275/- and penalty of ₹ 5,74,77,000 on the appellant. The said order stands impugned in Appeal No.E/70368/2017. 7. We have heard Ms.Seema Jain Shri Abhishek Srivastava, ld.Advocates for the appellant and Shri Gyanendra Kumar Tripathi and Shri Pawan Kumar Singh, ld.A.R.s for the Revenue. 8. The dispute in all the appeals relates to the fact as to whether the product being manufactured by the appellant was chewing tobacco or Jarda scented toba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as such their product cannot be considered to be Jarda scented tobacco. In the said communication they have also made a request to the Revenue to get their goods tested or to visit their factory, which request of the appellant has not been acceded to by the authorities. 10. It is seen that the entire case of the Revenue is based upon the said declaration of the assessee without making any efforts to find out as to what exactly was being manufactured by the appellant. If the Deputy Commissioner did not approve the declaration filed by the assessee, he was under obligation to make enquiries including physical verification in terms of Rule 6(2) of the Chewing Tobacco Rules, 2010. No such enquiry stands made by the officer. Further their factory was never visited by the officers and no samples were drawn in spite of requests made by the assessee. Further the appellant had disclosed the manufacturing process of their final product which does not stand rebutted by the Revenue. The appellant was using lime powder as one of the essential ingredients of chewing tobacco and had submitted the purchase bills of the same before the authorities. The various ER-1 returns filed by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured tobacco classifiable as Jarda. Further in the case of M.G. Mohite Sons v. Collector of Central Excise [1992 (62) E.L.T. 810 (Tribunal)], it was held that tobacco sold by assessee, though known as Zarda, is only un-manufactured tobacco inasmuch as the same is not treated with additional ingredients. 13. Even as per ISI Glocery of terms of tobacco and tobacco products Zarda is nothing but chewing tobacco which is unmanufactured tobacco containing beaten tobacco leaves. Only when Zarda so obtained is perfumed, the same would become Jarda scented tobacco. Admittedly chewing tobacco and Jarda scented tobacco are different products mentioned separately in the Tariff. Zarda and Jarda scented tobacco are not one and the same product. Whereas Zarda is admittedly chewing tobacco the same would be classifiable along with the classification of chewing tobacco and would not fall under the heading of Jarda scented tobacco. Even though the appellant had originally classified Zarda under heading 2403 99 30, but it having been proved by various evidences that the appellant s manufactured product was chewing tobacco and Zarda, the mention of classification of heading 2403 49 30 agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the product given by the manufacturer on the outer cover of the pouch as also on the basis of common parlance and established practice. As such by taking into account the decisions in the case of Prabhat Zarda Factory v. Commissioner [2004 (163) E.L.T. 485 (Tribunal)] as also the Hon ble Supreme Court s decision in the case of Gopal Zarda Udyog v. Commissioner [2005 (188) E.L.T. 251 (S.C.)] and Dharampal Satyapal v. Commissioner [2005 (183) E.L.T. 241 (S.C.)], even the intermediate products like admixture of Kiman, Paraphion, Menthol were held to be chewing tobacco falling under erstwhile Chapter heading 2404.49. Further the Tribunal in the said case also referred to the Hon ble Supreme Court s decision in the case of CCE, Nagpur v. Shree Baidyanath Ayurved Bhawan Ltd. [2009 (237) E.L.T. 225 (S.C.)] laying down that resort should be had to popular meaning and understanding attached to such product by those people using the product and not to scientific and technical meaning and expressions. Admittedly in the present case the appellants have marketed their product as chewing tobacco and not as Jarda scented tobacco. Revenue has neither disputed the manufacturing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Tobacco. No expert opinion or information from the trade have been obtained and it is only the statement of factory manager that the product is usually eaten with Pan, Betel nut or Pan Masala etc. Department has come to the conclusion that the product is not Chewing Tobacco. Further, as submitted by the appellant, nowhere in the statement of the employees, it has been stated that Zarda Scent was added. Under these circumstances, in view of the above discussion, neither side has been able to show whether the product is Chewing Tobacco or Zarda Scented Tobacco clearly. Both sides have some points in their favour and some against them. Under these circumstances, in view of the fact that the label calls the product as Flavoured Chewing Tobacco, no Zarda Scent has been used and the product has not been sold as Zarda Scented Tobacco by the appellant, we consider that the claim of the appellant that the product is Flavoured Chewing Tobacco has to be accepted. Thus, on merit the appellants succeed. Therefore, the demand for differential duty fails and naturally the penalties imposed under Section 11AC of Central Excise Act or rules of Central Excise Rules, 2002 also have to be set a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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