TMI Blog2022 (8) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... part from the test report, the revenue has not adduced any evidence to support its proposal to classify the impugned product as jarda scented tobacco and not chewing tobacco. In the present case neither in the show cause notice nor before the adjudicating authority, it is the case that the appellant have used jarda scent in their product. Even the statements relied upon by the department nowhere mention that jarda scent has been used by the appellant in their product. The learned commissioner mistook the pleasant odour as mentioned in CRCL test report as scent which is totally different from jarda scent , an essential ingredient for manufacturing jarda scented tobacco - the learned commissioner has erred in not resorting to the Trade Parlance Test in the facts of the present case by erroneously observing that as the product can be classified as per the contents, there is no need to resort to the parlance test. In Trade parlance i.e. from packaging and presentation, sales and distribution and till its consumption by the ultimate consumer the product in issue is known as chewing tobacco only. The learned commissioner has also overlooked that the contents of the product in dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Maha Pasand Jarda Scented Tobacco (without lime tube) vide panchnama dated 13.3.2015 from the appellant s premises and forwarded the same to Central Revenues Control Laboratory (CRCL), New Delhi for testing and vide communication dated 27.4.2015 informed the appellants that as per the report of CRCL dated 23.3.2015 the sample is in the form of brown coloured dried cut pieces of vegetable matter. It is a preparation containing tobacco, lime and flavoring agents. It is other than Jarda Scented Tobacco. It has the characteristic of Khaini and therefore the product is classifiable under chapter sub-heading 24039910 as Chewing Tobacco (other than filter khaini) and not under CESTH 24039930. The aforesaid report of CRCL as well as the direction of the department in its communication dated 27.4.2015 was accepted by the Appellant and they communicated the same to the department vide their letter dated 15.6.2015 and accordingly they filed challan dated 12.6.2015 for the differential duty alongwith interest on Maha Pasand Chewing Tobacco. 4. Although as per the direction of department the appellant started classifying the product as Chewing Tobacco (without lime tube) under CETH 24039 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r crore, Forty Seven lacs, seventy two thousand eight hundred and forty two only) should not be determined, demanded and recovered from them by invoking the extended period of five years under the provisions of Section 11A of the Central Excise Act, 1944 read with Rules 7, 8, 9 and 19 of Chewing Tobacco and un manufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. ii) Central Excise Duty amounting to Rs. 1,86,64,055/- deposited by the party under protest, as informed by the party to the Assistant Commissioner, Kundli vide their letter dated nil received in Kundli Division on 20.01.2016 and also informed by Shri Ram Gopal Yadav in his statement dated 27.01.2016 should not be appropriated against the duty proposed to be demanded above. iii) Interest at appropriate rate should not be demanded and recovered from them on the proposed demand of duty mentioned at (i) above by invoking the extended period of five years under Section 11AA of the Central Excise Act, 1944; and iv) Penalty under Section 11 AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002 read with Rule 18 of the Chewing Tobacco and un manufactured Tob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the test report as to what is the definition of jarda scented tobacco and chewing tobacco and under which parameter test of sample conducted viz. moisture content, Nicotine, Ash etc. as provided in the Bureau of Indian Standards (BIS) specifications. According to learned counsel the Chemical Examiner failed to provide the parameter/standards set out for Jarda Scented Tobacco during her cross-examination. Learned counsel also submits that the respondents have proceeded only on assumptions and presumptions and failed to produced any evidence in support of their classification, whereas it is settled principle that the classification has to be proved by the department with evidences only and not merely on the basis of statements without any corroborative evidence. According to learned counsel Additive Mixture (Kimam) and Perfumery compound is not a scent and the same has been held to be chewing tobacco or preparation for chewing tobacco by the Hon ble Supreme Court in the matter of Gopal Zarda Udyog vs. CCE, New Delhi; 2005(188) ELT 251 (SC) and also in Dharam Pal Satyapal vs. CCE, New Delhi; 2005 (183) ELT 241 (SC). He further submits that the product in issue is known as chewing toba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant clearly establishes the product to be jarda scented tobacco. He also submits that when the product can be classified as per the contents there is no need to resort to common parlance test. On the issue of wrong calculation of duty learned authorised representative submits that the duty has been rightly calculated as in terms of Rules 7,8,9 10 of the Chewing Tobacco and Unmanufactured tobacco Packaging Maching (Capacity Determination and Collection of Duty) Rules, 2010, the central excise duty on all the machines, including the machines which were put into operation even for a day during a particular month, is required to be paid for full month. Learned authorised representative also submits that no case is made out by the appellant for setting aside penalty as the appellants had deliberately mis-declared their product in order to avoid higher amount of duty. He accordingly prayed for dismissal of the appeal. 9. We have heard learned Senior counsel for the appellants and learned Authorised Representative for the Revenue and perused the case records including the case laws and the written submissions/additional written submissions submitted by the respective sides. Admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in issue is jarda scented tobacco classifiable under Tariff Item No.24039930 mainly on the basis of test report and statement the chemical examiner. We have gone through the statement of Chemical Examiner Dr. (Ms.) Purnima Mishra and in her cross-examination she has stated that the samples were tested as IS 5643 of 1999 and when she was asked In IS 5643 of 1999 is there any parameter / standard set out for zarda scented tobacco , she replied that there is no direct standard set out under IS 5643. She further stated that the definition given under IS 2344 of 1994 were also referred to at the time of report given. She had also referred to the characteristics given in Table-1 of Flake type chewing tobacco (Zarda)-specification IS 2344 of 1944, for flake type chewing tobacco zarda, however when she was categorically asked Did you test the sample for these four characteristics given in Table-1 at serial no. 1 to 4 , she replied that whatever has been tested has been written in the report. But the three reports (supra) nowhere refer to four characteristics as given in Bureau of Indian Standards (BIS) specification, which are Moisture Content-27, Nicotine-8, Total Ash-25 and Acid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r favour, they again requested CRCL for the exact commodity/product and classification of sample drawn and the exact words were kindly confirm whether the party has correctly classified their product, if not intimate correct classification of the product. . In our view the department should not have asked the CRCL about the classification of the goods as this is not the duty/job of CRCL to classify the goods. The CRCL also vide communication dated 27.7.2015 responded as under:- In this regard, it is to inform that the test report issued earlier that the sample is composed tobacco and lime and it has the characteristics of chewing tobacco,........that assessing officers at the various levels should not ask the Deputy Chief Chemist/Chemical Examiner to give the tariff classification. The department did not stop here and they keep on sending the samples to CRCL and ultimately in the month of December, 2015 when the samples were sent to CRCL, and this time they asked the CRCL to confirm whether the appellants have correctly classified their product or the product is appropriately classified under CETSH 24039930 (Jarda Scented Tobacco) and ultimately CRCL vide Test Memo Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. (P) Ltd. submitted by them in their appeal paper book from where it can be seen that zarda scent as such is available in the market and therefore the product zarda scented tobacco would mean that the zarda scent has been used in the manufacture of the same. Since the appellants have never used the zarda scent, the product cannot be classified as zarda scented tobacco. 13. In the present case neither in the show cause notice nor before the adjudicating authority or before us it is the case that the appellant have used jarda scent in their product. Even the statements relied upon by the department nowhere mention that jarda scent has been used by the appellant in their product. The learned commissioner mistook the pleasant odour as mentioned in CRCL test report as scent which is totally different from jarda scent , an essential ingredient for manufacturing jarda scented tobacco. 14. For the purpose of Central Excise Tariff, jarda scented tobacco and chewing tobacco are different products as they have been specifically covered under two separate sub-headings viz. 24039910 (chewing tobacco) and 24039930 (jarda scented tobacco). Further, the glossary of the terms for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a particular entry, has acquired some other meaning in market parlance. However, in the present case, revenue has not brought on record any evidence in the form of market enquiries to support its case for classification under jarda scented tobacco. The learned commissioner in the impugned order has referred the definition of the expression zarda as defined under BIS specification (para 2.185 of glossary) and the same is reproduced hereunder: 29.3 . zarda (jarda) is a variety of chewing tobacco. In Urdu, it is called zarda. Ordinarily, it is chewed with pan whereas chewing tobacco is consumed with lime in its powder form by rubbing it on the palm with the thumb. The former is a more refined form of chewing tobacco. Further, the glossary of the terms for tobacco and tobacco products (Third revision of IS 10335) ICS 65.160 for BIS use at para 2.185 term Zarda as chewing tobacco product made of highly scented and flavours tobacco flakes, chewed along with betel nuts , paan (betel leaf). We are not able to find anything on record by the revenue in the show cause notice regarding the pattern of consumption of the product of the appellant in issue. Therefore the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent from chewing tobacco on the ground that it contains scent which is not there in chewing tobacco and that since the assessee therein was not using perfume/scent during manufacturing therefore it was held to be chewing tobacco. While recording the finding the learned commissioner completely overlooked para 8 of the order which reproduced the manufacturing process adopted by the assessee therein. The same is reproduced as under:- 8. The manufacturing process stand given by the appellants and reproduced in the impugned order. The same is as under:- Raw tobacco received from the market is sieved and mixed with Additive Mixture and Glyceerin. The Additive Mixture is of a great significance, which is manufactured by mixing perfumery compounds, received from the Noticee s Delhi unit, as per their formula. To this perfumery mix they further add sada-kiwam, spices and aromatic chemicals, in a mixer to form in-house kiwam . To this in-house kiwam they further add some perfumeries, spices etc. based on the additive mixture to be made for making various types of tobacco to be manufactured. In deluxe varieties silver leave are mixed. After mixing, the manufactured product ..... 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