Tobacco product classification and cum-duty valuation relief determine central excise treatment of pan masala containing tobacco.

Pan masala containing tobacco was held classifiable under Heading 24.04 as a tobacco product, because the Tribunal applied the binding Supreme Court position that such goods fall within the tobacco tariff regime and cannot be placed under Chapter 21 for central excise purposes. On valuation, the assessee was entitled to treat the sale price as cum-duty price, and duty was to be recomputed after allowing the statutory deduction. The classification issue was decided for the Revenue, while limited relief was granted to the assessee on recomputation of duty.

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Issues: Whether pan masala containing tobacco was classifiable under Heading 24.04 of the Central Excise Tariff or under Heading 21.06, and whether the assessee was entitled to treat the sale price as cum-duty price while re-computing duty.

Analysis: The product was held to be pan masala containing tobacco and, in the light of the Supreme Court's ruling that such goods are tobacco products covered by the relevant fiscal regime for tobacco and manufactured tobacco, the Tribunal concluded that the product could not be classified under Chapter 21 for central excise purposes. The Tribunal applied the principle that the law declared by the Supreme Court is binding and accepted the Revenue's classification under Heading 24.04. On the separate question of valuation, the Tribunal accepted that the assessee was entitled to statutory deduction by treating the price as cum-duty price and directed recomputation of duty accordingly.

Conclusion: The classification dispute was decided against the assessee and in favour of the Revenue, with the product held classifiable under Heading 24.04. The assessee was, however, entitled to cum-duty price deduction for recomputation of duty.

Final Conclusion: The appeal failed on the principal classification issue, but limited relief was granted on valuation for fresh duty computation.

Ratio Decidendi: Pan masala containing tobacco is classifiable as a tobacco product under the tariff entry applicable to tobacco and manufactured tobacco, and Supreme Court declarations on that character are binding for central excise classification.

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