Tribunal classifies 'Kimam' as chewing tobacco preparation under Central Excise Act

The Tribunal held that the product "Kimam" should be classified under heading 24039920 as a "preparation containing chewing tobacco" under the Central Excise Act, 1944. The appellants' argument that it should be classified under 24039960 as a tobacco extract was rejected. The Tribunal found no evidence of suppression by the appellants and restricted the demands to the normal time limit, deeming the imposition of penalties unjustified. As a result, the appeals were partly allowed, with the decision issued on 07.08.2017.

---

---

Issues:
Classification of the product "Kimam" under the Central Excise Act, 1944 based on the eight-digit tariff system.

Analysis:
The appellants were manufacturing Kimam and paying duty under Section 4 of the Central Excise Act. They initially classified the product under heading 2404.41 during the six-digit tariff regime. However, with the introduction of the eight-digit tariff system, they started classifying it under 24039960 as "tobacco extracts and essence." The department contended that the product should be classified under 24039920, which is assessed under Section 4A, leading to the impugned demand and penalties.

The appellants argued that post the eight-digit tariff introduction, their product was more specifically classifiable under 24039960 as a tobacco extract. They emphasized that Kimam is not a preparation containing chewing tobacco, as it cannot be consumed, supported by a Supreme Court judgment. They maintained that there was no suppression, as they consistently filed returns showing the classification and paid duty under Section 4.

The Tribunal analyzed the manufacturing process of Kimam and noted that it contains tobacco and is used in making pan, even though it may not be consumed as is. The dispute centered on the classification post the eight-digit tariff regime change. Referring to a Supreme Court judgment, the Tribunal held that Kimam falls under "preparation containing chewing tobacco," classifiable under 24039920. Therefore, the demand under Section 4A was deemed sustainable.

The Commissioner (Appeals) accused the appellants of suppression for not consulting the department on classification doubts. However, the Tribunal found no evidence of suppression and directed the demands to be restricted to the normal time limit. The imposition of penalties was deemed unjustified due to the classification dispute. Consequently, the appeals were partly allowed, with the decision pronounced on 07.08.2017.

---