2017 (11) TMI 5 - AT - Central Excise

Tribunal dismisses Revenue's appeal on excise duty valuation for chewing tobacco. Pouch packing method not under Chewing Tobacco Rules.

The Tribunal dismissed the Revenue's appeal regarding the excise duty valuation on Lime mixed chewing tobacco. It held that the respondent's method of ... Valuation - non-woven fabrics/ sachets of chewing tobacco (Filter Khaini) of 0.25 grams each - respondent claims, that they are covered by regular transaction value based duty in terms of Section 3 read with Section 4 - Revenue entertained a view that they are covered by Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 read with Notification 14/2012 CE dated 17/03/2012 - Held that: - Admittedly, the said pouch is a retail package intended for retail consumer - The explanation 5 in the notification makes it abundantly clear that for the purpose of said N/N. 16/2010 ‘Filter Khaini means chewing tobacco which is packed in sachets of filter paper or fabric before being packed in pouches with the aid of packing machines’ - A plain reading of the explanation shows that packing in pouches should be with the aid of packing machines. In the respondent’s own case in identical situation the Tribunal relying on the decision of Tej Ram Dharam Paul [2013 (8) TMI 607 - CESTAT NEW DELHI] held that the Chewing Tobacco Rules, 2010 will not apply to the respondent. Appeal dismissed - decided against appellant. Issues:1. Method of valuation for excise duty on Lime mixed chewing tobacco (filter khaini).2. Interpretation of Chewing Tobacco and Unmanufactured Tobacco Packing Machine Rules, 2010.3. Application of Compounded Levy Scheme.4. Compliance with brand name and MRP requirements on pouches.Analysis:Issue 1: Method of valuation for excise dutyThe dispute centered around the method of valuation for excise duty on Lime mixed chewing tobacco (filter khaini). The Revenue contended that duty liability should be based on the capacity of the packing machine, while the respondent argued for regular transaction value-based duty under Section 3 read with Section 4.Issue 2: Interpretation of Chewing Tobacco Rules, 2010The Revenue claimed that the respondent's product falls under the Chewing Tobacco Rules, 2010, and should be subject to duty under Section 3A. They argued that the respondent violated rules by not putting brand name and MRP on the pouches packed with the aid of a machine. However, the Commissioner (Appeals) ruled in favor of the respondent, stating that the Chewing Tobacco Rules did not apply.Issue 3: Application of Compounded Levy SchemeThe Revenue contended that the Commissioner (Appeals) overlooked legal provisions and set aside the assessment order without following the Compounded Levy Scheme. They sought to set aside the impugned order and restore the original order.Issue 4: Compliance with brand name and MRP requirementsThe Revenue argued that the respondent failed to comply with the requirement to put brand name and MRP on the pouches packed with the aid of a machine, thus avoiding duty payment under Section 3A of the Central Excise Act, 1944.The Tribunal, after considering both sides and examining the relevant provisions, found that the respondent's process of packing filter khaini in sachets and then in pouches with the aid of a machine did not fall under the Chewing Tobacco Rules, 2010. The Tribunal emphasized that the packing of pouches with the aid of machines, as clarified by the board, did not attract the Chewing Tobacco Rules. Additionally, citing a previous decision in the respondent's own case, the Tribunal ruled that the Chewing Tobacco Rules would not apply. Hence, the appeal by the Revenue was dismissed, as the grounds did not warrant interference with the Commissioner (Appeals) order.