Unmanufactured tobacco classification confirmed where beaten, crushed and sieved leaves kept without foreign ingredients remain under Heading 24.01.

Tobacco leaves beaten, crushed and sieved without any added foreign ingredients were treated as unmanufactured tobacco under Heading 24.01, because the processing did not change the product into manufactured chewing tobacco. The HSN notes, sample reports showing only broken tobacco bits free from lime and molasses, and consistent Tribunal decisions supported that classification. Earlier adverse classification for a different period did not control the later period, and the departmental circular and trade notice also favoured Heading 24.01. On that basis, duty demands founded on sub-heading 2404.41 were held unsustainable and the classification in favour of the assessees was upheld.

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Issues: Whether branded chewing tobacco prepared by beating, crushing and sieving tobacco leaves without adding foreign ingredients was classifiable as unmanufactured tobacco under sub-heading 2401.00 or as manufactured chewing tobacco under sub-heading 2404.41, and whether the duty demands could stand.

Analysis: The product was admittedly meant for chewing and not for smoking. The process of preparation involved only beating, crushing and sieving tobacco leaves, with no addition of chuna, molasses, katha, perfume, spices or any other foreign material. The HSN notes treated tobacco in such a form as unmanufactured tobacco, and the latest sample reports for the relevant period showed only broken tobacco bits free from lime and molasses. The earlier adverse classification could not govern the later period, and the Revenue was also bound by the departmental circular and trade notice supporting classification under Heading 24.01. Consistent Tribunal decisions were relied upon to hold that such processing did not amount to manufacture.

Conclusion: The goods were correctly classifiable under sub-heading 2401.00 as unmanufactured tobacco, and the duty demands based on sub-heading 2404.41 were unsustainable.

Final Conclusion: The Revenue's appeals failed and the classification adopted in favour of the respondents was upheld.

Ratio Decidendi: Tobacco leaves merely beaten, crushed and sieved without addition of foreign ingredients remain unmanufactured tobacco and are classifiable under Heading 24.01 rather than as manufactured tobacco.

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