1987 (7) TMI 381 - AT - Central Excise

Appellant not liable for tax on tobacco processing; Tribunal rules in favor.

TPNS. CHETTIAR PARVATHI VILAS TOBACCO & CIGARS Co. Versus CCE.

TPNS. CHETTIAR PARVATHI VILAS TOBACCO & CIGARS Co. Versus CCE. - 1989 (41) E.L.T. 79 (Tribunal) Issues:- Determination of whether the processes of cutting unmanufactured tobacco leaf into small pieces, labeling with strings or rings bearing trade name, and packing into containers constitute 'manufacture' of 'Chewing tobacco' falling under a specific item of the Central Excise Tariff Schedule.- Interpretation of the definition of 'manufacture' under Section 2(f) of the Central Excises and Salt Act, 1944, in relation to tobacco, including preparation of chewing tobacco and labeling or repacking of manufactured tobacco.Analysis:1. The main issue in the appeal was to decide whether the processes undertaken by the appellant, involving cutting unmanufactured tobacco leaf, labeling, and packing, amounted to the 'manufacture' of 'Chewing tobacco' as per the Central Excise Tariff Schedule. The appellant claimed that no additional ingredients were added during these processes. The lower authorities had considered these processes as manufacturing of chewing tobacco, leading to the rejection of the appellant's duty refund claim on the clearance of such tobacco.2. The definition of 'manufacture' under Section 2(f) of the Central Excises and Salt Act, 1944, was crucial in determining the applicability of the processes employed by the appellant. The section includes processes incidental to the completion of a manufactured product, such as the preparation of chewing tobacco and the labeling or repacking of manufactured tobacco to render it marketable. It was essential to establish whether the appellant's processes constituted the preparation of chewing tobacco to further analyze the application of the Act.3. Reference was made to the Departmental Manual on Tobacco Excise Duty, which highlighted that cut tobacco without added ingredients and packed in containers for retail sale should not be considered as manufactured tobacco. Several Collector notices supported this view, emphasizing that mere cutting and tying of unmanufactured leaf with a brand label did not classify the product as chewing tobacco under the Tariff Schedule.4. A previous case, Collector of Central Excise, Pune v. Jaikisan Tobacco Company, Pune, was cited, where the Tribunal ruled that repacking and labeling unprocessed tobacco did not fall under the category of chewing tobacco. The Tribunal's decision was deemed applicable to the current case, leading to the conclusion that the appellant's product was not taxable as chewing tobacco under the specific item of the Central Excise Tariff Schedule.5. Additionally, the appellant raised a contention regarding the limitation of the refund claim, arguing it was governed by general law rather than Central Excise law. The lower authorities did not address this contention, necessitating further examination into whether the duty was paid under protest. The Tribunal set aside the lower authorities' orders, allowed the appeal, and remitted the matter to the Assistant Collector for a decision on the refund claim based on the classification decision and the limitation question, providing the appellant with an opportunity to present their case.This detailed analysis of the judgment highlights the key issues, legal interpretations, and precedents considered in determining the appellant's liability for excise duty on the processed tobacco product.