2024 (6) TMI 1321 - AT - Central Excise

Scented tobacco classified under CETH 2403 99 10 not CETH 2403 99 30, departmental appeals dismissed

CESTAT Allahabad dismissed departmental appeals regarding classification of chewing tobacco products. The tribunal held that scented tobacco falls under ... Classification of Goods - Chewing Tobacco or Jarda Scented Tobacco - to be classified under CETH 2403 99 10 or under CETH 2403 99 30 - HELD THAT:- The issue in the present appeal is no more res integra and is covered by the decision in the case of M/S. FLAKES-N-FLAVOURZ VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [2014 (9) TMI 664 - CESTAT NEW DELHI (LB)]. Against the Final order of the Tribunal upholding the product to be ‘Chewable Tobacco’ falling under Tariff Heading 2403 99 10 the appeal preferred by the Commissioner, Central Excise, Chandigarh before the Hon’ble Supreme Court has been dismissed in COMMR. OF CEN. EXC. AHMEDABAD VERSUS URMIN PRODUCTS P. LTD. AND OTHERS [2023 (10) TMI 1112 - SUPREME COURT] and the order of the Tribunal has been upheld. Since the matter has been settled by the Hon’ble Supreme Court in favour of the Respondent, the present appeals filed by the Department are liable to be dismissed - the appeals filed by the Department are dismissed. Issues Involved:Classification of the product as 'Chewing Tobacco' or 'Jarda Scented Tobacco' under specific headings.Detailed Analysis:1. Background and Facts: The dispute revolves around the classification of the product declared as 'Chewing Tobacco' by the Respondent under CETH: 2403 99 10 and as 'Jarda Scented Tobacco' CETH: 2403 99 30 as claimed by the Appellant Revenue. The Respondent's product, branded as 'GOPAL Chewing Tobacco,' has been in production for several decades under different manufacturers and licensing agreements.2. Manufacturing Units and Notifications: The Respondent established manufacturing units under the Compound Levy Scheme for duty payment. In 2015, the government amended the Capacity Determination Rules, introducing separate duty calculation tables for 'Chewing Tobacco' and 'Jarda Scented Tobacco.' The Respondent initially classified its product as 'Chewing Tobacco' based on the new rules.3. Show Cause Notice and Adjudication: The Department issued a Show Cause Notice alleging that the product should be classified as 'Jarda Scented Tobacco.' The Commissioner adjudicated both notices, classifying the product as 'Chewing Tobacco' under CETH 2403 99 10. The Department appealed this decision before the Tribunal.4. Basis of Classification: The Commissioner classified the product as 'Chewing Tobacco' considering various factors: the historical declaration of the product by the Respondent, the product's long-standing presence in the market, lack of conclusive evidence from CRCL Test Report, and a precedent where a similar product was classified as 'Chewing Tobacco' by a larger bench of the Tribunal.5. Legal Arguments: The Department argued that the ongoing classification matter before the Supreme Court should prevent the dropping of the demand by the Adjudicating Authority. However, the Respondent highlighted that the Supreme Court had already dismissed a similar appeal by the Commissioner, upholding the Tribunal's decision regarding the classification of 'Chewing Tobacco.'6. Tribunal Decision: After considering the arguments and reviewing the appeal records, the Tribunal found that the issue was no longer open to debate. Referring to a previous Tribunal order upheld by the Supreme Court, the Tribunal dismissed the Department's appeals, stating that the burden of proof for classification lies with the Revenue, and in this case, no evidence supported reclassification.7. Final Verdict: The Tribunal, relying on the settled legal principles and the Supreme Court's decision in favor of the Respondent, dismissed the Department's appeals. The matter was pronounced in open court on 27.06.2024.This detailed analysis outlines the key aspects of the judgment, including the factual background, legal arguments, basis of classification, and the final decision of the Tribunal in favor of the Respondent.