Manufactured tobacco classification turns on proof of processing; unprocessed chewing tobacco stayed exempt and duty demand failed.

Chewing tobacco is classifiable as manufactured tobacco under Tariff Item 411(5) only if the department proves processing or addition of ingredients amounting to manufacture. On the facts, the record showed no such further treatment at the appellants' hands; broken-leaf form and price difference were insufficient to establish manufacture. The product therefore could not be treated as manufactured chewing tobacco, the exemption under Notification No. 34/79-C.E. remained available, and the duty demand and penalty were unsustainable.

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Issues: Whether the chewing tobacco cleared by the appellants was manufactured tobacco classifiable under Tariff Item 411(5) so as to deny exemption under Notification No. 34/79-C.E., and whether duty and penalty were sustainable.

Analysis: The decisive question was whether the product had undergone a process of manufacture bringing it within the tariff entry for manufactured chewing tobacco. The record did not show that the tobacco at the appellants' hands had been treated with any additional ingredients or processed into a manufactured variety. The Tribunal relied on the earlier view that the tariff entry covered only manufactured chewing tobacco and not raw or unmanufactured tobacco merely because it was used for chewing. In the absence of evidence of further processing, mere broken-leaf form and price difference were insufficient to sustain classification under the manufactured-tobacco entry.

Conclusion: The tobacco was not proved to be manufactured chewing tobacco, the exemption could not be denied, and the duty demand and penalty were unsustainable.

Ratio Decidendi: Chewing tobacco remains outside the manufactured-tobacco tariff entry unless the department proves processing or addition of ingredients showing manufacture; mere chewing use or broken-leaf form is not enough.

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