Temporary weight gain in chewing tobacco manufacture cannot by itself sustain duty demand, clandestine removal, or extended limitation.

Temporary weight gain during an intermediate manufacturing stage of branded chewing tobacco could not justify a duty demand or a finding of clandestine removal, because earlier findings on pilot experiments showed the increase was only transitory and the weight later returned to the level of the coloured leaves. Non-entry of ingredients in the prescribed register did not, by itself, establish suppression of facts where the unit was under physical control and departmental officers had access to the factory and records. On that basis, extended limitation was not available and the demand was unsustainable.

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Issues: (i) whether the alleged increase in weight of branded chewing tobacco after mixing of ingredients was only temporary so as to negate the duty demand and the finding of clandestine removal, and (ii) whether non-entry of ingredients in the prescribed register amounted to suppression of facts justifying the demand and extended limitation.

Issue (i): whether the alleged increase in weight of branded chewing tobacco after mixing of ingredients was only temporary so as to negate the duty demand and the finding of clandestine removal.

Analysis: The goods were manufactured through intermediate stages in which volatile substances and liquid compounds were mixed and later dried. The earlier Tribunal order on the same set of facts had found, on the basis of pilot experiments, that the increase in weight was purely temporary and the weight substantially returned to the level of the coloured leaves. The impugned order was found to have wrongly ignored those findings and to have proceeded on an erroneous factual assumption that the seizure-day measurements themselves represented the final state of the product. The Tribunal also rejected any general formula based on other manufacturers, since the ingredients, quantities and processes varied materially from unit to unit.

Conclusion: The alleged weight increase could not sustain the duty demand or the finding of clandestine removal.

Issue (ii): whether non-entry of ingredients in the prescribed register amounted to suppression of facts justifying the demand and extended limitation.

Analysis: The unit was under physical control and the departmental officers had access to the factory and records. In that setting, mere omission to enter the ingredients in the relevant register columns was not enough to establish deliberate suppression with intent to evade duty. The record did not support the invocation of the larger period of limitation, and the demand was therefore unsustainable on both facts and law.

Conclusion: Suppression was not established and the extended limitation could not be invoked.

Final Conclusion: The demand and the impugned order were unsustainable, and the assessee obtained complete relief.

Ratio Decidendi: Where the evidence shows only a temporary gain in weight during an intermediate stage of manufacture and the assessee is under physical control, a duty demand and extended limitation cannot be sustained merely on register omissions or on assumptions drawn from other manufacturers' processes.

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