Binding tariff circulars govern jarda tobacco classification where the product remains unmanufactured and Chapter 24 note does not apply.

Jarda tobacco packed in retail pouches was treated as unmanufactured tobacco under Heading 24.01 because the sample contained only bits of tobacco leaves and no added ingredients such as lime or catechu. A Board circular dated 23-6-1987 was treated as binding on tariff classification, and the Revenue could not disregard it as merely advisory. On that basis, Chapter Note 2 of Chapter 24, which applies to manufactured tobacco, had no application. The demand, confiscation and penalty were therefore unsustainable.

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Issues: Whether the jarda tobacco was classifiable as manufactured tobacco under Heading 2404.41 or as unmanufactured tobacco under Heading 24.01, and whether the Board's circular on jarda unmanufactured tobacco was binding while determining the applicability of Chapter Note 2 of Chapter 24.

Analysis: The sample test report showed only bits of tobacco leaves packed in pouches with no added ingredients such as lime or catechu. On that basis, the tobacco answered the description of unmanufactured tobacco rather than manufactured tobacco. The Board's circular dated 23-6-1987 specifically clarified that jarda unmanufactured tobacco merely broken by beating and packed in retail packets for chewing would fall under Heading 24.01. The Court relied on the principle that a binding Board circular cannot be repudiated by the Revenue on the ground that it is inconsistent with the statute, and held that the Commissioner was not justified in treating the circular as merely advisory. Since the goods were found to be unmanufactured tobacco, Chapter Note 2 of Chapter 24, which applies to manufactured tobacco, had no application.

Conclusion: The tobacco was correctly classifiable under Heading 24.01 as unmanufactured tobacco, and the impugned order was unsustainable.

Final Conclusion: The demand, confiscation, and penalty could not be sustained because the goods were not manufactured tobacco for excise classification purposes.

Ratio Decidendi: A binding departmental circular on tariff classification must be followed, and tobacco without added ingredients that remains unmanufactured cannot be brought within the manufactured-tobacco chapter note merely by repacking or branding.

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