TaxTMI 
TaxTMI 
2022 (8) TMI 1050
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....to whether that product is Chewing Tobacco classifiable under heading 24039910 as claimed by the Appellants or its Jarda Scented Tobacco classifiable under heading 24039930 as claimed by the revenue? 3. The facts of the appeals in brief are as follows. The Appellant i.e. M/s. Som Flavour Malasa Pvt. Ltd. started manufacturing chewing tobacco (without lime tube) w.e.f. 23.7.2015 under various names and filed necessary declarations with the department i.e. Form-1 and continued to declare during the period August, 2015 to January, 2016. On perusal of the declarations filed in Form-I and Form-II in terms of Rule 6 of Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 as amended for the relevant period, it was observed that single track FFS pouch packing machine were to be installed/un-installed in the factory and were to be put into use for production/packing of the chewing tobacco without lime tubes in terms of Notification No.11/2010-CE(NT) dated 27.2.2010 as amended vide Notification No.04/2015-CE(NT) dated 1.3.2015. According to department, the appellants themselves declared that the maximum speed of all the pouc....
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....ty has classified their product as Chewing Tobacco (without lime tube) under CETH No. 24039910. Kindly confirm whether the party has correctly classified their product or the product is appropriately classified under CETSH 24039930 (Jarda Scented Tobacco).' Ms.Purnima Mishra, Chemical Examiner Gr.-II, CRCL vide her 12 different test reports all dated 14.12.2015 opined that the 'sample has the characteristics of Jarda Scented Tobacco'. One thing was common in the all the 12 reports that the report only mentioned about the 'content of calcium' which varied between 0.18% to 0.21% in all the test report. Content of 'slacked lime' was not detected in any of the samples as per the test reports. 6. On the basis of the earlier test report of the samples drawn on 24.7.2015, the department issued two capacity determination orders both dated 4.12.2015, one for the months of July-September, 2015 and another from October-December, 2015. Since both the capacity determination orders were based on the test report dated 26.8.2015 of CRCL (of sample taken on 24.7.2015) the appellants after getting the test report on 1.12.2015 requested for re-testing of the aforesaid samples vide letter dated 11.....
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.... order dated 28.1.2021 of the Adjudicating Authority and directed the department to transmit copy of the re-testing report to the appellants and thereafter to decide the matter afresh in accordance with law. 8. Somewhere in the month of April, 2021 re-test report issued by Jt.Director, CRCL was supplied to the appellants whereas the same was forwarded to the department much earlier vide communication dated 9.12.2016. The said re-test report dated 9.12.2016 reads as under:- "REPORT: The sample is in the form of brownish, dried cut pieces of leaves having characterstic pleasant odour in unit packing. It is composed of Cut bits of tobacco leaves and flavourant. It does not contain added lime. It is a preparation containing Chewing Tobacco. It is other than Jarda Scented Tobacco."(emphasis supplied) After getting the re-test report, the appellants filed their final reply on 7.7.20201 to the show cause notice. After supply of copy of re-testing report, the adjudicating authority vide impugned Order-in-Original dated 14.7.2021 once again confirmed the demand of Central Excise duty alongwith interest and equal penalty on M/s. Som Flavour Masala Pvt. Ltd. and also i....
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....nalty on the appellants. Per contra learned Authorised Representatives appearing on behalf of Revenue supported the findings recorded in the impugned order and prayed for dismissal of appeals filed by the appellants. According to learned Authorised Representative it is wrong to imply that the opinion of Chemical Examiner in the test reports of samples is based on the presence/absence of lime as both the chemical examiners have stated in their respective cross-examination that the test for lime is conducted as a routine manner for such commodity. He further submits that chewing tobacco is a broader term used which includes various forms of tobacco namely, surti, zarda, quiwam, dokta and sukla and that depending upon the contents in the tobacco, the product would be classified. Learned Authorised representative further submits that the appellants are comparing two alien things and that nicotine percentage was not there in any of the test reports. According to learned Authorised Representative in the decisions relied upon by the appellants it has been observed that zarda in common parlance is nothing but tobacco flakes without any other ingredient. It has also been submitted that zard....
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....n order to appreciate it we are reproducing hereunder in tabular form the contents of moisture etc. as provided by BIS and the contents found in the product in issue as per the test/re-test reports of CRCL:- Contents as prescribed by BIS S. No. Criteria Minced Type Chewing Tobacco Flake Type Chewing Tobacco (Zarda) 1. Moisture content by mass Max 27 15 2. Nicotine (on dry basis) percent by mass, Max 8 4 3. Total Ash (on dry basis) percent by mass, Max 25 28 4. Acid Insoluble ash (on dry basis), percent by mass 5 4 The summary of the test reports of samples taken on 24.7.2015 and 2.12.2015 issued by CRCL are as under:- 1. Date of sample drawn & its description Test report of sample drawn on 24.7.2015 of DB Royal Chewing tobacco Test report of 12 samples drawn on 2.12.2015 of all brands of chewing tobacco and loose samples 2. Physical Characteristics Brown cut piece of vegetable matter (bits of leaves) with pleasant odour. Yellowish brown coloured cut piece of leaves having pleasant odour 3. Main Composition Tobacco and Flavourant Processed tobacco leaves with flavouring agent. 4.....
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....d that lime is not the deciding component which distinguishes chewing tobacco from zarda scented tobacco. According to him, it is the scent or perfume which makes the distinction. But we are afraid that the aforesaid finding/opinion of the learned Commissioner is misplaced and is not as per the BIS standard. Jarda is unmanufactured tobacco which is in the form of flakes and is obtained by crushing or beating dry tobacco leaves. The Indian Standard issued by BIS describe Flake Type Chewing Tobacco (Zarda) and Minced Type Chewing Tobacco is as under:- "FLAKE TYPE CHEWING TOBACCO (ZARDA) 3. Requirement 3.1 Description Flake type chewing tobacco (ZARDA) shall be prepared from mould free tobacco lamina in the form of dry flake. It may be coloured and perfumed. MINCED TYPE CHEWING TOBACCO 3. Requirement 3.1 Description The minced type chewing tobacco (in the form of shreds) shall be prepared form mould free tobacco leaves. It may be coloured and perfumed." In view of the above description as per the Indian Standard issued by BIS 'perfume' is not the deciding factor for deciding whether the product is chewing tobac....
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....ntent as per the report of CRCL was 25.95% and 25.4% respectively which is much more than 15% which is the maximum moisture content as per BIS, therefore the sample can safely be termed as chewing tobacco. The sample of 24.7.2015 when re-tested in December, 2016 i.e. after 16 months, had the moisture content of 19.9% on account of moisture loss during those 16 months but still it was more than the maximum moisture content prescribed for zarda. In the samples drawn on 2.12.2015, moisture content was not tested and only calcium content was examined which was varied between 0.18% to 0.21% in all the 12 samples. Although as per BIS specifications the tests for Moisture content, Nicotine, Total Ash and Acid Insoluble Ash are mandatory but the test reports issued by the Dr. (Ms.) Purnima Mishra, Chemical Examiner, CRCL nowhere refer to those four characteristics. As we discussed earlier, the test for moisture content percentage and Nicotin percentage are very essential to arrive at the conclusion whether the sample is of chewing tobacco or of zarda, but none of these characteristics have been referred to or dealt with by the Chemical Examiner, CRCL in her report although she had referred....
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.... on Jarda Scented Tobacco....." A bare perusal of the show cause notice and in particular the aforesaid paragaraph would make it clear that the show cause notice is mainly based upon the test reports, opinion of Chemical Examiners, CRCL and also of the statements which uses the words 'compound'. Whereas the learned commissioner while changing the classification substantially relied upon the statements of Director/Production Manager/Manager and came to the conclusion that since the appellants uses scent in their product therefore it can only be classified as zarda scented tobacco, which in our view is totally contrary to the description by Indian Standard issued by BIS. Otherwise also the word 'scent' has not been used by the appellants and secondly even if they uses this words, then if the classification has to be based only on the basis of statements then there is no need of any testing laboratories. Perfumery compound is not 'scent' and the same has been held as chewing tobacco or preparation for chewing tobacco by the Hon'ble Supreme Court in the matter of Gopal Zarda Udyog vs. CCE, New Delhi; 2005(188) ELT 251 (SC) and also in the matter of Dharam Pal Satyapal vs. CCE, New D....
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....160 for BIS use in para 2.185 defines the term 'Zarda' as a "chewing tobacco product made of highly scented and flavours tobacco flakes, chewing along with betel nuts & pan (betel leaf)". Thus, the BIS defines zarda as a chewing tobacco product which would only mean 'a product containing chewing tobacco' and not chewing tobacco per se. If both the products are treated as jarda scented tobacco then the same would make the heading 24039910 as redundant. 17. We are also of the view that the learned commissioner has grossly erred in completely ignoring the opinion of Jt. Director, CRCL in re-test of the same samples whose earlier test reports were relied upon by the revenue in changing the classification. The appellants objected to the authority of the Chemical Examiner Gr.-II to give opinion, since as per powers and duties of officers and employees posted at CRCL, as prescribed, Chemical Examiner can only issue test reports, they cannot give any opinion. Whereas the Jt. Director, CRCL is the head of the laboratories and supervises the overall functioning of Laboratory and offers technical opinion. We also do no find the conduct of the department proper. As per the request of the ap....
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.... their popular meaning. It is the specific case of the appellants that they are packing and selling the product in issue as chewing tobacco and so has been stated by the Director, Manager/Production Supervisor of the appellants. 19. Recently on somewhat similar facts the issue about not applying the common parlance test came up for consideration before this Tribunal in the matter of Excise Appeal No. 60336 of 2021 titled as M/s. Tej Ram Dharam Paul vs. Commr. CGST, Rohtak and this Tribunal vide its order dated 8.8.2022 while allowing the appeal filed by the appellant therein held as under:- "14. .... Neither jarda scented tobacco nor chewing tobacco have been defined in the Central Excise Act and therefore in order to find out whether the product of the appellant is jarda scented tobacco or chewing tobacco, the department ought to have conducted market enquiries with the persons in this trade in order to find out how this product is treated in the market or we can say Trade Parlance test. The Hon'ble Supreme Court also in the matter of Indian Aluminium Cables Ltd. vs. UOI & Ors.; (1985) 3 SCC 284 has laid down that in determining the meaning or connotation of word....
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.... contrary, the product in question has to be treated as per the description given by the manufacturer on outer cover of pouch, common parlance and established practice as the chewing tobacco or zarda scented tobacco have not been defined in the tariff. The relevant para of the said decision is reproduced as under: "48. In the Tariff the expression chewing tobacco and zarda scented tobacco are not defined as the product has to be classified based upon the description of the product given by the manufacturer on the pouch as well as on the basis of common parlance and established practice. In the present case, as the product in question as per the description of the product is flavor chewing tobacco and it is bought and sold in the market as chewing tobacco. Further the appellant from the beginning classifying the same as chewing tobacco and after the period in dispute also classified the same as chewing tobacco. Hence, I find merit in the contention of the appellant that the product in question is chewing tobacco and classifiable under heading 24039910 of the Tariff." A similar view has been by the Tribunal in the matter of Kaipan Pan Masala Pvt. Ltd. vs. CCE, Bhopal; 202....