TaxTMI 
TaxTMI 
2025 (10) TMI 678
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....ief that are relevant for our consideration as could be gathered from the impugned order and the documents placed on record, are that the Appellant upon issuance of Notification No. 05/2015-CE dated 01.03.2015 through their revised declaration dated 02.03.2015 declared that they are going to manufacture 'Zarda/Jarda Scented Tobacco' ('JST' for short) w.e.f. 01.03.2015. Again, vide declaration dated 27.05.2015, the Appellant declared that they are going to manufacture 'Branded Chewing Tobacco' ('BCT' for short) w.e.f. 01.06.2015 after the issuance of Notification No. 25/2015-CE dated 30.04.2015. The Department appears to have regularly obtained samples of the product manufactured by the Appellant which were sent for testing at CRCL. Regular Capacity Determination Orders were passed by the Ld. Assistant Commissioner determining the duty liability based on production capacity. 3. It appears that the Appellant was served with following SCNs - 1. SCN dated 08.06.2016 in C.No. CE-20/Div-III/R12/D-I/36/15-16 for the period 2015-16 in relation to Unit-IV for demand of Duty amounting to Rs.14,34,51,000/- along with interest and penalty; 2. SCN dated 09.09.2016 in C.No. ....
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....co including preparations commonly known as Khara Masala, Kiwam, Dokta, Zarda, Sukha and Surti". Thus, for the first time 'Zarda' was recognized separately as preparation. 5.4 Prior to the introduction of the 8-digit tariff classification, 'chewing tobacco' was reflected under Chapter 24, under specific Entry '2404.41' of the six-digit Central Excise Tariff classification. Subsequently, the new 8-digit Central Excise Tariff classification was introduced vide Circular No. 808/05/2005-CX, dated 25-2-2005, Chapter 24 of the Central Excise Tariff came to be amended and Heading '2403' was introduced which reads: "2403 - Other manufactured tobacco and manufactured tobacco substitutes; 'Homogenised' or 'Reconstituted' tobacco; Tobacco extracts and essences" 5.5 The Central Excise Tariff Heading '2403' now includes the following sub-headings: 2403 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES; "HOMOGENISED" OR "RECONSTRUCTED" TOBACCO; TOBACCO EXTRACTS AND ESSENCES - Smoking tobacco, whether or not containing tobacco substitute in any proportion; 2403 99 10 Chewing Tobacco 2403 99 30 Jarda Scented Tobacco 5.6 Thus, the Central Exci....
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....duct manufactured by the Appellant is 'JST'. They have also drawn our attention to the judgement of Hon'ble Apex Court in the case of CGST, C.C.E & ST., Rohtak VsM/s. Som Flavour Masala Pvt. Ltd. reported in 2023 (385) E.L.T. 101 (S.C.) / (2023) 6 Centax 4 (S.C.) wherein, the Hon'ble Apex Court while affirming the judgement of the Tribunal, has affirmed that the if the moisture content is more than 15%, then the tobacco shall be considered as 'BCT'. In one of the test reports dated 26.08.2015 the Chemical Examiner affirmed that the product contains moisture content of 19.7% which automatically proves that the product manufactured by the Appellant is 'BCT' and not 'JST'. Regular purchases of lime and their use in the manufacture of BCT which is recorded in Form IV Register shows that the Appellant is using lime in the manufacture of the said product and therefore, the product cannot be classified as 'JST'. 7. Ld. Advocate has also referred to the statement of the Appellant's Director Akhil Jain recorded on 15.10.2015 wherein he has confirmed the process of manufacturing of BCT and JST and specifically mentioned that lime is being added for manufacturing of BCT along with other in....
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....ing previous reports of JST from CRCL kept on assessing the duty as per BCT and even after the report from CRCL that the product manufactured by the Appellant is having characteristic of JST, the Ld. Assistant Commissioner passed various capacity determination orders confirming the product as 'BCT' and accordingly, directed the Appellant to pay the duty. The present demand was issued by the Ld. Commissioner without challenging those final capacity determination orders and the present demand is reassessment of the assessed duty. In this connection, the Ld. Counsel submitted that such reassessment is not permissible under the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. The Ld. Counsel in their support have cited M/s. Miraj Products Pvt. Ltd. Vs Commissioner, Central Goods & Service Tax in Excise Appeal No. 51730 of 2019 and Vikas Steel vs. Commissioner of Central Excise, Jamshedpur [2001 taxmann.com 1488 (CEGAT- Kolkata)]. 11. With regard to interest and penalty, ld. counsel submitted that the Appellant has paid the duty according to the assessment orders and the product manufactured by them is BCT and th....
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....ntent alone is not sufficient to hold that the product is BCT or JST. The presence of moisture content in one of the test reports is not sufficient to hold that the product manufactured by the Appellant is BCT. To support that the product should be appropriately classified as 'JST', he cited the judgment of Hon'ble Apex Court in case of C. Ex. Ahmedabad Vs Urmin Products Pvt. Ltd. [2024(388) E.L.T. 418 (SC)]. He further submitted that the process of manufacturing of BCT and JST are very much different and the presence of lime in BCT is a necessary ingredient which is missing in the Appellant's case as per the test report and therefore, the product manufactured by the Appellant is correctly classified by the Ld. Commissioner as 'JST' under Chapter Heading 24039930. 13. Ld. D.R would further submit that the assessment order/s passed by the Ld. Assistant Commissioner was in respect of determination of annual capacity and in the said order, it is clearly mentioned that the samples were sent for testing and the report/s from CRCL was pending. Therefore, the said assessment order shall not be deemed to be a final assessment order and the Ld. Commissioner has correctly passed the impug....
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....'tobacco' was covered under Item 4 of the Schedule to the Central Excise Act, the relevant entry being Entry 4-II(5) which covered 'chewing tobacco'. In 1985, the CETA was enacted and 'Chewing tobacco' was shown under Entry 4-II(4). The Finance Act, 1987, inserted "CET SH 2404.39" with effect from 1-3-1987. The heading included the following: "Chewing tobacco including preparations commonly known as Khara Masala, Kiwam, Dokta, Zarda, Sukha and Surti". Thus, for the first time 'Zarda' was recognized separately as a preparation. Prior to the introduction of the 8-digit tariff classification, 'chewing tobacco' was reflected under Chapter 24, under specific Entry '2404.41' of the six-digit Central Excise Tariff classification. Subsequently the new 8-digit Central Excise Tariff classification was introduced, as explained by Circular No.808/05/2005-CX, dated 252-2005, as per which Chapter 24 of the Central Excise Tariff came to be amended and Heading '2403' was introduced which read as under: "2403 - Other manufactured tobacco and manufactured tobacco substitutes; 'Homogenised' or 'Reconstituted' tobacco; Tobacco extracts and essences" 19. The Central Excise Tarif....
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....hich are made applicable for the said products. It thus boils down to the fact that the test reports have been issued in a mechanical/informal manner without mentioning the methods applied for testing and also without disclosing the composition; as the opinion of an expert plays an important role in determining the correct classification. But here, the same has been reduced to a formality, lacking any credence thus rendering it a futile exercise. The Hon'ble Punjab and Haryana High Court in case of Commissioner of Central Excise, Delhi Vs Exportec India Exports [2015 (323) E.L.T. 131 (P&H)] has clearly held that nonadherence of procedure for testing and non-following the procedures and protocols for testing would make the test report redundant and unacceptable. In fact, in the SLP filed before the Apex court against the judgment of High court in Exportec [supra], the Hon'ble Apex dismissed the same with the observation that 'setting aside of demand by Tribunal on these finding of facts is not required to be disturbed' [see 2015 (323) ELT A27]. Even during the cross-examination, the Chemical Examiner was unable to explain the detailed methods which were adopted for testing of the sa....
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....est reports are silent about the composition and if the said report is considered, then as per BIS standard, when moisture content in tobacco is found to be more than 15%, then the product should be classified as BCT. We draw support from judgment of M/s Som Flavour Masala Pvt. Ltd. vs CGST, CCE & ST, Rohtak reported in 2023 (6) Centax 1 (Tri-Chan) wherein, the co-ordinate Chandigarh Bench has held that if the moisture content in Jarda is equal to or less than 15% and the Nicotine percentage is less than or equal to 4%, then the product is 'Jarda Tobacco', whereas, if moisture content is more than 15% and up to 27% and Nicotine content is more than 4% and less than or equal to 8% then the said product will be called 'Chewing Tobacco'. The said judgment of the Tribunal has since been affirmed by the Hon'ble Apex Court [see 2023 (385) E.L.T. 101 (S.C.)]. We have found that the other compositions are not disclosed in the test reports and therefore, in view of the Hon'ble Supreme Court judgment as regards the moisture content, we are of the considered view that the product manufactured should be appropriately classifiable under Tariff Heading No. 24039910 as 'BCT'. We also take support....