TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 666
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....ere engaged in the manufacture of branded Chewing Tobacco falling under tariff item No.24039910 and paying Central Excise duty in terms of Section 3A of the Central Excise Act, 1944 in respect of 7 Single Track Form, Fill and Seal (FFS) Machines on the basis of annual capacity determined by the Deputy Commissioner, Central Excise Sangrur under the Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 for the period 08.03.2010 to 31.03.2010 and 01.04.2010 to 31.03.2011. In the capacity determination Order, the Deputy Commissioner has not taken filter pillow sachet making machines under Section 3A of the Act confirming that these were not subjected to compounded levy. He had also clarified this issue vide his letter dated 07.04.2010. 2.1 The Central Excise Hqrs. Officers searched the premises of the respondent on 16-6-2010 and the manufacturing process employed by them was ascertained as under: Nine Form Fill and Pack Machines were found installed and working with the aid of power. Paper Rolls are put on the said machine; tobacco is put into the hoppers fitted on the machines. The machines automatically form ....
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....t notified under section 3A of the Act. The explanation to notification 10/2010-C.E.(N.T.) mentioned that "packing machine" includes all types of packing machines; and after putting the filter pillows into the said Pouches, the pouches are sealed by the labour on the continuous band sealer machines which are run with the aid of electricity. That Board's letter F.No.341/24/2010-TRU dated 05.03.2010 does not cover the situation where the filter pouches containing khaini are manufactured with the aid of packing machines. That this clarification does not envisage the situation where small sachets are formed with the help of filling/packing machines and then put manually in another pouch and sealed with help of electricity aided band sealer machines. That as per the Explanation 5 to the Notification 16/2010-CE dated 27.02.2010 inserted vide Notification No. 19/2010-C.E. dated 13.04.2010 the words 'with the aid of packing machine" are to be read with the words 'chewing tobacco' which is packed in sachets of filter paper or fabric' and not otherwise. That the Notification no.19/2010-C.E. dated 13.04.2010 being an amending notification cannot be read in isolation but ha....
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....nsel for the respondent reiterated the findings of the impugned order passed by the Commissioner. He further submits that this issue is no more res integra and the Commissioner (Appeals) in their own case for the earlier period vide its order dated 21.04.2011 has allowed the appeal of the respondent and set aside the demand. The said order was challenged by the Revenue before the CESTAT and CESTAT vide its order dated 17.06.2013 dismissed the appeal of the Revenue and the same is reported in 2013 (297) E.L.T. 125 (Tri. - Del.) in the appellant's own case of Commissioner of C.Ex. Chandigarh Vs. Tej Ram Dharam Paul. He further submits that the appeal of the Revenue should be dismissed by following the ratio of the CESTAT decision (cited supra) which has been subsequently accepted by the Revenue and has not appealed against. 6. We have considered the submissions of both the parties and perused the material on record and the judgment of this Tribunal dated 17.06.2013 vide which the Tribunal has dismissed the appeal of the Revenue on identical issue; in this regard, it is relevant to reproduce the relevant findings recorded in the following paras: "9. After hearing both the ....
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.... used is filter khaini means ...... Filter Khaini is nothing but chewing tobacco packet in filter paper/fabric It is the second part of the explanation which reveals the intent of the scheme. It is the activity of packing of sachets into pouches with the aid of packing machines which will bring the product into purview of compounded levy scheme. Since earlier notifications. Notification Nos 10/2010 11/2010 16/2010 did not mention filter Khaini, there arose the need for addition of explanation 5 to notification No. 16/2010. Filter khaini is called filter khaini precisely due to the fact that chewing tobacco is packed in a fitter paper, meaning till the time, tobacco is packed in filter paper/fabric, it remains chewing tobacco, it is called filter khaini only after the same is packed in filter paper/fabric. So packing of tobacco into filter paper is actually a processing stage, and packing stage is arrived only when the same are put in plastic pouches." 12. The reasoning adopted by the appellate authority for grants of relief to the respondent is as under: "I find that the department, in the grounds of appeal, has driven a different meanin....
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....om them are erroneous and not biome out borne out of the wording of the Explanation and clarification as above." 13. He has also referred to the Board's letter No. 341/24/2010/TRU, dated 53-2010 which reads as under: "I am directed to say that certain issues have been raised by field formations as well as trade regarding implementation of compounded levy scheme for chewing tobacco and branded unmanufactured tobacco with effed from 1-2010. These issues have been examined and the following instructions are being issued in terms of Rule 19 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 mad with Rule 31 of Central Excise Rules, 2002:- (1) ..... (2) ...... (3) Requests have also been received to clarify whether manual packing of pouches of notified goods and their further sealing with the help of heat sealers/band sealers/candies/hot iron would come within the purview of compounded levy scheme or not. The scheme covers the said notified goods manufactured with the aid of packing machine However, there is no intention to levy duty on compounding basis on pouches wh....