TaxTMI 
TaxTMI 
2026 (4) TMI 1271
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.... and packing for subsequent sale. Dipping the raw tobacco in jaggery water is called liquoring. This process is resorted to prevent mould and also to preserve the natural flavor of the tobacco. 3.Initially, the appellant was adding further ingredients to tobacco after it was processed as mentioned above like chilli/mint/other flavors and essences and marketed the product as "chewing tobacco" classifying the same under Central Excise Tariff Heading (hereinafter referred to as "CETH") 2403 99 10. During May 2017, Government of Tamil Nadu issued a notification dated 23.05.2017 vide Gazette No.146, whereby, manufacture, storage, transport, distribution or sale of gutkha, pan masala, chewing tobacco and any other food products containing tobacco or nicotine as ingredients were prohibited. In view of the change in the legal regime, the appellant stopped the addition of the flavors and essences to their product and started selling the same as "unmanufactured tobacco". Notwithstanding the fundamental change in the character of the product, the appellant continued to classify the same under CETH 2403 99 10. 4.GST came into force on 01.07.2017. Products falling under CETH 2403 99 10 we....
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....e the GST regime had come into force, that cannot result in change of classification. The learned Judge was of the view that the assessee's have been shifting their stand only to evade payment of compensation cess. Such conduct is impermissible. The assessee's could have availed the alternative remedy. 6.Heard the learned counsel appearing for the appellant/assessee and the learned Standing Counsel for the department. The learned counsel appearing for the assessee after obtaining leave of the court, amended the writ prayer. He reiterated the contentions set out in the grounds of appeal. He also filed written notes of argument and took us through the same. He wanted us to set aside the order impugned in the writ petition as well as the order of the learned Single Judge and grant relief as prayed for 7.The learned standing counsel for the department submitted that the reasons assigned by the learned Single Judge are sound. He also harped on the fact that the assessee's are shifting their goal posts. They all along classified their product under CETH 2403 99 10. They wanted to reclassify their product subsequently under CETH 2403 99 90. This was the core issue before the departm....
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.... might have agreed with the objection raised by the standing counsel. But in the case on hand, calling upon the appellant to go before the authority would be a futile exercise. The learned Single Judge had given his seal of imprimatur to the stand taken by the department. Obviously, the hands of the appellate authority stand tied. No purpose will be served by filing an appeal. It is for this reason, we overrule the stand of the Standing Counsel. If the writ court is of the view that the petitioner deserves to be non-suited on the ground of failure to exhaust the alternative remedy, merits of the matter ought not to be gone into. We would even go to the extent of remarking that it would be advisable to show the door to the petitioner at the threshold stage itself. At the final hearing stage after exhaustively listening to arguments on merits advanced from either side, the writ court should not ordinarily invoke this ground. The earliest writ petition in the batch was filed in January 2021. The matters were disposed of finally on 24th October 2024. We have come across cases in which it was held that at the final hearing stage, the petition should not be dismissed on this ground. Be t....
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....y stand prejudiced because of the shift in position by the assessee. The Hon'ble Supreme Court had consistently held that the onus lies only on the department to justify the classification. In 2006 (197) E.L.T 324 (SC) ( vide HPL Chemicals Ltd vs CCE), it was held that the classification of goods, being a matter relating to chargeability, the burden of proof squarely lay on the Revenue. It was further held that if the department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. In Union of India and Ors. v. Garware Nylons Limited and Ors (1996 (87) ELT 12(SC)), the Hon'ble Supreme Court held as follows: "15... The burden of proof is on the taxing authorities to show that the particular case or item in question is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before t....
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....nvolves a manufacturing process, the stand of the revenue has to be upheld. Otherwise, the case of the assessee must be sustained. 13.This issue is no longer res-integra. It was authoritatively settled long ago in Pachiappa Chettiar V. State of Madras ((1963) 2 MLJ 71). It is relevant to note that this question came up for consideration in connection with interpreting Section 5(viii) and (vii) of the Madras General Sales Tax Act. In the very opening line, the question was formulated in the following terms : "Whether the goods sold by the assessee, which is described as tundu tobacco, is "chewing tobacco" produced as a result of any manufacturing operations and assessable as a manufactured product". The process employed by the assessee was described as follows : "The raw tobacco is cut into pieces. It is periodically sprinkled with palm jaggery water to keep it soft and wet. Otherwise, the tobacco becomes brittle and cannot be cut into pieces. The tobacco so treated with palm jaggery water is taken out little by little and cut into pieces. They are then separately arranged, packed in bundles, pressed and labelled." The above product was contrasted with wha....
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....ubscribe to the aforesaid submission of the learned Standing Counsel. While E.S.Mydeen arose under the Food Safety and Standards Act, Pachiappa Chettiar arose under a taxing statute. The facts involved in Pachiappa Chettiar and the facts obtaining in the present case are not similar but identical. Pachiappa Chettiar is by a Division Bench. On the authority of Pachiappa Chettiar, we hold that the product made by the appellant is "unmanufactured tobacco" because it does not involve any manufacturing activity. 15.The ratio laid down in Pachiappa Chettiar finds an echo in the Explanatory Notes of HSN with respect to unmanufactured tobacco (24.01). It reads as follows : "24.01 - Unmanufactured tobacco; tobacco refuse. 2401.10 - Tobacco, not stemmed/stripped 2401.20 - Tobacco, partly or wholly stemmed/stripped 2401.30 - Tobacco refuse This heading covers: (1) Unmanufactured tobacco in the form of whole plants or leaves in the natural state or as cured or fermented leaves, whole or stemmed/stripped, trimmed or untrimmed, broken or cut (including pieces cut to shape, but not tobacco ready for smoking). Tobacco leaves, blended, stemme....
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....t results in emergence of a new product having a distinct name, character and use and the term "manufacturer" shall be construed accordingly; Applying the above, one can notice that as a result of the process adopted by the assessee, no new product having a distinct name, character and use has emerged. The product continues to be raw tobacco. It was capable of being chewed in the first instance and is capable of the very same use even post the process adopted by the assessee. Hence, one has to hold that there is no manufacturing activity involved. 18.Another decision that is squarely applicable to the case on hand is Crane Betel Nut Powder Works v. CCE, Thiruppathi (2007) 4 SCC 155. It was held therein as follows : "30....the issue involved in this appeal boils down to the question as to whether by crushing betel nuts and processing them with spices and oils, a new product could be said to have come into being which attracted duty separately under the Schedule to the Tariff Act. 31. In our view, the process of manufacture employed by the appellant Company did not change the nature of the end product, which in the words of the Tribunal, was that in the end pr....