2006 (6) TMI 229 - AT - Central Excise

Summary

Issues:
Classification of 'Tipper - Gold Tipped Cigarettes' under heading 2403.11 as "Other than Filter Cigarettes" for lower duty rate vs. classification under 2403.13 as filter cigarettes for a higher duty rate.

Analysis:
The dispute in this case revolves around the classification of 'Tipper - Gold Tipped Cigarettes' for duty liability purposes. The applicants initially classified the cigarettes under heading 2403.11 as "Other than Filter Cigarettes," resulting in a lower duty rate. However, the impugned order determined that the cigarettes should be classified under 2403.13 as filter cigarettes, attracting a higher duty rate. The key contention of the applicant is that the cigarettes are unfiltered since no filtering material is used, supported by technical and commercial evidence presented during the hearing. The applicant highlighted that cigarette filters are typically made of non-toxic materials such as viscose staple, acetate tow, or crimped paper, emphasizing that tobacco itself is not commonly used as a filter material in cigarettes. Additionally, the applicant pointed out that other manufacturers of similar cigarettes had their products classified as non-filter cigarettes by the Revenue, further supporting their argument.

The learned SDR argued that the tobacco used at the non-smoking end of the cigarettes is a different type of tobacco that can filter the smoke from the burning end, suggesting that the cigarettes should be considered filter cigarettes. However, upon review, the Tribunal found that the Commissioner's classification was not supported by the evidence on record, including test reports from the Chemical Examiner and ISI. The Tribunal noted that in the trade, the cigarettes in question are not marketed or labeled as filter cigarettes, as typically done with filter cigarettes. Moreover, the use of exhausted tobacco as a filtering medium was deemed unusual, as polluting material is unlikely to serve as a filter medium. Consequently, the Tribunal concluded that prima facie, the Revenue did not have a strong case, and the Commissioner's finding appeared to be a personal opinion contrary to the evidence on record.

In light of the above analysis, the Tribunal waived the requirement for pre-deposit, allowed the Stay application, and stayed the recovery of duties until the appeal's final disposal. Furthermore, the Registry was directed to expedite the hearing of the case due to the continuing nature of the dispute, ensuring a prompt resolution of the classification issue regarding the 'Tipper - Gold Tipped Cigarettes.'