2010 (8) TMI 241 - AT - Central Excise

Pan masala containing tobacco - Chapter 21 was specifically covered by sub-heading 2106.00, while during relevant period, sub-heading 2404.40 covered chewing tobacco and preparations containing chewing tobacco Held that - chewing tobacco and Pan masala containing tobacco are in the same heading, chewing tobacco does not include and never included Pan masala containing tobacco and but for inclusion of Pan masala containing tobacco in Chapter 24 (sub-heading 2404.49) of Central Excise Tariff w.e.f. 1-3-01, it would have been covered by heading 2106.00 - appeals disposed off

Summary

Issues Involved:
1. Classification of "Pan masala containing Tobacco" (Gutka) under sub-heading 2106.00 vs. sub-heading 2404.40 for the period from November 2000 to 28th February 2001.
2. Applicability of the Supreme Court's judgment in Kothari Products Ltd. v. Government of Andhra Pradesh.
3. Determination of assessable value under Section 4A vs. Section 4(1) of the Central Excise Act.
4. Adjustment of Additional Excise Duty (AED) (GSI) paid under sub-heading 2404.40 if classification is revised to sub-heading 2106.00.

Issue-wise Detailed Analysis:

1. Classification of "Pan masala containing Tobacco" (Gutka):
The primary dispute was whether Gutka should be classified under sub-heading 2106.00 (Pan masala) or sub-heading 2404.40 (chewing tobacco and preparations containing chewing tobacco) for the period from November 2000 to 28th February 2001. The Tribunal concluded that during the period of dispute, "Pan masala containing tobacco" was correctly classifiable under sub-heading 2106.00. This conclusion was based on Chapter note 3 to Chapter 21, which defined "Pan masala" as any preparation containing betel nuts and any one or more of the following ingredients: lime, katha (catechu), and tobacco. The Tribunal noted that a specific sub-heading for "Pan masala containing tobacco" (2404.49) was introduced only w.e.f. 1-3-2001. Therefore, during the period of dispute, the product was more specifically covered by sub-heading 2106.00.

2. Applicability of the Supreme Court's Judgment in Kothari Products Ltd. v. Government of Andhra Pradesh:
The Supreme Court had remanded the matter to the Tribunal for de-novo consideration, observing that its judgment in Kothari Products Ltd. v. Government of Andhra Pradesh was not applicable to the facts of this case. The Supreme Court emphasized that the issue in Kothari Products arose under the AP General Sales Tax Act, whereas the present case concerned the interpretation of tariff entries under the Central Excise Act. The Tribunal, therefore, disregarded the applicability of the Kothari Products judgment in its analysis.

3. Determination of Assessable Value under Section 4A vs. Section 4(1):
The Tribunal addressed the contention that the assessable value should be determined under Section 4(1) rather than Section 4A. It was argued that the notification under Section 4A did not cover "Pan masala containing tobacco" during the disputed period. However, the Tribunal found that Notification No. 9/2000-C.E. (N.T.) dated 1-3-2000, issued under Section 4A, did cover "Pan masala in retail packs containing 10 gms. or more per pack" falling under sub-heading 2106.00, which included Pan masala containing tobacco by virtue of Chapter note 3 to Chapter 21. Therefore, the assessable value of Gutka was to be determined under Section 4A during the period of dispute.

4. Adjustment of AED (GSI) Paid under Sub-heading 2404.40 if Classification is Revised to Sub-heading 2106.00:
The Tribunal considered the plea that since the appellants had paid AED (GSI) under sub-heading 2404.40, this should be adjusted against the differential duty payable if the classification was revised to sub-heading 2106.00. The Tribunal agreed with this contention, noting that the differential duty recoverable must be determined after taking into account the AED (GSI) paid by the appellants. The jurisdictional Assistant/Deputy Commissioners were directed to adjust the AED (GSI) paid by the appellants when determining the quantum of differential duty.

Conclusion:
The Tribunal upheld the classification of "Pan masala containing tobacco" under sub-heading 2106.00 for the disputed period. The Tribunal also directed that the AED (GSI) paid by the appellants under sub-heading 2404.40 should be adjusted against the differential duty payable due to the change in classification. The appeals were disposed of accordingly.