2017 (3) TMI 647 - AT - Central Excise

SSI exemption - manufacture of branded manufactured tobacco falling under Chapter Heading 24039990 and Roasted Cut Supari falling under Chapter Heading 21069030 of the First Schedule to the CETA 1985 - whether the products are correctly classified and whether these are eligible for exemption under N/N. 8/2003-CE dated 01.03.2003 - Held that - the cut roasted supari is correctly and legally classifiable under Tariff Item 08029012 of the CETA as betel nuts split, attracting NIL tariff rate of duty. It may be mentioned that the process of roasting and cutting of supari undertaken by them does not amount to manufacture since such process has not been defined as amounting to manufacture in the said Chapter Note 6 of Chapter 21 of the CETA. It is evident that after cutting and roasting, betel nut remains a betel nut and no change occurs in the end product. Therefore, their cut roasted supari is correctly classifiable under Tariff Item No. 0802 90 12 of the CETA which attracts the NIL tariff rate of duty - tobacco product can be classified under Chapter heading 24039990 only when it contains betel nut and tobacco and any one or more of lime and kattha (catechu) whether or not contained any other ingredients. In the instant case, seized manufactured tobacco contains neither lime nor kattha, therefore, it cannot be classified under Chapter heading 24039990. At the maximum, it can be classified under the Chapter heading no. 24039910 as Chewing Tobacco which attracts NIL duty. The N/N. 8/2003-CE dated 01.03.2003 provides exemption to the chewing tobacco, chewing tobacco preparations and tobacco extract and essences falling under Heading 2403, other than those bearing a brand name - the seized manufactured tobacco is unbranded goods and, therefore, entitled for the SSI exemption - appeal dismissed - decided against Department.

Summary

Issues: Classification of goods under Central Excise Tariff Act, 1985; Confiscation of seized goods; SSI exemption eligibility.

Classification of goods under Central Excise Tariff Act, 1985:
The judgment revolves around the classification of goods under the Central Excise Tariff Act, 1985. The case involved the manufacturing of branded manufactured tobacco and roasted cut supari. The Tribunal analyzed the process undertaken by the assessee and concluded that the cut roasted supari is correctly classifiable under Tariff Item 0802 90 12, attracting a NIL tariff rate of duty. The Tribunal emphasized that the process of roasting and cutting did not amount to manufacture, as defined in Chapter Note 6 of Chapter 21 of the CETA. It was established that the end product remained unchanged, and therefore, the classification under the mentioned Tariff Item was deemed appropriate.

Confiscation of seized goods:
The Tribunal examined the brand names decoded by the Department and clarified that these marks were not actual brand names but symbols used for mixing ratios. It was highlighted that the confiscated goods were correctly classified under Tariff Item 08029012, attracting a NIL rate of duty. The Tribunal further ruled that the confiscation of unbranded chewing tobacco was not sustainable under the law, especially considering the SSI exemption available to the assessee. The judgment emphasized that the seized goods did not indicate any connection with branded products in the course of trade, leading to the dismissal of the appeal filed by the Department.

SSI exemption eligibility:
The Tribunal considered the turnover of the assessee for the relevant financial years and noted that it did not exceed the threshold for SSI exemption. Based on this assessment, the Tribunal concluded that the seized manufactured tobacco qualified as unbranded goods and was entitled to the SSI exemption under Notification No. 8/2003-CE. The judgment upheld the Commissioner's order, stating that there was no reason to interfere with the decision, ultimately dismissing the appeal filed by the Department.

In conclusion, the judgment extensively analyzed the classification of goods under the Central Excise Tariff Act, 1985, the legality of confiscating seized goods, and the eligibility of the assessee for SSI exemption based on turnover. The detailed examination of the facts and legal provisions led to the dismissal of the Department's appeal, affirming the Commissioner's decision.