2019 (1) TMI 820 - AT - Central Excise

Valuation - manufacture of Branded Chewing Tobacco - classification of the goods - enhancement of rate of tax - change of duty structure - Rule 6 of Chewing Tobacco Rules - case of Revenue is that the appellant is not manufacturing JST and their product is only BCT - Held that - Admittedly, in this case, no sample was drawn to find out the composition of the product, in that circumstance, the classification determined by both the sides are on assumptions and presumptions. Although the appellant filed declaration on 2.3.2015 and changed their classification from BCT to JST. The said declaration was rejected by the adjudicating on 4.3.2015, which has been accepted by the appellant and started paying duty on BCT of their product from 1.3.2015. In that circumstance, the benefit of doubt goes in favor of the appellant. The order of the adjudicating authority was reviewed only after introduction of Notification No. 25/15-CE dt.30.4.2015 wherein the duty on JST was enhanced and prior to that period, the duty paid by the appellant on BCT was accepted by the Revenue has not objected the classification during the period 1.3.2015 to 30.4.2015 as BCT. Further, no declaration was filed by the appellant, therefore, the change of classification from 30.4.2015 is not acceptable, if the said notification would not have come into force, in that circumstance, the order of the adjudicating authority would not have reviewed. The classification of the product is as BCT under heading 24039910 of CETA, therefore, the duty against the appellant is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of the appellant's product as Jarda Scented Tobacco (JST) or Branded Chewing Tobacco (BCT) for duty payment purposes.

Analysis:
The appellant, registered with the Central Excise department, manufactured Pan Masala, BCT, and JST. Initially, duty was paid under Notification No.16/10-CE, but subsequent amendments increased duty rates. The appellant filed a declaration on 2.3.2015 classifying their product as JST. The Assistant Commissioner, however, determined the product as BCT, which the appellant accepted and paid duty accordingly. A later amendment increased JST duty rates, leading to a dispute. The Commissioner (Appeals) held the product was JST, leading to a demand for duty and penalties.

The appellant argued that the declaration was made under the reduced JST duty rate, but they were manufacturing BCT. They contended that without samples or test reports, the product's true classification couldn't be determined. They also cited a previous case where the Commissioner (Appeals) held that the classification couldn't be changed from BCT to JST based on a declaration.

The Revenue argued that the product was JST, as declared by the appellant, and its consumption pattern aligned with common JST practices. They warned that selling Jarda as chewing tobacco could violate consumer rights.

The Tribunal found that no samples were drawn to determine the product's composition, leading to classification based on assumptions. The declaration made by the appellant was rejected by the adjudicating authority, and the appellant accepted the BCT classification. Without test reports, the Tribunal gave the benefit of doubt to the appellant, upholding the BCT classification under heading 24039910 of CETA. Consequently, the Commissioner (Appeals) order was set aside, and the appeals by the appellant were allowed.

The Tribunal's decision on the product's classification as BCT under heading 24039910 of CETA rendered the duty demand against the appellant unsustainable. Therefore, the duty demand was set aside, and both appeals by the appellant were allowed, providing consequential relief.