1985 (10) TMI 171 - AT - Central Excise

Summary

Issues Involved: Determination of duty liability on tobacco packets labeled as "Jarda" or "Bhugi" under Entry 4-II(5) of the Central Excise Tariff.

Summary:
The appeals before the Appellate Tribunal CEGAT, New Delhi involved a common dispute regarding the duty liability on tobacco packets labeled as "Jarda" or "Bhugi". The respondents purchased raw tobacco flakes, repacked them into smaller packets, and sold them under their brand names. The key issue was whether these packets fell under the category of "Chewing tobacco" as per the Central Excise Tariff.

The department argued that the labeling and repacking operations constituted the "preparation of chewing tobacco" as per the statutory definition of "manufacture." They contended that the product was intended for chewing, thus falling under the specific entry for chewing tobacco. On the other hand, the respondents claimed that their unprocessed tobacco did not qualify as manufactured chewing tobacco, which typically includes additional ingredients and sells at a higher price.

Upon careful consideration, the Tribunal observed that the respondents did not process the tobacco flakes themselves but merely repackaged them. They noted that if the flakes were considered unmanufactured tobacco when purchased, repacking alone could not convert them into manufactured tobacco. The Tribunal also highlighted that the Central Excise Tariff primarily taxed the manufactured variety of chewing tobacco, supporting the respondents' argument.

In conclusion, the Tribunal agreed with the Collector (Appeals) that the product in question was not taxable under the Central Excise Tariff Entry 4-II(5). Therefore, they upheld the impugned orders and dismissed all the appeals.