1992 (7) TMI 157 - AT - Central Excise

Summary

Issues:
1. Demand of duty on chewing tobacco cleared without payment.
2. Imposition of personal penalty on the appellants.
3. Classification of unbranded chewing tobacco under Central Excise Tariff.
4. Interpretation of Notification No. 34/79-C.E.
5. Process of manufacture for chewing tobacco.
6. Applicability of Tariff Item 411(5).
7. Comparison with previous tribunal decisions.

Analysis:

1. The appeal challenged the order demanding duty of Rs. 23,821.38 on unbranded chewing tobacco cleared without payment during a specific period. The appellants, wholesale dealers in tobacco, were found to have manufactured and cleared unbranded chewing tobacco without accounting for it in the statutory record. The Additional Collector imposed a duty under Rule 9(2) of the Central Excise Rules, 1944, and a personal penalty under Rule 210. The appellants held a license for manufacturing branded chewing tobacco and were found ineligible for exemption under Notification No. 34/79-C.E.

2. The appellants failed to appear for the appeal hearing, citing financial constraints. They argued that unmanufactured Jarda Tobacco used for chewing purposes should be exempt from duty under Tariff Item 41(6) since 1-3-1979. They referenced a Trade Notice and previous tribunal decisions to support their case. The Departmental Representative contended that the process of beating whole leaf tobacco into broken leaf constituted manufacture, bringing the goods under Tariff Item 411(5).

3. The Tribunal considered the contentions of both parties. The Department classified the tobacco sold by the appellants as manufactured chewing tobacco under Tariff Item 411(5), making them ineligible for the exemption. However, the appellants argued that only processed chewing tobacco falls under this category, citing a previous tribunal decision. The Tribunal found merit in the appellants' argument, noting the lack of evidence of additional ingredients in the tobacco and the absence of processing as per the Trade Notice. The impugned order was set aside, and the appeal was allowed.