1996 (3) TMI 250 - AT - Central Excise

Summary

Issues:
1. Classification of tobacco dust under the new Tariff effective from 28-2-1986.
2. Applicability of Notification No. 356/86, dated 24-6-1986 to tobacco dust arising at different stages of cigarette manufacturing.

Analysis:

Issue 1: Classification of tobacco dust under the new Tariff
The main issue in this appeal is the classification of tobacco dust under the new Tariff effective from 28-2-1986. The Revenue argues that tobacco dust is a manufactured product falling under Tariff Heading 2404.90 and should attract a duty rate of 12%. On the other hand, the Respondents contend that tobacco dust falls under Tariff sub-heading 2401.00 as "tobacco refuse" which carries a nil rate of duty. The Respondents rely on the HSN explanatory notes which describe "tobacco refuse" as waste resulting from tobacco manipulation or manufacture, including dust. They argue that tobacco dust arising in the cigarette manufacturing process should be considered as "tobacco refuse" and be exempt from duty.

Issue 2: Applicability of Notification No. 356/86
Another issue raised is the applicability of Notification No. 356/86, dated 24-6-1986, to tobacco dust arising at different stages of cigarette manufacturing. The Respondents argue that the notification should be given retrospective effect as there was no duty leviable on tobacco dust before the introduction of the new Tariff on 28-2-1986. They point out that the lower appellate authority has already granted retrospective exemption based on the Central Duties of Excise (Retrospective Exemption) Act, 1986. The Respondents contend that the notification should apply to all tobacco dust falling under the category of "tobacco refuse" under Tariff sub-heading 2401.00.

In the judgment, the Tribunal considered the arguments presented by both sides. It noted that a previous judgment did not provide a clear classification for tobacco dust under Tariff Heading 2404.90. However, upon reviewing the HSN explanatory notes provided by the Respondents, the Tribunal found that tobacco dust should be considered as "tobacco refuse" under Tariff sub-heading 2401.00, attracting a nil rate of duty. Additionally, the Tribunal held that Notification No. 356/86 should be given retrospective effect, in line with the lower appellate authority's decision and the Central Duties of Excise (Retrospective Exemption) Act, 1986. Consequently, the Tribunal dismissed the Appeal in favor of the Respondents based on the classification of tobacco dust as "tobacco refuse" and the retrospective application of the notification.