1996 (1) TMI 260 - AT - Central Excise

Summary

Issues Involved:
1. Condonation of Delay
2. Classification of Product
3. Provisional Assessment
4. Trade Parlance vs. Legal Definition
5. Limitation Period for Demand of Duty

Detailed Analysis:

1. Condonation of Delay
The Collector of Central Excise, Kanpur filed an application for condonation of delay in the matter of classification of products manufactured by the respondents. The Tribunal, upon careful consideration of the submissions made by the appellants, decided to condone the delay.

2. Classification of Product
The primary issue in these appeals is the classification of the product described as Jhakara Tobacco. The appellants claimed classification under Chapter Heading 2404.41 of the Central Excise and Tariff Act, 1985, while the Department sought to reclassify it under Chapter Heading 2106.11 as Pan Masala. The Assistant Collector initially ordered reclassification under Heading 2106.11, but the Collector (Appeals) set aside this order and classified the product under Heading 2404.41. The Department appealed against this decision.

The Tribunal examined the product's composition, which included supari, tobacco, lime, and menthol. The Department argued that according to Chapter Note 3 of Chapter 21, Pan Masala includes any preparation containing betel nuts and any one or more of other specified ingredients, including tobacco. The Tribunal found that the product met this definition and thus should be classified as Pan Masala under Heading 2106.11.

3. Provisional Assessment
The Assistant Collector had ordered that the assessment of the branded chewing tobacco would be made provisionally under Rule 9B of the Central Excise Rules, 1944. The appellants filed an appeal against this provisional assessment, which the Collector (Appeals) dismissed as infructuous. The Tribunal remanded these appeals for de novo adjudication, instructing the Assistant Collector to examine the facts and contents of the preparation in accordance with Chapter Note 3 of Chapter 21.

4. Trade Parlance vs. Legal Definition
The respondents argued that their product was known in trade parlance as chewing tobacco and should be classified under Chapter 24. However, the Tribunal held that the legal definition provided in Chapter Note 3 of Chapter 21 was clear and unambiguous. Therefore, the product should be classified as Pan Masala, regardless of its trade name.

5. Limitation Period for Demand of Duty
The Department raised a demand under Section 11A, limited to six months from the date of the show-cause notice. The Tribunal referred to the Apex Court's judgment in the case of TISCO v. Union of India, which held that in the absence of suppression or misstatement of facts, the demand could only extend to six months prior to the service of the notice. The Tribunal found no evidence of suppression or misstatement by the respondents and thus upheld the six-month limitation period.

Conclusion:
The Tribunal allowed the four appeals filed by the Commissioner of Central Excise, setting aside the impugned order and classifying the product as Pan Masala under Heading 2106.11. The three appeals filed by M/s. Gupta Tobacco and M/s. Durga Prasad Vidyasagar were allowed by remand for de novo adjudication. The seven appeals were disposed of accordingly.