2018 (9) TMI 124 - AT - Central Excise

Classification of goods - manufacture of Tipper brands Cigarettes - whether Tipper cigarettes manufactured by the respondents are filter cigarettes or not? - tests conducted by Chemical Examiner - presence of the subsequent report of the Chemical Examiner. Held that - As is seen from the report, the same is based upon the definition of the filter and filtration as is available from the technical books wherein natural fibers have also been held to be the material used in the filtration. As per the said report the filling in filter rod of the products are covered by the term Natural Fibers . If that do so the cigarette have to be held as filter cigarette - It is a fact that the classification of tipper brand cigarette already stands held in favour of the assessee by the decision of the Tribunal in M/s International Tobacco Co. Ltd. Vs Commissioner of Central Excise, Ghaziabad 2007 (3) TMI 24 - CESTAT, NEW DELHI - The question remains as to whether the ratio of the said decision would be applicable in the present case where the revenue have procured more evidence and another report, which substantiate their stand. The Hon ble Supreme Court in the case of CCE, Calcutta Vs Alnoori Tobacco Products 2004 (7) TMI 91 - SUPREME COURT OF INDIA has observed that the precedent decisions, before applying, have to be shown to fit factual situation of the given case. Circumstantial flexibility, one additional or different fact may make world of difference between conclusions of two cases and disposal of cases by blindly placing reliance on a decision, is not proper. As such the presence of the subsequent report of the Chemical Examiner in the present case may make the entire difference having bearing on the finality of the matter. Inasmuch as, the Adjudicating Authority has neither referred to the said report, nor examined the same and has simplicitor followed the Hon ble Supreme Court s decision, the impugned order is required to be set aside and matter remanded with directions to consider the applicability of the subsequent report of the Chemical Examiner and to re-decide the issue accordingly. Appeal allowed by way of remand.

Issues Involved:
1. Classification of "Tipper" brand cigarettes as filter cigarettes.
2. Applicability of the Hon'ble Supreme Court's decision in the case of International Tobacco Co. Ltd.
3. Consideration of the Chemical Examiner's report.

Detailed Analysis:

1. Classification of "Tipper" Brand Cigarettes as Filter Cigarettes:
The central issue in this case is whether the "Tipper" brand cigarettes manufactured by the respondents are classified as filter cigarettes. The respondents argued that their "Tipper" brand cigarettes, which include "Tipper Plain Gold Tipped" and "Tipper Premium Gold Tipped," should be classified under Sub Headings 2402 20 10 and 2402 20 20 of the Central Excise Tariff as plain cigarettes. However, the revenue contended that these should be classified under heading 2402 20 30 as filter cigarettes, which attract a higher rate of duty. The manufacturing process involved joining a filter rod containing crushed tobacco stems with a smoking rod, which the revenue argued functioned similarly to acetate filter rods used in traditional filter cigarettes.

2. Applicability of the Hon'ble Supreme Court's Decision in the Case of International Tobacco Co. Ltd.:
The Commissioner of Central Excise, in the impugned order, relied on the Hon'ble Supreme Court’s decision in the case of Commissioner of Central Excise, Ghaziabad Vs M/s International Tobacco Co. Ltd., which had upheld the Tribunal’s decision that "Tipper" brand cigarettes were not filter cigarettes. The revenue, however, argued that the Commissioner failed to consider the subsequent Chemical Examiner’s report dated 08.05.2006, which was in favor of the revenue and established that the "Tipper" brand cigarettes should be classified as filter cigarettes. The revenue cited the Supreme Court’s decision in CCE, Calcutta Vs Alnoori Tobacco Products, emphasizing that each case depends on its own facts and that a single significant detail might alter the entire aspect.

3. Consideration of the Chemical Examiner's Report:
The Chemical Examiner’s report dated 08.05.2006, which was not considered by the Commissioner, stated that the "Tipper" brand cigarettes contained filter rods that did not answer tests for the presence of nicotine, indicating that they functioned as filters. This report contradicted the earlier report considered in the International Tobacco Co. Ltd. case, which did not classify the "Tipper" brand cigarettes as filter cigarettes based on the materials used for the filter rods. The revenue argued that the subsequent report should have been considered, as it provided new evidence supporting the classification of "Tipper" brand cigarettes as filter cigarettes.

Conclusion:
The Tribunal noted that the presence of the subsequent Chemical Examiner’s report could significantly impact the classification of the "Tipper" brand cigarettes. The Tribunal emphasized that the Adjudicating Authority must consider this new evidence and re-evaluate the issue accordingly. Therefore, the impugned order was set aside, and the matter was remanded with directions to consider the applicability of the subsequent Chemical Examiner’s report and re-decide the issue.

Separate Judgment:
Both members of the Tribunal, Archana Wadhwa (Judicial) and Raju (Technical), agreed on the final decision to remand the matter. Raju further observed that the earlier Chemical Examiner’s report in the International Tobacco Co. Ltd. case was incomplete and based on an improper appreciation of facts. He highlighted that the subsequent report addressed these deficiencies and provided a more comprehensive analysis, supporting the revenue’s contention that the "Tipper" brand cigarettes should be classified as filter cigarettes.

Final Decision:
The revenue's appeal was allowed by way of remand, with instructions for the Adjudicating Authority to consider the subsequent Chemical Examiner’s report and re-evaluate the classification of the "Tipper" brand cigarettes.

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