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TMI Blog2013 (8) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... for the manufacture of the said sachets would not be taken into consideration for determining the annual capacity of production and collection of duty - Section 3 A covers only pouches packed with the aid of packing machine and not the pouches that were packed manually - Inasmuch as the plastic pouches were pre-sealed and zipped from one side and the sachets were put in manually and the pouch was sealed with the help of hot iron/band sealer. The filter khaini, pillows/sachets packed with the aid of packing machine do not bear any brand name, MRP, warnings as to health hazards and manufacturer's particulars, as required under the capacity Rules, it cannot be held that the same were notified goods in terms of the compounded levy rules - The same were more or less like the Tea bags, which were without any brand, name or carrying any other requisite information and which were ultimately packed in the final containers carrying various requisite information. It was only the final container, which can be held to be as the final product -The Tea bags cannot be held to be the product which was marketable in that condition inasmuch as not even the manufacturer's name was described - ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larification given by the Assistant Commissioner of Central Excise Kundli Division (Distt-Sonipat) that tobacco pillow (Sachet) could not be considered as notified goods under the compounded levy scheme. The party thus requested the Deputy Commissioner, Central Excise Division, Sangrur to allow the installation of pillow pouching machines in their factory and confirming the views that the said small pouches were not notified goods under the compounded levy scheme. They also stated that the small pouches would be packed in a big pouch manually and duty would be paid as leviable under Section 3 4 of the Central Excise Act, 1944 (hereinafter referred to as the "Act"). 4. In their letter dated 07.04.2010 the party also made the following submissions: (i) That they are manufacturer of Khaini and Filter Khaini at Maur Mandi; (ii) That prior to the introduction of compounded levy scheme w.e.f. 08.03.2010, they were making filter Khaini which consisted of 2 steps, 1st step to pack tobacco in filter paper to make filter pillows which are just like tea bags and do not carry any brand name or MRP and also in no way marketable as filter paper is porous one and needs an outer cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re found installed and working with the aid of power. Paper Rolls are put on the said machine; tobacco is put into the hoppers fitted on the machines. The machines form the filter pouches or sachets, fill these with chewing tobacco (filter Khaini) and seal them. The sachets at this stage are without any marks or numbers and do not contain any details of manufacturer, product, health hazards or MRP etc. Then 10 such sachets are manually filled by the labour into Pouches which contain the requisite details of the product, brand, name of the manufacturer, health warning, MRP etc. The Pouches purchased from the market are pre-zipped and pre-sealed from three side (upper side also pre-zipped). Then the pouches containing 10 filter sachets are sealed by the labour with the aid of Continuous Band Sealing Machines. The process was verified and samples of the filter Khaini sachet, sealed pouches containing filter sachets and empty pouches were drawn under Panchnama dated 16.06.2010 (Annexure-5); (ii) Shri Sandeep Kumar son of Shri Ramesh Kumar, authorized signatory of the party in his statement dated 16.06.2010 (Annexure-6) recorded on the spot admitted the process of manufacture as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturers for the safety of the consumers as it avoids a direct contact of tobacco leaves with the mouth, thereby reducing the hazardous effects, thereof. True purpose of Explanation 5 of the Notification No.16/2010 inserted vide notification No.19/2010 can be understood in proper perspective in the following way. The Notification reads as: - filter khaini means chewing tobacco which is packed in sachets of filter paper of fabric - before - being packed in pouches with the aid of Packing Machine The first part of Explanation 5 explains what is 'filter khaini' that is why the expression used is filter khaini means.....................Filter khaini is nothing but chewing tobacco packed in filter paper/fabric. It is the second part of the explanation which reveals the intent of the scheme. It is the activity of packing of sachets into pouches with the aid of packing machines which will bring the product into purview of compounded levy scheme. Since earlier notifications i.e. Notification No.10/2010, 11/2010 16/2010 did not mention filter khaini, there arose the need for addition of explanation 5 to notification No.16/2010. Filte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper and their further packing into pouches should be done with the aid of packing machine. But, it is a admitted fact that the activity of packing of sachets/pillow in pouches is done manually by the respondent. Therefore, it does not fall in the purview of compounded levy scheme as per Section 3A of the Central Excise Act by virtue of Explanation 5 of Notification No.19/2010, read with C.B.E.C. letter dated 5.3.2010. Appellant has referred to Explanation 5 of Notification No.16/2010 inserted vide Notification No.19/2010 as well as Board's letter dated 5.3.2010 in their appeal but the inference sought to be drawn from them are erroneous and not borne out of the wording of the Explanation and clarification as above." 13. He has also referred to the Board's letter F. NO.341/24/2010- TRU dated 5.3.2010 which reads as under:- "I am directed to say that certain issues have been raised by field formations as well as trade regarding implementation of compounded levy scheme for chewing tobacco and branded unmanufactured tobacco with effect from 8th March, 2010. These issues have been examined and the following instructions are being issued in terms of Rule 19 of Chewing tobacco and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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