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TMI Blog2014 (9) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi from where they were being sold through their wholesale dealers. 2. The dispute in the present appeal relates to the correct classification of the product manufactured by them as 'zarda scented tobacco' and being cleared by them as 'chewing tobacco' under classification heading 2403 99 10. Inasmuch as the said heading was specified under the provisions of Section 34A of the Central Excise Act, vide notification No. 2/2006-Ce (NT) dated 1.3.06, the duty on the said product was being discharged by the appellants on the basis of maximum retail price. 3. Prior to introduction of the 8 digit tariff code in the year 2005, the said product of the appellant was being classified under tariff heading 2404.41 and duty was also being paid under section 4A based upon MRP. However, with the introduction of 8 digit tariff heading, the new tariff entry 2043 99 30 was created describing the goods as 'zarda scented tobacco'. The entry 2403 99 10 referred to the 'chewing tobacco' and the 'preparations containing chewing tobacco'. According to the Revenue, the appellants product fall under new entry 2403 99 30 as zarda scented tobacco and was required to discharge duty liability in terms of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed in terms of section 4 and not under Section 4A. As such, demand of duty stand raised and confirmed against the appellant for the above period. 7. The above stand of the Revenue that during the period from, 1.3.06 to 10.7.06, the tariff item 2403 99 30 was not a specified item under section 4A would be relevant only if the appellants product was fall under said tariff heading. As such, the first issue required to be examined is as to whether the said tariff heading covers the appellants product or not. 8. The manufacturing process stand given by the appellants, and reproduced in the impugned order. The same is as under: Raw tobacco received from the market is sieved and mixed with 'Additive Mixture' and Glyceerin. The Addittive Mixture is of a great significance, which is manufactured by mixing perfumery compounds, received from the Noticee's Delhi unit, to form perfumery mix, as per their formula. To this perfumery mix they further add sada-kiwam, spices and aromatic chemicals, in a mixer to form 'in-house kiwam'. To this in-house kiwam they further add some perfumeries, spices, etc. based on the additive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to establish that the product has traveled from 'chewing tobacco' falling under Chapter 2403 99 10 to 'zarda scented tobacco' falling under heading 2403 99 30, on account of addition of any material which would make the product as scented tobacco. 12. Apart from the above, we also find that the appellants product was being classified as 'chewing tobacco' in the earlier tariff heading and even after the introduction of 8 digit classification, the same continued to be classified by their jurisdictional Central Excise authorities as 'Chewing Tobacco' falling under heading 2403 9910. The expression 'chewing tobacco' or 'zarda scented tobacco' are not defined anywhere in the texting statute and as such, and in the absence of same, the product has to be classified based upon the description of the product given by the manufacturer on the outer cover of the pouch as also on the basis of common parlance and established practice. Admittedly, the appellants product is classifiable as 'chewing tobacco' right from the beginning and Revenue was admitting said classification when the product has discharged duty under section 4A of the Central Excise Act, on the basis of MRP. Even after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that earlier decisions on the issue inter parties is a cogent factor in the determination of the same issue and there is no justification for changing the classification without the change in nature or the change in use of the product. Merely because there is some difference in tariff entry, the product will not change its character. 14. When we apply the above principle laid down by the Hon'ble Supreme Court to the facts of the present case, we note that there is admittedly no change in the manufacturing process of the product or in common marketing description of the product. The goods were being marketed earlier as 'flavoured chewing tobacco' and even after the introduction of new tariff, they continue to be named as 'flavoured chewing tobacco'. Hence, they have to be held as flavoured 'chewing tobacco'. Inasmuch as there is specific entry in the tariff of chewing tobacco and by applying the Rules of interpretation, the entry relatable to chewing tobacco is the proper and correct entry for the correct classification of the product. 15. At this stage, we also take note of Tribunal's decision in the case of Urmin Products P. Ltd. vs. CCE, Ahmedabad [2010 (256) ELT 597 (Tri-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of the employees, it has been stated that Zarda Scent was added. Under these circumstances, in view of the above discussion, neither side has been able to show whether the product is Chewing Tobacco or Zarda Scented Tobacco clearly. Both sides have some points in their favour and some against them. Under these circumstances, in view of the fact that the label calls the product as Flavoured Chewing Tobacco, no Zarda Scent has been used and the product has not been sold as Zarda Scented Tobacco by the appellant, we consider that the claim of the appellant that the product is Flavoured Chewing Tobacco has to be accepted. Thus, on merit the appellants succeed. Therefore, the demand for differential duty fails and naturally the penalties imposed under Section 11AC of Central Excise Act or rules of Central Excise Rules, 2002 also have to be set aside. 16. In view of our foregoing discussions and in view of the Tribunals, decision in the case of Urmin's products involving the same dispute of the identical product, we hold that appellants product is properly classified under 2403 99 10 as 'chewing tobacco' only and as such, liable to Central Excise duty under Section 4A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n undoubtedly falls in generic category of chewing tobacco. There is no dispute about this aspect. Prior to 28.2.2005, there was no dispute that the product in question was classified under tariff heading No. 2404.41. 4.2 As regards its assessment, it was being done in terms of Section 4A of the Central Excise Act, 1944. While normally goods which are liable to advalorem duty are assessed under Section 4 of the Central Excise Act. There is, however, an exception provided in terms of Section 4A of the Central Excise Act. In terms of Section 4A(1), the Central Government may specify the goods in respect of which assessment will be done not in terms of Section 4, but in terms of Section 4A. Section 4A provides for determination of assessable value based on retail sale price (RSP), which is required to be printed o the packaged commodities in terms of the provisions of Standard of Weight and Measure Act, 1976 or the rules made thereunder or any other law. In terms of notification No. 13/2002-CE(NT), all goods covered by subheading No. 2404.41 were notified to be assessable under Section 4A of the Central Excise Act, 1944. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1.3.2006, the notification specifying the goods to be assessed under Section 4A was superseded so as to specify the goods under 8 digit tariff items. The notification specifying he goods to be assessed under Section 4A were issued on 01.3.2006 by superseding the earlier notification No. 13/2002-CE(NT), so as to incorporate the new 8 digit tariff items. This notification No. 2/2006-CE(NT) dated 1.3.2006 interalia, specified only the tariff items 24039910 and 24039920. The tariff item 24039930 was not notified. What it meant that w.e.f. 1.3.2006, Zarda scented tobacco falling under heading 24039930 was required to be assessed under Section 4 and not under Section 4A, as it was being done earlier. Subsequently, on a representation from manufacturers, the tariff item 24039930 was also notified vide amending notification No. 16/2006-CE(NT) dated 11.7.2006. Therefore, it is a matter of record that during the period 1.3.2006 to 10.7.2006,goods falling under tariff item 24039930 had to assessed in terms of Section 4 and not under Section 4A. During the above period in question, the noticee, on their product, namely, Zarda scented tobacco, paid excise duty in terms of Section 4 of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that during the period 1.3.2006 to 10.7.2006, 'Zarda Scented tobacco' had to be assessed in terms of Section 4 only. But in view of notification number 16/2006-CE(NT), the same was to be covered under the provisions of Section 4A w.e.f. 11.7.2006 only. 28. I have gone through the adjudication order passed by the Commissioner and agree with the findings as referred above. Para 4.8 of the order is very relevant which is extracted below:- The noticee has referred to a large number (in fact a very large number) of judicial decisions most of which do not appear to be relevant. Anyway I will deal with the thrust of all these decisions as I move on. The noticee has laid great stress in pointing out that the product manufactured by them is flavoured chewing tobacco and not scented. They concede that the chewing tobacco in question contains added flavour. From this, they vehemently oppose the stand of the department equating flavoured tobacco with scented tobacco. But there is no allegation in the show cause notice that scent is equivalent to flavour. The show cause notice does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction: 'Zarda scented tobacco' has to be classified as 'Zarda scented tobacco' only because there is a specific entry in the tariff. 'Chewing tobacco' is genus while 'scented' product constitutes its species. 32. I do not agree with the findings of learned Member (J) on the issue of Gopal Zarda Chewing Tobacco being flavoured and not scented chewing Tobacco. Discussion and reference to the dictionary does not help to resolve the controversy. It has to be seen with reference to actual contents, trade parlances and statements of concerned persons about nature of scent/flavour in the chewing tobbaco At the relevant time when eight digit tariff code came into operation, a separate classification under heading 2403 99 30 of Zarda Scented Tobacco was brought in the tariff. While going through the process of manufacture as indicated in learned Member (J)s draft order, it clearly comes out that the product was manufactured with addition of mixture of perfumery compounds making as per their formula. It is well known in the public, trade as well as admitted by the appellants that manufactured chewing tobacco contains perfumery compounds in addition to sada-kimam species and aromatic chem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the products manufactured by them contained both scent as well as flavour. 36. From the above discussion, it clearly comes out that Gopal Zarda which is claimed as only flavoured, is actually flavoured and scented. 37. Now there are only three tariff items for chewing tobacco namely, 24039910, 24039920 and 24039930 and it is general law of interpretation that a specific entry will override the general entry. By reference to Rule 3 of interpretation rules, it is clearly observed that heading 24039930 is most specific entry and chewing tobacco containing scent/flavor manufactured by the appellant would be correctly classifiable under heading 24039930. I agree with the interpretation taken by the adjudicating authority. Difference emerges with the conclusion drawn by learned Member (J) in her draft order. 38. From the above it is concluded that Gopal Zarda Flavoured/Scented Tobacco will be classifiable under heading 24039930 for the period 01.3.2006 to 10.7.2006 and will be rightly assessed under provisions of Section 4 during the relevant period. Of course, it will be assessable under Section 4A from 11.7.2006 when specific notification no. 16/2006 (N.T) came into operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period in dispute i.e. 1.3.2006 to 10.7.2006 the appellants are liable to pay duty as per the provisions of Section 4 of the Central Excise Act, 1944 and not under Section 4A on MRP basis. 43. The contention of the appellant is that the appellants are manufacturing flavoured chewing tobacco which is sold as Gopal Zarda. Prior to 28.2.2005 the products chewing tobacco and preparation containing tobacco are classifiable under Tariff Heading 2404.41 of the Tariff and the appellants were clearing the same under this Tariff Heading and paying duty accordingly. With effect from 28.2.2008 the Central Excise Tariff Act migrated from six digit to eight digit classification and a new Entry was added related to zarda scented tobacco. On 1.3.2006 Notification No.2/2006-CE (NT) was issued whereby chewing tobacco and preparation containing chewing tobacco were notified as items which are to be assessed under Section 4A of the Central Excise Act, 1944 on MRP basis. During this period the appellant continued to be classified the product under Heading 24039910 as chewing tobacco and paying duty under Notification No. 2/2006-CE(NT) dated 1.3.2006. Subsequently Notification No. 16/2006-CE(NT) d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of the Notification. The pouches of the product produced by the appellant show that the product is described as under: 'GOPAL 100 ZARDA Deluxe flavoured chewing tobacco'. The instructions on the pouches are that the product is to be chewed and not to swallow but to spit. 48. In the Tariff the expression chewing tobacco and zarda scented tobacco are no defined as the product has to be classified based upon the description of the product given by the manufacturer on the pouch as well as on the basis of common parlance and established practice. In the present case, as the product in question as per the description of the product is flavour chewing tobacco and it is bought and sold in the market as chewing tobacco. Further the appellant from the beginning classifying the same as chewing tobacco and after the period in dispute also classified the same as chewing tobacco. Hence I find merit in the contention of the appellant that the product in question is chewing tobacco and classifiable under Heading 24039910 of the Tariff. 49. Further the Notification No. 2/2006-CE (NT) dated 1.3.2006 is further amended by Notification No. 16/2006-CE(NT) dated 11.7.2006 whereby ..... X X X X Extracts X X X X X X X X Extracts X X X X
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