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TMI Blog2006 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue and held that the impugned goods are entitled for the SSI exemption under Notification No. 8/2001-C.E., dated 1-3-2001. The Revenue did not accept the Order-in-Original. Therefore the appeals were filed before the Commissioner (Appeals). The Commissioner (Appeals) in both the impugned orders upheld the decision of the Original authority. Therefore, the Revenue is aggrieved over the impugned orders and have filed these appeals. 3.The gist of the 'Grounds of the Appeals' is as follows :- The Orders-in-Appeal No. 07/2004 (G)(D)CE, dated 27-1-2004 and 24/2004 (G)(D)CE, dated 30-4-2004 are not proper and legal on the following grounds :- (i) In terms of the clause (iv) of the Notification No. 8/2001-C.E., unbranded chewing tobacco and preparations containing chewing tobacco falling under Heading No. 24.04 are eligible for granting benefits under exemption Notification No. 8/2001-C.E. In this connection, it is relevant to examine the Tariff classification of above products. The description of the relevant Tariff Sub heading reads as under : "Chewing Tobacco and preparations containing chewing tobacco; Pan Masala containing Tobacco" The existence of the 'semi colon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner (Appeals) that the 'Pan Masala containing Tobacco' is rightly classifiable as 'Preparations containing chewing Tobacco'. As explained above, both the goods differently described in the one dash (-) Tariff description itself and further divided into two separate two dash (--) Tariff sub-headings as 2404.41 and 2404.49. (iv) Further, the conclusion that the word "unbranded" used in the clause (iv) of the said Notification is applicable only to the chewing tobacco and not to the preparations containing Chewing Tobacco is not tenable for the following reasons : (a) The word "Unbranded" is an adjective. It qualifies both the nouns that were added by a conjunction "and". There is common usage of singly adjective for qualifying two nouns joined by "and", to illustrate, the phrases Little boys and girls, poor men and women, beautiful roses and lilies and dear ladies and gentlemen, etc. wherein both nouns are covered by the adjective mentioned before the first known. Hence, a simple reading of the above sentence clearly indicates that both the chewing tobacco and preparations of chewing tobacco are unbranded. (b) Further, the conclusion of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asala" during the relevant period would be classified in Chapter 21 in view of the specific entry and therefore it gets excluded from the General Sub-Heading 2404.40 wherein the entry is "Chewing Tobacco and Preparations containing Chewing Tobacco". He maintains in view of the findings of the High Court of Andhra Pradesh that the "Pan Masala" in question should not be considered as coming within the purview of "Chewing Tobacco and its Preparations". In that view of the things, it would not be entitled for the benefit of the exemption Notification as there is no specific entry of "Pan Masala" in the exemption Notification. 5.The learned Advocates urged the following points : - (i) A careful reading of the Notification No. 8/2001-C.E., dated 1-3-2001 would show that the exemption is available to "Chewing Tobacco and Preparations containing Chewing Tobacco" falling under Chapter Heading No. 24.04 of Central Excise Tariff Act, 1985. It is not restricted to the item falling under 2404.41 or 2404.49. In fact, it applies to all the goods falling under Heading 24.04. (ii) The Department contends that only 'Unbranded Chewing Tobacco' falling under Heading 2404.41 is entitled f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning chewing tobacco and tobacco extracts and essences', falling under the Heading 24.04) were not entitled to SSI exemption. In 2003, the same position continued. Thus it can be seen in 2002, the words "tobacco extracts and essences" were added. Further the word 'and' was removed and in this place a comma was introduced, between the words 'unbranded chewing tobacco'/'preparations containing chewing tobacco'. The ambiguity which was there, if any has been removed by introducing a 'comma' which in terms of the settled law is 'disjunctive'. The legislative intent as well as the historical evolution of the Notification issued from time to time clearly shows that the intention of the Government was always to extend the benefit of SSI exemption to unbranded chewing tobacco and to preparations containing chewing tobacco, (even if branded and falling under Heading 24.04). The law is supposed to be evolving and dynamic and not static as held by the Apex Court in a number of decisions. (v) If it is the intention of the Government to extend the benefit of Notification, the word 'and' can be interpreted as 'or'. In the case of ITC Ltd. V CC, Madras [1997 (89) E.L.T. 90 (Tri.)] it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te entry for 'Pan Masala' in the Tariff. (2) Preparations containing chewing tobacco are distinguishable from Pan Masala. (3) The exemption is only for preparations containing chewing tobacco and not for pan masala. (4) Assuming that pan masala is covered under preparations containing chewing tobacco even then it would not be entitled for the exemption because the word 'unbranded' appearing before chewing tobacco qualifies even the preparations containing chewing tobacco. In the present case, the product is branded. Only unbranded products are entitled for the exemption. Hence the pan masala under brand name manufactured by the Respondent is not entitled for the exemption Notification. The relevant portion of the Tariff entries are reproduced below :- Heading No Sub-head-ing No. Description of goods Rate of duty Basic Additional 2404 xxx Other manufactured tobacco and manufactured tobacco substitutes; homogenised or 'reconstituted' tobacco; tobacco extracts and essences xxx 2404.39 - Other Rs. 11.50 per thousand Rs. 3.50 per thousand - Chew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Pesticides, Weedicides and Fungicides" The assessee claimed the benefit of the exemption Notification under the above entry. The Assistant Commissioner rejected the assessee's contention. He held that the Disinfectant fluids manufactured by the appellants did not have the property of killing any insect or pest and therefore would not be entitled for the benefit of exemption Notification. The appellate authority, on the other hand, held that the impugned products were nothing but fungicides. In the Departmental appeal, two members of the Tribunal out of the three rejected the Collector's decision. The Tribunal found that the impugned goods were being referred to and marketed as disinfectants and that the preparations in question were capable of killing of various bacteria and fungi, but it refused to extend the benefit of exemption Notification as the Notification being confined to specified categories, the appellant was not entitled to claim the exemption by extension of the principle that since the goods produced by the appellant satisfied the broad test of killing insects, it should be held to be pesticides or fungicides. According to the Tribunal, the exemption notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g covered in either of the expression, then it is entitled to exemption. The broad and basic characteristic for exemption under the notification is that the goods must have the property of killing germs and bacteria insects or pest and it should be understood in the common parlance as well as being covered in one of the broad categories mentioned in the notification. Since the goods produced by the appellant are capable of killing bacteria and fungi which too, is covered in the expressions 'pesticide' and 'fungicide' there appears no reason to exclude the goods from the aforesaid notification." Hence if we keep in mind the guidelines enunciated in the above mentioned Supreme Court decision, we should first ask the question whether the impugned products can be considered as preparations containing chewing tobacco. If the answer is 'yes', then the benefit of exemption notification cannot be denied. In the present case, going by the definition of 'pan masala' given in Note 6 of Chapter 24, as extracted above, the impugned product is indeed a preparation containing chewing tobacco. Moreover, there is no doubt that it falls under heading No. 24.04. On the question of entitlement of br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure as he wants to accommodate Pan Masala containing tobacco also as a product entitled for SSI exemption....." The learned Departmental Representative's reliance on the judgment of the Apex Court rendered in the case of Kothari Products Ltd. (supra) will not help the case of the Revenue as it deals purely with the classification issue and not the entitlement of the benefit of a Notification. In the result, the Appeal No. E/533/2004 is dismissed. 7.It has been stated in the Grounds of Appeal that the SSI Notification No. 8/2001 exempts only Basic and Special Excise duty and there is no exemption for Additional Excise Duty (AED) and National Calamity Contingent Duty (NCCD). It has been pointed out the Commissioner has erred in dropping the entire demand. We find merit in the contention of the Revenue. Even though the impugned product is entitled for SSI exemption, the duties which are not covered by the said exemption are to be paid. Therefore, we allow the Appeal No. E/633/2004 on this ground only. In other words, while holding that the Respondents are entitled for SSI exemption under Notification No. 8/2001-C.E. for the product 'Pan Masala', we hold that the Additional Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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