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TMI Blog2005 (9) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... y are understood to be a solution of flavouring materials in water or other solvents that are applied to leaf tobacco blends; in the present case application is of a solution of quimam (which is tobacco flavoured water) and other flavours including saffron water which admittedly serve no other purpose than to prepare a blend of unmanufactured tobacco for purposes of use in further manufacture of Gutkas/Pan Masala. The process indulged herein is found to be casing of Raw tobacco leaf relying upon material from internet submitted by the ld. Advocate. We would therefore uphold classification to be under 2401.10. We find that the classification of the disputed admittedly unbranded entity is under 2401.10 and we cannot uphold the classification thereof under 2404.40 as arrived at by the adjudicator and on finding that the tariff rate of duty under 2401.10 or and 2404.49 is NIL as also, we find no reasons to uphold the duty demands and the consequent penalties and liabilities arrived at by classifying the entity under 2404.40. When the entity is to be classified under 2401.10 at nil tarrif rate of duty the question of determining any duty demand on M/s. J.M. Enterprises and/or others by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999 the same has been reconstituted as Proprietary concern of Shri J.M. Joshi (HUF). (ii) M/s. J.M. Enterprises : Shri J.M. Joshi floated this unit as his sole Proprietary concern and operated at small level from Pune to manufacture scented tobacco till 1007-98 and thereafter suspended its activities. The unit did not register itself under C.Ex. Act during its operation period at Pune. (iii) M/s. J.M. Perfumery, Silvassa : Shri J.M. Joshi floated this firm as his sole proprietary concern in the year 1994-95. It has its factory at Silvassa to manufacture perfumes/perfume blends, mainly required by Pan Masala/Gutka manufactures. The unit is registered under C.Ex. Act and is paying duty at normal rate as applicable for goods falling under SCH No. 3202.10. (iv) M/s. J.M. Essential Oil Company : Shri J.M. Joshi floated this unit as his sole Proprietary concern having its factory at Silvassa. The unit is engaged in the manufacture of natural herbal extracted products by way of hydro distillation, without the aid of power. (v) M/s. J.M. Laminates and Packaging Silvassa : This is also sole proprietary concern of Shri J.M. Joshi having factory at Silvassa. The unit is primarily engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; SCN etc. taken as in E/2703/02 of M/s. Yogesh for ease since the process; product impugned is same in all respects) it is found - (a) the notice issued relies upon the values of the product in the case of M/s. Dhariwal Tobacco (herein after referred to as DTPL) and the impugned order also finds the entity under classification dispute to be analogues to the product in the DTPL case. Yet the ld. Adjudicator does not approve the product classification and excisability, as arrived at in the DTPL case by the Commissioner, subsequently upheld by the Tribunal in the case reported as Dariwal Tobacco Products Ltd. v. CCE - 2002 (139) E.L.T. 356 (T). (b) The notice issued in E/2703 and 2704/02 terms the product under dispute to be as 'preparation containing chewing tobacco', however it now where defines the term 'preparation' nor the adjudicator finds out or explains this term, nor does it raise grounds as to how it is 'Chewing Tobacco'. (c) There is no contest to the fact of Quimam, which is admittedly an extract of tobacco in aqueous solution, which is applied on the surface of the raw tobacco leaves procured form the market/farmers. The purpose of this applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boiled in hot water and used after 15 days. (2) Products Described As 'Loose Unbranded Scented Tobacco In The Despatch Challan. The process as explained and the submissions made as regards the same are not under contest. 2.1 The notices issued termed the entity under dispute at places as chewing tobacco and at other preparation for chewing tobacco . The ld. Adjudicator records in paragraph 95 of the impugned order a finding as : 95. The SCN proposes to seek recovery of duty on the product by referring to it as chewing tobacco preparation of chewing tobacco without pinpointing as to under which of the two description the duty is sought to be determined. While at the time portion of SCN it is claimed that the product merit classification as a preparation in the subsequent portion it is also claimed to be chewing tobacco. The Assessee are denying duty liability under either of the category. From the momenclature used in the tariff it would also be clear that a product is a chewing tobacco the same cannot be categorised as Preparation of chewing tobacco , then the starting point.......... And thereafter in paragraph 95 a finding is recorded that the product is a chewing tobacco an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty as long as the same is not sold under a brand name. It is not the allegation that the product in question is sold under a brand name. Therefore, Manufactured tobacco alone is subjected to duty during the relevant time. In the manufactured section under Chapter 24 Chewing Tobacco and Preparation of chewing tobacco are listed as being subjected to duty. The above finding accepts that raw tobacco is used as a chewing tobacco and consumed as such at the point of individual consumers consumption, by mixing of lime and at times with lime and other additives. There is no lime added in the entity herein to render it a Chewing Tobacco, as it leave the premises. The Appellants have relied upon the Apex Court decision in the case of Damodar J. Malpani - 2002 (146) E.L.T. 483 (S.C.) wherein the Apex Court while dealing with the classification of chewing tobacco has laid down, 2. It is not in dispute that the appellants product is chewing tobacco. It is also no tin dispute that chewing tobacco is not necessarily manufactured tobacco or classifiable under Tariff heading 24.04 the classification of chewing tobacco will ultimately depend on the process adopted for an consumption of the chewing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in and thereafter relying and interpreting chapter note 2 under Chapter 24 in details as recorded in paragraph 99 and 100, it was concluded that the treatments brought about on the raw tobacco rendered the product marketable to an industrial consumer and therefore the process employed by the appellants would amount to manufacture by the application of said note 2 to Chapter 24. This finding of the Commissioner cannot be upheld, when the findings and reliance as placed by the ld. Sr. Counsel on the Tribunal decision in the case of Sri Ayyappan Silicate Chemical Products (P)Ltd. v. CCE - 2004 (165) E.L.T. 425 (T) especially the following findings therein are shown. 14... The term Consumer has already been extracted from the Dictionaries above. The item has to be in a marketable stage to be used by the consumer who are the ultimate users of the goods. In the present case, the solid sodium silicate was converted into liquid sodium silicate by addition of water and pumped into the boiler with a mixture of 60 Kgs. of Sodium Hypo chlorides (Liquid Bleach) which helps in colouring and bleaching the final products i.e. Sodium Silicate. The finished product is manufactured by Steam boiler to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to prevent mould and drying and also to preserve the flavour are also covered in this heading. A reading of these mandatory provisions to be applied, for purpose of classification, which have been totally ignored by the ld. Adjudicator, induces us to conclude that the treatments and process conducted at the premises of the Appellants are nothing more than flavouring or moistening substances added to be a curing or a casing of tobacco leaf in order to improve the aroma or keeping qualities and such Tobacco leaf, cased ( sauced or liquored ) leaf with a liquid of appropriate composition, mainly in order to prevent mould and drying would not render raw tobacco to be classified out of Heading 2401 of C. Ex. Tariff Act, 1985. Casings and flavours used in cigarette/tobacco industry are understood to be a solution of flavouring materials in water or other solvents that are applied to leaf tobacco blends; in the present case application is of a solution of quimam (which is tobacco flavoured water) and other flavours including saffron water which admittedly serve no other purpose than to prepare a blend of unmanufactured tobacco for purposes of use in further manufacture of Gutkas/Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 709 (Tri.-Bang.) did not uphold the Revenue plea of classification of similar products under 2404.40 (see also Dariwal Tobacco Products [2002 (139) E.L.T. 356]. (g) Therefore, classification under 2404.40 cannot be upheld. The apex Court in case of Dharampal Satyapal - 2005 (183) E.L.T. 241 (S.C.) also was of the view that for unbranded Chewing Tobacco Preparations the classification has to be under 2404.49 or 2404.40 depending on whether unbranded or branded as the case may be, if the entity is held to be manufactured tobacco. Therefore there is no cause to uphold the classification under 2404.40 issue demands of duty in there case of unbranded entity. 2.4 When we find that the classification of the disputed admittedly unbranded entity is under 2401.10 and we cannot uphold the classification thereof under 2404.40 as arrived at by the adjudicator and on finding that the tariff rate of duty under 2401.10 or and 2404.49 is NIL as also, we find no reasons to uphold the duty demands and the consequent penalties and liabilities arrived at by classifying the entity under 2404.40. 2.5 When the entity is to be classified under 2401.10 at nil tariff rate of duty the question of determining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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