Customs, Excise and Gold Tribunal - Mumbai
Domodar Jaganath Malpani vs Commissioner Of Central Excise on 24 March, 2005
ORDER Shri Krishna Kumar, Member (J)
1. The issue relates to classification of tobacco bye products namely Mishri and Masheri. The ld. Counsel appearing for the appellant at the outset submitted that he is not contesting the classification of Mishri. Therefore, the issue of classification is confined only to Masheri. The ld. Counsel submitted that the process of manufacture of Masheri is given at page 2 of the Order-in-Original. The same is reproduced as under:-
1) Mishri - The mishri is small tobacco particles generated during the process of conversion of raw tobacco into the flakes. The tobacco particles ranging between 20/25 Mesh size to 60/70 Mesh size are called as mishri. This is packed into retail packs and is generally used by consumer for applying on teeth as it is or after roasting/grinding at his place.
2) Mesheri - The mishri obtained as above is further processed by roasting and grinding and is packed into retail packets. This is also used for applying on teeth. This product also can not be used for chewing purpose at all."
2. The department proposed to classify the said product under sub Heading 2401.00 whereas the appellant contention is that the same is classifiable under sub Heading 2404.90. For the purpose of reference the text of the Headings 2401 and 2404 is given as under:-
24.01 - Unmanufactured tobacco, tobacco refuse.
24.04 - Other manufactured tobacco and manufactured tobacco substitutes, homogenized or reconstituted tobacco, tobacco extracts and essences".
2404.11 to 2404.39 not applicable/relevant.
Chewing tobacco, including preparations commonly known as "Khara Masala", "Kimam", "Dokta", "Zarda", "Sukha" and "Surti".
2404.41 bearing a brand name.
2404.49 Other Snuff.
2404.50 Snuff of tobacco 2404.60 Preparations containing Snuff of Tobacco in any proportion 2404.90 Other.
3. The ld. Counsel submitted that as per HSN note the moment roasting is done it becomes the manufactured tobacco. To support his contention he relied on the decision in the case of Eagles Chicory (Firm) v. CCE reported in 2000 (126) ELT 908 (Tri.). He particularly relied on para 5 thereof which is reproduced as under:-
5. There is no doubt that the roasting and grinding of chicory roots is done by both appellants with the aid of power. The contention of the appellants is that this process does not amount to manufacture as defined in the Central Excises and Salt Act. Reliance is placed in this connection on the judgement of this Tribunal in the case of M/s. Pyrites, Phosphates and Chemical Ltd. - (1983 (12) ELT 537). Pyrites mined in the form of lumps were being crushed and then sieved by the assessee in that case. The Department contended that this process of crushing and sieving would amount to manufacture. The Tribunal held that as no new product had come into existence, the crushing and sieving process cannot be treated as manufacture. But as against this Shri Sachar relies upon a later decision of this Tribunal relating to the same assessee reported in 1983 (13) ELT 1192. The product concerned in the said case was Rock Phosphate. It was held that it was only after the process of breaking, powdering, sieving and bringing it up to a specified fineness that the Rock Phosphate that had been mined became fit for use as a fertilizer and that Rock Phosphate as mined was not being marketed and in the said circumstances the processes aforesaid, leading to the emergence of the final marketable fertilizer, amounted to manufacture as defined in the Central Excises and Salt Act. In the present instance it may be noted that the chicory roots are first roasted to a particular degree and thereafter they were being ground to powder. Chicory roots as such chicory powder would be finally marketed. Hence it appears to us that the process of roasting and grinding brought into existence a new and distinct commercially marketable commodity different from the original unprocessed commodity and hence the process of roasting and grinding amounts to a process of manufacture as defined in the Central Excises and Salt Act.
4. In another similar case he also relied on para 4 of the decision in the case of Uncle Chips Co. Ltd. v. CCE, Ghazoabad reported in 2001 (134) ELT 549 (Tri. Del), which is reproduced as under:-
4. We have considered the submissions of both the sides. The ld. Sr. Counsel for the appellants has mentioned that the peanuts are purchased by them which are roasted and salted and packed. The roasted peanuts cannot be equated with naturally occurring peanut as these are obtained by adopting the process of roasting. As the Roasted peanuts are obtained as a result of a process, these are nothing but preparation of Nuts which are specifically covered under Chapter 20 of the Tariff. According to the World Bank Dictionary "Preparation" means the "act of preparing, making ready a medicine, food, or mixture of any kind made by a special process". The process of roasting has not been excluded in Note 1 to Chapter 20 and as such Note 1 is applicable and as roasted peanuts are prepared, these are covered by Chapter 20. The ratio of the decision in Northland Industries, supra, will not apply as in the said case fresh fruits were washed and the inedible portions were taken out and the edible portions of the fruits were put into cans after adding sugar. Certainly the canned fruit is not different from the naturally occurring fruit as only the inedible portions of the fruits were removed and nothing else was done by the Appellants thereon. We also notice that at the relevant time Heading 08.01 was subdivided and sub-heading 0801.10 reads as - "put up in unit containers and ordinarily intended for sale, whether or not containing any added ingredient including sugar or other sweetening matter". The Appellate Tribunal, therefore, held in the said case that "But the canned fruit nevertheless is only fruit. It is not something else. In this view of the matter, and considering the words employed in sub-heading No. 2001.10 the subject fruit put up in unit containers would prima facie fall under the heading" (Emphasis supplied). In the present matter, the peanut is not merely put in unit container after deshelling it but the same is roasted and salted. After roasting it is no more the nut as naturally occurring and which falls under Chapter 8. Explanatory notes of H.S.N. mentions that Heading 20.08 of H.S.N. includes. Almonds, ground-nuts, area nuts, dry roasted, oil roasted or fat roasted whether or not containing or coasted with vegetable oil, salt, flavours, spices or other additives. We are, therefore, of the view that Roasted peanuts are classifiable under Chapter 20 of the Tariff. Similarly Moongfali Masala Majedar is nothing but a preparation of nut which falls under Chapter 20 only. Addition of gram flour will not take away them from the coverage of Heading 20 as gram flour is a part of process mentioned in Note 1 to Chapter 20. The ground nut (Moongfali) retains its essential character as groundnut even after preparation with gram flour. The Additional Commissioner has given findings in the Adjudication Order that the identity of Nut is not lost as is the case in Milk Masala Mixture. We, therefore, hold that this product is also classifiable under Chapter 20 only."
He also submitted that the Commissioner (Appeals) has overlooked the process of manufacture and has not given any finding thereon.
5. The ld. SDR appearing on behalf of the Revenue submitted that mere roasting of the bye product will not change its character and in this regard he relied on the Apex Court's decision in the case of Union of India v. J.G. Glass Industries Ltd. reported in 1998 (97) ELT 5 (SC). He submitted that the adjudicating authority has gone into process of manufacture and has clearly given his findings thereon. The issue relates to the period 1995 and at the relevant time labelling, packing etc included in sub Heading 2401 as per Chapter Note 2. In this regard he drew our attention to para 3 of the Order-in-original. To support his contention the ld. SDR relied on paras 2 and 3 of the decision in the case of Jaikisan Tobacco Ltd. reported in 1986 (23) ELT 184 (Tri.).
6. After hearing both sides, perusal of the records and the case laws relied on, we find that the Commissioner (Appeals) has passed the ex-parte order. Besides he has also failed to give his findings on the process of manufacture involved in the present case. Therefore, we consider it necessary that the matter is remanded to the Commissioner (Appeals) for fresh adjudication in the light of the decision relied on by the Ld. Counsel as mentioned above vis-a-vis the decision relied on in the memo of the appeal. We order accordingly.
(Pronounced in Court on 24.3.05)