Customs, Excise and Gold Tribunal - Delhi
T.P.N. S. Chettiar Parvathi Vilas ... vs C. C. E. on 17 July, 1987
Equivalent citations: 1989(41)ELT79(TRI-DEL)
ORDER
G. Sankaran, Senior Vice-President
1. The issue arising for determination in the present appeal is whether the processes of cutting unmanufactured tobacco leaf into small pieces, labelling such pieces with strings or rings bearing trade name and packing them into containers bearing trade labels constitute "manufacture" of "Chewing tobacco", a manufactured tobacco product, falling under item No. 411(5) of . the Central Excise Tariff ScheduletCET, for short). It is stated for the appellant that there is no addition of scent or any other ingredient. The lower authorities have held that the aforesaid processes resulted in the manufacture of chewing tobacco, and, on that basis, rejected the appellant's claim for refund of duty paid on clearance of such tobacco.
2. We have heard Shri P.S. Nagarathnam, Consultant, for the appellants and Shri Vineet Kumar, Sr. D.R., for the respondent.
3. Section 2(f) of the Central Excises and Salt Act, 1944, defines "manufacture" as including any process incidental or ancillary to the completion of a manufactured product. In relation to tobacco, the term includes inter alia preparation of chewing tobacco [Section 2(f)(i)] and, in relation to manufactured tobacco, includes the labelling or relabelling of container and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the commoner [Section 2(f)(i-a)]. In the light of this definition, we have to first consider whether the processes employed by the appellant constitute "preparation" of "chewing tobacco". Only if they do, the further question of examining the applicability of Section 2(f)(i-a) would arise.
4. In this connection, as the learned Consultant pointed out before us, the "Departmental Manual on Tobacco Excise Duty" says in Chapter IV, para 102A under the head "Manufactured Tobacco" - para (i)(d):
"Tobacco treated with foreign matter in any manner, and in any proportion, whatsoever, provided that it is packed in containers of a size suitable for retail sale and bearing the name of the product and/or the name and address of the manufacturer. Such treatment should, however, be genuine and the packing should completely enclose the contents. Transport of cut tobacco, which is apparently unmanufactured leaf merely cut and tied or held together with a string or ring bearing some sort of a brand label, even though, claimed to be treated tobacco, should not be allowed without a valid transport document"
We have already noted the appellant's statement that no scent or any other ingredient is added to the subject product. The department has not disputed this statement. We may also note that many Collectors have issued trade notices to the effect that cut tobacco which is apparently unmanufactured leaf merely cut and tied or held together with a string or ring bearing some sort of a brand label would not be treated as manufactured tobacco (Cochin Collector's Notice No. 41/78, dated 4.2.1978; Baroda Collector's Notice No. 38/77, dated 31.10.1977; Pune Collector's Notice No. 208/78, dated 23.11.1978, Madras Collector's Circular No. 14/78, dated 27.12.1978). It is clear, therefore, that from the department's own point of view which, we consider proper, the appellant's product ought not be considered as chewing tobacco, a manufactured tobacco product, falling under Item No. 411(5) of the Central Excise Tariff Schedule.
5. In Collector of Central Excise, Pune v. Jaikisan Tobacco Company, Pune [1986(23)ELT 184 (Tribunal)] relied upon by the present appellant, the assessee used to purchase raw tobacco, crushed in the form of flakes and packed in bulk packs, from the market. No ingredient was added to the tobacco nor was it processed in any man- ner. The tobacco flakes were just repacked into small paper or polythene packets which were labelled with the assessee's brand make and the description "Jarda" or Bhugi (choora). It was considered as chewing tobacco and the department sought to tax the product as "chewing tobacco" under Item No. 411(5), CET, citing as grounds, its description as "jarda", its intended and actual use as chewing tobacco, that repacking and labelling amounted to "preparation of chewing tobacco" within the meaning of the definition of "manufacture" [Section 2(f)(i)] and that in any case, the process adopted were intended to render the product marketable to the consumer [Section 2(f)(i-a)]. The assessee's contention, however, was that only manufactured chewing tobacco (that is the processed variety which has added ingredients like perfume, menthol, lime, katha, cardamom, spices, silver foil, etc. and which because of such processing and admixture of ingredients sell at a high price) came within the scope of the tariff entry. The assessee's product, it was contended, was unmanufactured chewing tobacco. After a detailed consideration of the matter, the Tribunal held that the assessee's product was not taxable under Item No. 4.II(5) of the Schedule, as chewing tobacco.
6. The above-referred-to decision, in our opinion, squarely applies to the facts of the present case as well. Accordingly, we hold that the product in the present appeal was also not taxable as chewing tobacco under Item No. 411(5) of the Central Excise Tariff Schedule.
7. We find that the appellant had urged that the claim for refund was not governed by the limitation under Central Excise law but by the general law of limitation. On this, the lower authorities have not recorded any finding. Any finding on this contention may also entail an investigation into the question whether duty was being paid under protest. For these reasons, while we set aside the orders of the lower authorities and allow the appeal, we remit the matter to the Assistant Collector to dispose of the refund claim in the light of the classification decision we have given and after going into the limitation question. Before passing any order, he will give an opportunity to the appellant to represent his case.