Custom, Excise & Service Tax Tribunal
M/S Gahoi Foods Pvt. Ltd vs Cce, Indore (M.P.) on 6 August, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I Excise Appeal Nos. 2405-2406 of 2003 [Arising out of the Order-in-Appeal No. 312 & 314-CE/IND/APPL-II/2003 dated 26/06/2003 passed by The Commissioner (Appeals-II), Central Excise, Indore.] M/s Gahoi Foods Pvt. Ltd. Appellant (None) Versus CCE, Indore (M.P.) Respondent
Excise Appeal No. 2612 of 2003 [Arising out of the Order-in-Appeal No. 259-60/CE/DLH/2003 dated 20/06/2003 passed by The Commissioner (Appeals), Central Excise, New Delhi.] M/s Kuber Tobacco Products Pvt. Ltd. Appellant Versus CCE, Delhi Respondent Excise Appeal No. 3978 of 2003 [Arising out of the Order-in-Appeal No. 363-CE/DLH/2003 dated 01/10/2003 passed by The Commissioner (Appeals-II), Central Excise, Delhi I.] M/s Prem Vijay Org. Chemicals Ltd. Appellant (Ms. S. Jain, Adovcate) Versus CCE, Delhi I Respondent Excise Appeal No. 191 of 2004 [Arising out of the Order-in-Appeal No. 410-CE/DLH/2003 dated 14/10/2003 passed by The Commissioner (Appeals), Central Excise, New Delhi.] M/s Soami Industries Appellant (Ms. S. Jain, Advocate) Versus CCE, Delhi I Respondent Excise Appeal No. 374 of 2004 [Arising out of the Order-in-Appeal No. 346-CE/DLH/2003 dated 08/09/2003 passed by The Commissioner, Central Excise (Appeals), New Delhi.] Shri Mahesh Kumar Gautam, Proprietor ] Appellant M/s Amar Jyoti Packers ] (None) Versus CCE, New Delhi Respondent Excise Appeal No. 459 of 2004 [Arising out of the Order-in-Appeal No. 508-CE/DLH/2003 dated 10/12/2003 passed by The Commissioner (Appeals), Central Excise, New Delhi.] M/s Som Flavours Pvt. Ltd. Appellant (Ms. S. Jain, Advocate) Versus CCE, Delhi I Respondent For Approval and signature :
Honble Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it would be released under Rule 27 of :
the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair :
copy of the order?
4. Whether order is to be circulated to the :
Department Authorities?
Appearance Ms. Seema Jain, Advocate (for M/s Som Flavours Pvt. Ltd., M/s Prem Vijay Org. Chemicals Ltd. and M/s Soami Industries) for the appellant.
Shri Sunil Kumar, Authorized Representative (DR) for the Respondent.
CORAM : Honble Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 28/04/2010.
DATE OF DECISION : 06/08/2010.
Order No. ________________ Dated : ,,,,,,,,,,,___________ Per. Rakesh Kumar :-
The Appellant in these appeals are manufacturer of Pan masala containing Tobacco called Gutka and the common point of dispute is as to whether during the period from November 2000 to 28th February 2001, Gutka was classifiable under Sub-heading 2106.00 pertaining to Pan masala, as claimed by the Department or under Sub-heading 2404.40 pertaining to chewing tobacco and preparations containing chewing tobacco. In these cases, the Tribunal, relying upon Honble Supreme Courts judgment in case of Kothari Products Ltd. vs. Government of Andhra Pradesh reported in 2000 (119) STC 353 had held that during the period of dispute, the Pan masala containing Tobacco (Gutka) was classifiable under Sub-heading 2404.40 of the Central Excise Tariff. The Department, however, filed appeals to Honble Supreme Court against the Tribunals orders under Section 35L (b) of the Central Excise Act, 1944. The appeals filed by the Department were disposed off by Honble Supreme Court by a common order dated 8/12/09 in respect of appeals No. 4226-4227/04, 7029 7030 & 7621/04 and 532 & 5019/05 by which the matters were remanded to the Tribunal for de-novo consideration of the matter in accordance with law. Honble Supreme court while remanding this matter observed as under -
7. on going through the impugned judgments of the Tribunal, we find that there is no analysis of the aforesaid entries in the context of classification of the subject product. The Tribunal has merely quoted a judgment of this court in the case of Kothari Products Ltd. vs. Government of Andhra Pradesh reported in 2000 (9) SCC 263. In that judgment, the issue arose under the provisions of AP General Sales Tax Act. The question which arose for determination was whether Gutka is a tobacco and stood covered by an entry in the First Schedule to the Additional duties of Excise (Goods of Special Importance) Act, 1957, and whether branded Gutka which the assessee therein manufactured was liable to be taxed thereunder. While deciding that issue, this court came to conclusion that Gutka is goods covered by the Explanation to the Fourth Schedule to the AP General Sales Tax Act and, therefore, covered by exemption in Section 8 thereto.
8. In our view, the judgment of this Court in the case of Kothari Products (supra) has no application to the facts of the present case. In the present case, we are strictly concerned with interpretation of Tariff entries, quoted hereinabove, under the provisions of the Central Excise Act. Moreover, in Chapter 21, under Chapter note 3 at the relevant time, Pan masala has been defined to mean preparations containing tobacco. In these cases, we are concerned with the product, namely Pan masala. We do not wish to express any view on the merits of the case, except to say that the judgment of this Court in Kothari Products is not applicable and, in our view, the Tribunal ought to have examined the scheme of the Central Excise Tariff Act which has not been done in these cases.
9. For the afore-stated reasons, without expressing any view on the merits of the case, we hereby set aside the impugned order of the CESTAT, and we remit the cases to the CESTAT for de-novo consideration in accordance with law.
10. Since the matter is an old matter, we request the Tribunal to expeditiously been and dispose of this batch of cases, preferably within six months from today. 1.1 In accordance with the above directions of Honble Supreme Court, these appeals have been taken up for de-novo consideration.
2. Heard both the sides.
2.1 While Ms. S. Jain, Advocate, appeared for M/s Som Flavours Pvt. Ltd.; M/s Prem Vijay Org. Chemicals Ltd. and M/s Soami Industries, none appeared for M/s Gahoi Foods Pvt. Ltd. and Shri Mahesh Kumar Gautam, Proprietor of M/s Amar Jyoti Packers. As regards M/s Kuber Tobacco Products Pvt. Ltd., they requested for adjournment but their request for adjournment was rejected and they were given time till 5th May 2010 for submitting written submissions, which were submitted by Shri Kamal Jeet Singh and Shri Manish Pushkarna, Advocates on 4th May 2010.
2.2 The Appellants counsels, while not contesting the classification of Gutka during the period of dispute under Sub-heading 2106.00, pleaded that while during the period prior to November 2000, they were classifying the Pan masala containing tobacco (Gutka) under Sub-heading 2106.00, it is only on the Departments instructions that in November 2000, they filed fresh declaration classifying the goods under Sub-heading 2404.40 of the Tariff, that while the goods covered by Sub-heading 2106.00 attracted 16% Cenvat duty and 24% SED, the goods covered by Sub-heading 2404.40 attracted 16% Cenvat duty + 24% SED + 10% AED (GSI)), that in spite of the goods having been classified under Sub-heading 2404.40 from November 2000, as per the Departments instructions, the Department subsequently issued show cause notices for revising the classification to Sub-heading 2106.00 and demanding the differential duty, that during the period of dispute, MRP based assessment under Section 4A was not applicable to Pan masala and hence the assessable value would remain the same whether the goods are classified under Sub-heading 2106.00 or Sub-heading 2404.40 and since under Sub-heading 2404.40, the AED (GSI) at the rate of 10% adv. was also payable in addition to 16% Cenvat duty + 24% SED, if the Department revises the classification to 2106.00, the Appellant have paid excess duty, that in any case, since AED is not payable if the goods, during the period of dispute, are classified under Sub-heading 2106.00, the AED paid by the Appellant during this period on account of Classification under Sub-heading 2404.40, must be adjusted towards Basic excise duty (Cenvat duty) demand and that in this regard, reliance is placed on Tribunals judgment in case of Coats Viyella India Ltd. vs. CCE reported in 1999 (111) E.L.T. 90.
2.3 Shri Sunil Kumar, the learned DR, pleaded that during the period of dispute i.e. during the period prior to 1/3/2001, in view of Chapter note 3 to Chapter 21 stating that in this chapter, Pan masala means any preparation containing betel nuts and any one or more of the following ingredients namely lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol, the Pan masala containing tobacco would be classifiable under Sub-heading 2106.00, that during the period of dispute, Sub-heading 2404.40 covered chewing tobacco and specific Sub-heading 2404.49 covering Pan masala containing tobacco was introduced w.e.f. 1/3/2001 only, that in view of this, during the period of dispute, Gutka was correctly classifiable under Sub-heading 2106.00, not under Sub-heading 2404.40, that Honble Supreme Court in its order remanding the matter to Tribunal for denovo consideration, has clearly observed that its judgment in case of Kothari Products Ltd. vs. Government of Andhra Pradesh (supra) is not applicable to the facts of this case, that during the period of dispute, the provisions of Section 4A were applicable to Pan masala including the Pan masala containing tobacco, while duty has been paid by the Appellant on the value determined under Section 4, resulting is short paying of duty and that in view of this, the duty demands had been correctly upheld by the CCE (Appeals).
3. We have carefully considered the submissions from both the sides and perused the records. The main point of dispute to be decided in this case is as to whether during the period of dispute i.e. during the period prior to 1/3/2001, Pan masala containing tobacco, commonly known as Gutka, was classifiable under Sub-heading 2106.00 pertaining to Pan masala or under Sub-heading 2404.40 pertaining to chewing tobacco and preparations containing chewing tobacco.
4. Sub-heading 2106.00 and 2404.40 during the period of dispute were as under -
2106.00 Pan masala 2404.40 chewing tobacco and preparations containing chewing tobacco. 4.1 During the period of dispute, there was Chapter note 3 to Chapter 21, which is reproduced below:
In this chapter, Pan masala means any preparations containing betel nuts and any one or more of the following ingredients, namely lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol.
4.2 During the period of dispute, there was no Sub-heading in 24.04 specifically covering Gutka i.e. Pan masala containing tobacco. Such a Sub-heading SH 2404.49 was inserted in heading 24.04 w.e.f. 1/3/2001 only.
4.3 As per the provisions of Rule 1 of the Rules for the interpretation of 1st Schedule to the Central Excise Tariff Act, 1985, which is part of the 1st Schedule, the classification shall be determined according to the terms of the headings and any relative section or Chapter notes and if such headings or notes do not otherwise require, according to the provisions of Rule 2, 3, 4 & 5 of these Rules. Tribunal in case of CCE vs. Metrowood Engineering Works reported in 1989 (43) E.L.T. 660 (Trib.) has held that the relevant headings in the tariff have to be interpreted and applied in the light of Section notes and chapter notes which are statutory and binding like the headings themselves, that these section notes and chapter notes sometimes expand and sometimes restrict the scope of certain headings and that the scheme of Customs Tariff Act is to determine the coverage of the respective headings in the light of Section notes and chapter notes and that the Section notes and Chapter notes have an overriding force on the respective headings.
4.4 In this case, while heading 2106.00 covered Pan masala during the period of dispute, Chapter note 3 to Chapter 21 defined the term Pan masala as any preparation containing betel nuts and any one or more of the ingredients namely lime, katha (catechu) and tobacco, whether or not containing other ingredients such as cardamom, copra and menthol. This chapter note 3 expanded the scope of the term Pan masala to include the Pan masala containing tobacco. It is only w.e.f. 1/3/2001 that chapter note 3 of Chapter 21 was amended to exclude the Pan masala containing tobacco and in Chapter 24, a specific Sub-heading 2404.49 for Pan Masala containing tobacco was inserted. Therefore, during the period of dispute, Pan masala containing tobacco, by virtue of Chapter note 3 to Chapter 21 was specifically covered by Sub-heading 2106.00, while during that period, Sub-heading 2404.40 covered chewing tobacco and preparations containing chewing tobacco. Since Pan masala containing tobacco was more specifically covered by Sub-heading 2106.00 and a heading which provides the most specific description shall be preferred to the heading providing a general description, we hold that during the period of dispute, the Pan masala containing tobacco i.e. Gutka was correctly classifiable under Sub-heading 2106.00 of the tariff. We find that while Honble Supreme Court in the remand order has specifically observed that its judgment in case of Kothari Products Ltd. vs. Government of Andhra Pradesh (supra) is not applicable to the facts of this case, Honble Madras High Court in case of Dharampal Stayapal Ltd. vs. Commercial Tax Officer, Coimbatore reported in 2009 (243) E.L.T. 179 (Mad.) has held that though w.e.f. 1/3/2001 chewing tobacco and Pan masala containing tobacco are in the same heading, chewing tobacco does not include and never included Pan masala containing tobacco and but for inclusion of Pan masala containing tobacco in Chapter 24 (Sub-heading 2404.49) of Central Excise Tariff w.e.f. 1/3/01, it would have been covered by heading 2106.00.
4.5 In view of the above discussion, we hold that during the period of dispute, Pan masala containing tobacco i.e. Gutka was correctly classifiable under Sub-heading 2106.00 of the Central Excise Tariff, not Sub-heading 2404.40 pertaining to chewing tobacco and preparations of chewing tobacco.
5. It has been pleaded that since the notification issued under Section 4A did not cover the Pan masala containing tobacco during the period of dispute, even if Gutka is classified under Sub-heading 2106.00, no duty would be recoverable as assessable value determined under Section 4 of the Act would be the same irrespective of whether the goods are classified under Sub-heading 2106.00 or 2404.40 and under Sub-heading 2404.40, the Appellant, in addition to BED of 16% and SED of 24%, had also paid AED (GSI) at 10%, which is not payable under Sub-heading 2106.00. We do not agree with this contention, as it is seen that during the period of dispute, Notification No. 9/2000-CE (NT) dated 1/3/2000, issued under Section 4A of the Act covered Pan masala in retail packs containing 10 gms. or more per pack falling under Sub-heading 2106.00, which by virtue of Chapter note 3 to Chapter, also covered Pan masala containing tobacco. Therefore, during the period of dispute, assessable value of Gutka was to be determined under Section 4 A, not under Section 4 (1).
6. It has been pleaded that in any case, since the Appellants, during the period of dispute, had paid duty under Sub-heading 2404.40, where in addition to 16% BED 24% SED, 10% AED (GSI) was also chargeable under AED (GSI) Act, 1957, and if the classification is revised to SH 2106.00, where only the BED @ 16% adv. and SED @ 24% adv., is chargeable, but on the assessable value determined under Section 4A, the AED (GSI) paid under heading 2404.40 must be adjusted towards differential duty payable on account of change of classification to Sub-heading 2106.00. We find that though this point had been raised before CCE (Appeals), no finding in this regard have been given in the impugned orders in appeal. We are of the view that when during the period of dispute, on account of classification of the goods under Sub-heading 2404.40, in addition to 16% BED & 24% SED, 10% AED (GSI) had also been paid on the assessable value determined under Section 4 (1) of the Act, when the classification of the goods is revised to 2106.00 under which only 16% BED and 24% SED is payable but on the assessable value determined under Section 4A, there is no reason for not adjusting the AED (GSI) paid by the Appellant. The differential duty recoverable from the Appellants must, therefore, be determined after taking into account the AED (GSI) also paid by the Appellants.
7. In view of the above discussion, the impugned orders are upheld except for the modification that for determining the quantum of differential duty recoverable from the Appellants on account of change of classification from Sub-heading 2404.40 to 2106.00, the AED (GSI) paid by the Appellant must also be taken into account for which the Jurisdictional Assistant/Deputy Commissioners are directed to do the needful. The appeals stand disposed off as above.
(Pronounced in the open court on 06/08/2010.) (Justice R.M.S. Khandeparkar) President (Rakesh Kumar) Member (Technical) PK