2024(06)LCX0279

Allahabad Tribunal

Commissioner Central Excise & Service Tax

Versus

Shree Flavours LLP

Excise Appeal No. 70411 of 2017 decided on 27-06-2024

CUSTOMS

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD

REGIONAL BENCH - COURT NO.I

Excise Appeal No.70411 of 2017

(Arising out of Order-In-Original No. 30-COMM-CEX-GZB-2016-17 dated 16/02/2017 passed by Commissioner, Central Excise & Service Tax, Ghaziabad)

Commissioner, Central Excise & Service Tax, Ghaziabad    …..Appellant
(CGO Complex-II, Kamla Nehru Nagar
Ghaziabad U.P.)

VERSUS

M/s Shree Flavours LLP     ….Respondent
(16/1-A-1/2 (Ground Floor)
Industrial Area, Site-IV,
Sahibabad, Ghaziabad)

WITH
Excise Appeal No.70412 of 2017

(Arising out of Order-In-Original No. 31-COMM-CEX-GZB-2016-17 dated 16/02/2017 passed by Commissioner, Central Excise & Service Tax, Ghaziabad)

Commissioner, Central Excise & Service Tax, Ghaziabad   …..Appellant
(CGO Complex-II, Kamla Nehru Nagar
Ghaziabad U.P.)

VERSUS

M/s Shree Flavours Llp               ….Respondent
(12/56 (Basement & Ground Floor)
Industrial Area, Site-IV,
Sahibabad, Ghaziabad)

APPEARANCE:
Shri Manish Raj, Authorized Representative for the Appellant
Shri Vivek Kohli, Senior Advocate & Shri Ashwini Sharma, Advocate for the Respondent

CORAM: HON’BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
                  HON’BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)

FINAL ORDER NO.-70361-70362/2024

DATE OF HEARING : 29.02.2024
DATE OF DECISION : 27.06.2024

P. K. CHOUDHARY:

Since the dispute in both the appeals is common, both these appeals are taken up together for hearing.

2. The issue involved in the present appeals is regarding the classification of the product declared as ‘Chewing Tobacco’ by the Respondent under CETH : 2403 99 10 and as ‘Jarda Scented Tobacco’ CETH : 2403 99 30 as alleged by the Appellant Revenue. Brief facts of the case are that the Respondent's product is "CHEWING TOBACCO" CETH : 2403.99 10, which is manufactured under the brand name "GOPAL" and is sold as such. In 2009, Shree Flavour Private Limited was incorporated and entered with Trade Mark and Copyright Agreement with M/s Hari Chand Shri Gopal for the manufacture of said Chewing Tobacco under the brand "GOPAL". The company, Shree Flavours Private Limited, was later converted to LLP Firm, M/s Shree Flavour LLP.

3. In the year 2015, the Respondent has established two manufacturing units under the jurisdiction of Commissionerate Central Excise, Ghaziabad under Assessee Code No. ABYF55498REM008 & ABYF55498REM008. Both manufacturing units of the Respondent covered under the Compound Levy Scheme for payment of duty. In the year 2015, the Government of India, Ministry of Finance, Department of Revenue, vide Notification No. 5/2015-Central Excise, dated 01.03.2015 and Notification No. 4/2015-C.E. (N.T.), dated 01.03.2015, amended the Capacity Determination Rules, and separate Tables of calculation of duty for "Chewing Tobacco" and "Jarda Scented Tobacco" were introduced for the first time. The duty liability fixed for the Chewing Tobacco on the basis of packing machines speed and in the case of Jarda Scented Tobacco no speed of packing machines fixed. The Respondent while filing the Declaration for the month of March & April, 2015 classified its product, and accepted by the Department as "Chewing Tobacco".

4. The Department on 05.05.2016 issued the Show Cause Notice on both units vide SCN NO. C.No. V(15) Adj./GZB/Shree Flavour/12/16- 17/2322-2326 and C.No. V(15) Adj./GZB/Shree Flavour/13/16- 17/2317-2321, wherein the Department alleged that the product of the Respondent was not "Chewing Tobacco" but classifiable as "Jarda Scented Tobacco" under the CETH 2403 99 30. The Commissioner has adjudicated both the SCN’s after affording personal hearing to Respondent vide Impugned Order dated 16.02.2017 and classified the Respondent's product as "Chewing Tobacco" under CETH 2403 99 10. Being aggrieved, Department is in appeal before the Tribunal.

5. We find that the learned Commissioner in the impugned orders have classified the respondent’s product as ‘Chewing Tobacco’ on the basis of :-

(i) That the Respondent has been declaring their product under reference as "Chewing Tobacco" on its packing has not been disputed by the Department;

(ii) That the said product, i.e., "GOPAL Chewing Tobacco", has been in production and sale for long time, almost 6 decades, albeit at different locations and different manufacturers under separate licensing agreements, and so might be said to possess the characteristics of CHEWING TOВАССО.

(iii) That the CRCL Test Report cannot be considered as conclusive regarding the classification dispute, more so in the light of the cross-examination wherein the Chemical Examiner admitted that there is no specification provided for Jarda Scented Tobacco and that the test carried out are for Chewing Tobacco;

(iv) That a similar classification dispute qua the product namely "GOPAL CHEWING TOBACCO" of the manufacturer has been settled in favour of the manufacturer by the larger bench of Tribunal, vide Final Order No. A/53229/2014-EX (DB), dated 08.08.2014 in the case of "FLAKES-N-FLAVOURS vs. C.C.E., CHANDIGARH" (2015 (327) ELT 435 (Tri.-Del.)] as under:

“48. In the Tariff the Expression chewing tobacco and zarda scented tobacco are not defined as the product has to be classified based upon the description of the product given by the manufacturer on the pouch as well as on the basis of common parlance and established practice. In the present case, as the product in question as per the description of the product is flavor chewing tobacco and it is brought and sold in the market as chewing tobacco. Further the appellant from the beginning classifying the same as chewing tobacco and after the period in dispute also classified the same as chewing tobacco. Hence, I find merit in the contention of the appellant that the product in question is chewing tobacco and classifiable under Heading 24039910 of the tariff.

49. Further the Notification No. 2/2006_C.E. (N.T.), dated 1.3.2006 is further amended by Notification No. 16/2006- c.E. (N.T.), dated 11.7.2006 whereby the chewing scented tobacco classiflable under Heading 24039910 also notified as assessable under Section 4A of the Central Excise Act, 1944. Prior to the period in dispute 1.3.2006 to 10.7.2006 the appellants were clearing the product as flavored chewing tobacco and thereafter, also clearing the same by classifying the product under Heading 24039910 of the Tariff and the product in question is marketed as Chewing Tobacco. In these circumstances I find in the contention of the Appellant."

(v) Since the facts of that case are identical, its ratio would be squarely applicable to this case also.

6. It is the case of the department that Since the matter of Classification is sub-judice before the Hon'ble Supreme Court, the dropping of the demand by classifying the product under CETSH 2403 99 10 as "Chewing Tobacco" by the Adjudicating Authority does not appear to be legal and proper.

7. Learned Counsel appearing on behalf of the Respondent submitted that the Civil Appeal No. 5146 of 2015 preferred by the Commissioner, Central Excise, Chandigarh against the Final Order of the Tribunal passed in the matter of Flakes-N-Flavours upholding the product to be Chewing Tobacco falling under Tariff Heading 2403 99 10 has been dismissed by the Hon'ble Supreme Court vide Order 20th October, 2023 and the Final Order No. A/53229/2014-EX (DB), dated 08.08.2014 passed by the Tribunal has been upheld. [2015 (327) ELT 435 (Tri.-Del.)].

8. Heard both sides and perused the appeal records.

9. We find that the issue in the present appeal is no more res integra and is covered by the Final Order No.A/53229/2014- EX(DB) dated 08.08.2014 in the case of Shree Flavours LLP [2015 (327) ELT 435 (Tri.-Del.). Against the Final order of the Tribunal upholding the product to be ‘Chewable Tobacco’ falling under Tariff Heading 2403 99 10 the appeal preferred by the Commissioner, Central Excise, Chandigarh before the Hon’ble Supreme Court has been dismissed vide order dated 23 rd October, 2023 and the order of the Tribunal has been upheld as under:-

“70. Classification is a question relating to “chargeability”. It is well settled law that insofar as chargeability is concerned, the burden of proof lies on the Revenue and not on the assessee. In the facts obtained in the present case, no evidence of whatsoever nature has been placed by the Revenue to raise any presumption. In fact, the entire proceedings are based upon “audit objection” and the Revenue attempts to rely upon the additives to the ‘chewing tobacco’ as the basis for arriving at a conclusion, that assessee had cleared the ‘jarda/zarda scented tobacco’ which is not even supported by the samples drawn or inquiry made from the traders or consumers or stockist, suppliers and buyers. In the absence of iota of material, the finding of the tribunal cannot be displaced. It would be of benefit to extract the finding recorded by the third member of the tribunal, who upheld the finding of the judicial member and it reads:

“9 In the tariff the expression xxxx practice. In the present case, as the product is flavour chewing tobacco and it is bought and sold in the market as chewing tobacco. Further the appellant from the beginning classifying the same as chewing tobacco and after the period in dispute also classified the same as chewing tobacco. Hence I find merit in the contention of the appellant that the product in question is chewing tobacco and classifiable under Heading 24039910 of the Tariff

71. Upon anxious consideration of the aforestated facts, coupled with lack of cogent evidence for the purpose of determination of the classification entry with respect to the product manufactured by the assessee, we deem it necessary to not interfere with the findings of the tribunal in light of the settled judicial findings of this Court which directly have a bearing on the facts of the present case.”

[(2023) 11 CENTAX 270 (SC)]

10. Since the matter has been settled by the Hon’ble Supreme Court in favour of the Respondent, the present appeals filed by the Department are liable to be dismissed and we do so.

11. In view of the above discussion the appeals filed by the Department are dismissed.

(Pronounced in open court on 27.06.2024)

Sd/-
(P. K. CHOUDHARY)
MEMBER (JUDICIAL)

Sd/-
(SANJIV SRIVASTAVA)
MEMBER (TECHNICAL)