Page 273 - ELT_1_1st April 2020_Vol 372_Part

2020 ] BORSAD TOBACCO CO. PVT. LTD. v. COMMR. OF C. EX. & S.T., AHMEDABAD-III 159

(2) Tobacco powder : The sample mainly contains tobacco powder and in
small quantities of Calcium Oxide (CaO), Katha, Flavouring agents.
The samples u/r are not showing the presence of any foreign sub-
stances in the observations and tests conducted.
1.4 It was alleged that in view of the chemical report, process under-
taken, above mentioned circular and HSN Explanatory Notes, it is clear that the
product under consideration has to be classified as “manufactured tobacco
product”. In respect of aforesaid seized goods, M/s. SEPL’s Borsad unit vide let-
ter dated 18-12-2007 requested to provisionally release the seized goods claiming
the same to be raw tobacco, which did not contain any chemicals. They also
claimed themselves to be the actual owner of the said goods and also gave the
manufacturing process in brief. The goods were ordered to be released provi-
sionally on execution of B-11 Bond after furnishing 25% cash security. The show
cause notice alleged that all the commodities of tobacco are covered under Chap-
ter 24 of the Central Excise Tariff Act, 1985. So, invariably the product manufac-
tured by M/s. BTPL would also fall under the said chapter. The Chapter Head-
ing No. 2401 covers ‘unmanufactured tobacco, tobacco refuse’. In the present
case, the process undertaken by appellant includes cutting of tobacco with ma-
chines, grinding in pulverizing machine, mixing of flavouring agents, etc. The
product emerging out of the process undertaken by appellant is entirely different
from unmanufactured tobacco. The physical characteristics, constituents, usage,
target customers and marketability of the resultant products are entirely different
from the unmanufactured tobacco. With a view to the above mentioned Circular
No. 01/88 dated 21-3-1988, it is clear that the product manufactured by appellant
cannot be classified under chapter sub-heading 2401. Now, chapter sub-heading
No. 2402 covers cigars, cheroots, cigarettes of tobacco or of tobacco powder, it
would be classifiable under the heading 2403. The chapter sub-heading no. 2403
10 covers smoking tobacco, guduka tobacco, smoking mixtures for pipes and
cigarettes, biris and others; the same would not be applicable to the product
manufactured by M/s. Borsad Tobacco Co. Pvt. Ltd. The chapter sub-heading
No. 2409 91 covers homogenized or reconstituted tobacco, the same would not be
applicable. Hence, the product in question manufactured by appellant would fall
under chapter sub-heading 2403 99. The appellant are engaged in business of
purchase of tobacco leaves and processing of the same in the factory premises.
Though the statements of the concerned persons were given to the effect that the
appellant has rented a portion of their unit to M/s. BTCPL. However, there was
nothing to indicate that part or entire premises was occupied by some other firm
or company. That the appellant has all the machines, which were used in manu-
facture of “other manufactured tobacco and manufactured tobacco substitutes -
other “falling under chapter sub-heading 2403.99 of the CETA, 1985. The seized
goods were Snuff and appellant are actually manufacturers of the seized goods.
No account of procurement of raw material and the production of the said 1152
bags of manufactured tobacco was maintained by the appellant. It appears that
the appellant is purchasing Tobacco from farmers, the leaves of tobacco is dried
and then cut to pieces by machines and then crushed/grinded in the grinding
machines. Through these processes, the leaves of tobacco are converted into
powder form, which is known as “Gadia Powder”. The said Gadia Powder is
manufactured tobacco packed in pre-printed HDPE bags bearing printed brand
name “Afzal (Regd)” best quality snuff tobacco and cleared in the domestic mar-
ket without following the central excise procedure. That the Chemical Examiner

EXCISE LAW TIMES  1st April 2020  321