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162 EXCISE LAW TIMES [ Vol. 372

unmanufactured tobacco and belong to M/s. SEPL and the goods were seized
from the property of the appellant, the part of which was leased to M/s. SEPL.
The Revenue has erred in misconstruing the Explanatory Notes to Harmonized
Commodity Description and Coding System for holding that when the process of
curing, fermentation, stripping, trimming and cutting are done on tobacco
plant/leaves, the resulting product would be ‘unmanufactured tobaccco’. The
adjudicating authority has wrongly held that if any process beyond the aforesaid
process is carried out on the tobacco plant/leaves, it would mean that the result-
ant product cannot be classified as “unmanufactured tobacco”. It has been
wrongly held that crushed/grinded unmanufactured tobacco leaves has been
added with calcium oxide, katha and flavouring agent supported by the Chemi-
cal Examiner report, which is not sustainable and not reliable. In normal course
the raw tobacco purchased from farmers is cleaned in the machines and the pro-
cess of drying, cutting and cleaning of tobacco leaves are undertaken. No katha,
calcium oxide or flavouring agents are being added in the tobacco after crushing;
packing in bags of 50 kg only and not in consumer packing of small pouches or
tin containers. Tobacco remained unmanufactured and classifiable under Head-
ing No. 2401 of CETA. He relies upon the Tribunal’s decision in case of Iswar
Grinding Mills v. CCE - 2000 (117) E.L.T. 743 (Tri.) wherein it was held that crush-
ing/powdering of tobacco leaves first manually and then with power aided
crushing/grinding machine to form tobacco flakes/powder does not amount to
manufacture. The tobacco is unmanufactured tobacco and classifiable under
24.01 of the CETA, 1985 attracting NIL rate of duty. He also relied upon the deci-
sion in case of Shrikant Prasad - 2000 (117) E.L.T. 345 (Tri.) wherein it was held
that the Tobacco powder obtained by crushing tobacco leaves, stems and stalks
fall under Heading 24.01 of the CETA, 1985 as unmanufactured tobacco attract-
ing NIL rate of duty. He also relied upon the Tribunal’s judgment in case of Sree
Biswas Vijaya Industries, 1997 (96) E.L.T. 712 (Tri.), as upheld by the Hon’ble Su-
preme Court, as reported in 1998 (104) E.L.T. A136 (S.C.). The reliance placed by
the adjudicating authority on Circular No. 1/88 dated 21-3-1988, according to
which powdering of tobacco leaves was a process of manufacture is erroneous.
As the circular is not binding on the assessee and it is contrary to the orders of
the Tribunal on the very same issue. He also relies upon the Tribunal’s judgment
in case of Gudakhu Factory - 2003 (151) E.L.T. 720 (Tri.), as upheld by the Apex
Court reported in 2003 (155) E.L.T. 235 (S.C.) that they have been challenging the
Chemical Examiner report from the very first statement and in spite of repeated
requests by the appellant as well as by M/s. SEPL, the adjudicating authority did
not allow the re-test of the samples, which is against the law. He also submits
that the Chemical Examiner, in his first report dated 28-3-2008, reported that “the
sample is in the form of brown powder. It is other than snuff.” The sample under
reference may be considered as manufactured tobacco. However, in his report
dated 22-4-2008, the Chemical Examiner has reported that “(1) Afzal brand Snuff
Tobacco : The sample mainly contains Tobacco powder and in smaller quantities
Calcium Oxide (CaO), Katha, flavouring agents (2) tobacco powder : The samples
mainly contains tobacco powder and in smaller quantities Calcium Oxide (CaO),
katha, flavouring agents.”
2.1 They had requested for retesting of samples but instead of comply-
ing with the request, the adjudicating authority had decided the case in gross
violation of the principles of natural justice and having violated the principles of
natural justice, created a situation whereby no opportunity was left for re-testing

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