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2020 ] BORSAD TOBACCO CO. PVT. LTD. v. COMMR. OF C. EX. & S.T., AHMEDABAD-III 167

some portion of the factory premises from the appellant and they are manufac-
turing Gadia Powder known as snuff tobacco. That the units have not taken any
central excise registration as Gadia Powder is not chargeable to central excise
duty. That M/s. SEPL, after receipt of snuff, i.e. gadia powder, from the appel-
lant, are exporting the same under ARE-1/ARE-2 by stuffing the same in con-
tainers. M/s. SEPL also claimed the ownership of the seized goods and the same
were ordered to be released to them on execution of appropriate bond and guar-
antee. Statement of Shri Rafique Sattar Kachhi, Manager of the appellant was
also recorded on 31-10-2007 wherein he stated that the appellant is engaged in
purchase and processing of tobacco at the portion of the factory, which has been
taken on lease by M/s. SEPL. They pack gadia powder in 50 kg bags and transfer
the same to M/s. SEPL. That gadia powder is nothing but tobacco powder with
kandi bits. M/s. SEPL is then exporting the gadia powder in the name of Afzal
snuff. Shri Arif Abdul Kader Fazlani, director of the appellant, in his statement
dated 13-11-2007 also narrated the same. The officers had drawn the sample of
Afzal (Regd.) snuff tobacco and tobacco powder, which were sent to the Chemi-
cal Examiner on 25-1-2008 for testing. The Chemical Examiner vide report dated
28-3-2008 in respect of snuff tobacco, opined that “the sample is in the form of
coarse brown powder. It is other than snuff. The sample U/R may be considered
as manufactured tobacco”. In respect of tobacco powder, he opined that “sample
is in the form of coarse brown powder. It is other than snuff. The sample U/R
may be considered as manufactured tobacco.” However, on 22-4-2008, the Chem-
ical Examiner, CRCL, Vadodara communicated the ingredients in both the sam-
ples of manufactured tobacco that the same are Tobacco powder mixed with cal-
cium oxide (CaO), katha, flavouring agents etc. In respect of such reports, state-
ments of Shri Faizal Yunusbhai Fazlani, director of the appellant firm and Shri
Salimbhai Yakubhai Momin, supervisor were recorded wherein they both disa-
greed with the report of the Chemical Examiner, Vadodara since it mentioned
that the goods “may be considered” as manufactured tobacco. They also stated
that the seized goods belonged to M/s. SEPL. The appellant M/s. SEPL had also
requested for re-testing of sample which was not acceded. We find that firstly
during the visit of the officers, the machines which were found were only for cut-
ting and sieving operations and no machines like mixture or any processing ma-
chine which can mix tobacco powder with katha, calcium oxide or flavouring
agents were found to be available in the factory premises. It is coupled with the
fact that when the machines were found to be in a running position, then pro-
cessing and mixing machines for manufacture of chewing tobacco would also
have been found. However, no such machines were found, which gives credence
to the claim of the appellant that they were not manufacturing any chewing to-
bacco. We also find that the appellant and M/s. SEPL were having the same
management and M/s. SEPL claimed to be the owner of the finished goods. In
fact, the finished goods were released provisionally by the Revenue on the appli-
cation filed by M/s. SEPL. Thus, it appears that the Department itself accepted
the fact that M/s. SEPL are the owners of such impugned goods. We find that the
Chemical Examiner in his report dated 28-3-2008 merely stated that the samples
are in the form of coarse brown powder. It is other than snuff and the samples
under reference may be considered as manufactured tobacco. It is only on 22-4-
2008 that the Chemical Examiner stated that the tobacco powder is mixed with

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