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2020 ] BORSAD TOBACCO CO. PVT. LTD. v. COMMR. OF C. EX. & S.T., AHMEDABAD-III 171

asmuch as the classification of a product will not change depending upon
its use in the manufacture of different final products Whether the tobacco
powder is used further in the manufacture of Gul or Hooka Tobacco Paste
or Gudakhu, will not affect the classification of the Tobacco Powder as un-
manufactured tobacco under sub-heading 2401.00. On the contrary, the de-
cision relied upon by the adjudicating authority in the case of Ajanta Marble
and Chemical Industries (supra) is not applicable to the facts and circum-
stances of the present case inasmuch as the same involve a question relating
to crushing/grinding of limestone to obtain chips of powder and not pow-
dering or crushing of tobacco leaves. Accordingly, following the ratio of the
earlier decisions which are directly on the issue, we hold that the tobacco
powder fell under Heading 24.01 as unmanufactured tobacco and attracted
nil rate of duty. Demand of duty and penalty on the first appellants, M/s.
Shree Prasad Grinding Mills is thus set aside.
8. As the appeal of the main appellants has been allowed, there is no justi-
fication for imposition of penalty on the other appellants under the provi-
sions of Rule 209A. The same is accordingly set aside and their appeals are
allowed.”
The same view was taken by the Tribunal in case of Pramila Gudakhu Factory -
2003 (151) E.L.T. 720 (Tri. - Kolkata).
5.3 We also find that the appellants and M/s. SEPL were group com-
panies and during the course of proceedings, they had produced the lease
agreement copy, in which M/s. SEPL had taken a part of the factory premises on
lease. We also find that the seized goods itself were ordered to be released to
M/s. SEPL by the Joint Director (Preventive), Central Excise, Ahmedabad-III.
This clearly shows that even the Department had accepted the fact that M/s.
SEPL are the owner of that goods. It is also not in doubt that the goods were ul-
timately for exports for which the relevant Bond/LUT were filed by M/s. SEPL
and evidence of exports was produced duly certified by the jurisdictional Super-
intendent of M/s. SEPL before the adjudicating authority, which shows that oth-
erwise also the goods were for export purpose and not liable for duty. Since the
chemical examiner report being inconclusive and the appellants were not grant-
ed retest of the samples, therefore the goods cannot be considered as chewing
tobacco. It is coupled with the fact that no machines used for mixing of katha,
calcium oxide or flavouring agents were found to be installed in the factory of
the appellant, even though the factory was in running condition. We also find
that the appellant are merely getting the raw leaves and grinding them and after
making powder putting them into 50 kgs pack which is a bulk pack. The inten-
tion is not to market. Hence the nature of product would not take it into category
of manufacture. Thus, in view of the facts, as discussed above, we are of the view
that the goods cannot be considered as manufactured chewing tobacco and
would merit classification as unmanufactured tobacco falling under CTH No.
2401 since the only operation undertaken in respect of tobacco leaves was drying,
cutting and seining. Thus we hold that the impugned order holding classification
of goods under CTSH No. 2403 99 10 is not sustainable and the confiscation of
goods, demand of duty and penalty imposed upon all the appellants are not sus-
tainable. We, thus, set aside the impugned order and allow the appeals filed by
the appellants.
(Order pronounced in the open Court on 4-6-2019)
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EXCISE LAW TIMES  1st April 2020  333