Damodar J. Malpani & Anr. Vs. Collector of Central Excise
EmailAppeal: Civil Appeal Nos. 7022-7023 of 1994
Petitioner: Damodar J. Malpani & Anr.
Respondent: Collector of Central Excise
Apeal: Civil Appeal Nos. 7022-7023 of 1994
Judges: Ruma Pal & S.N. VARIAVA, JJ.
Date of Judgment: Dec 09, 2002
Head Note:
EXCISE
Central Excise Act, 1944
Tariff item 24.01 or 24.04 – Chewing tobacco – Classification – Another manufacturer classified under heading 24.01 – Process of assessee claimed to be same – No reason for classifying the assessee under head 24.04. Held that this cannot be discriminated. Matter remitted back to tribunal for considering the product of assessee and other manufacturer and to find out any distinction in product and process among the two. Appeal allowed. (Paras 4, 5, 7)
JUDGEMENT:
ORDER
1. The appellants before us have impugned the decision of the tribunal by which the tribunal upheld the decision of the excise authorities to classify the product manufactured by the appellant under tariff heading 24.04 viz., “manufactured tobacco”. According to the appellant the product was properly classifiable under heading 24.01 i.e. “unmanufactured tobacco”.
2. It is not in dispute that the appellants’ product is chewing tobacco. It is also not in dispute that chewing tobacco is not necessarily manufactured tobacco or classifiable under tariff heading 24.04. The classification of chewing tobacco as “unmanufactured’ or “manufactured’ tobacco will ultimately depend on the process adopted for and the composition of the chewing tobacco. The appellants have relied upon the instance of a particular manufacturer of chewing tobacco, namely, M/s. Chandulal K. Patel and company who also manufactures chewing tobacco under the trade name ‘Karta Chhap Zarda’ and whose product has been classified by the excise authority under unmanufactured tobacco under tariff heading 24.01. According to the appellants, their product was, in substance the same as ‘Karta Chhap Zarda’ and they had followed the same process as M/s. Chandubhai Patel & Co.
3. It appears from the records that several letters were written by the appellants to the excise authorities requesting that a sample of the appellants’ product may be chemically analysed at the appellants’ cost for the purpose of determining whether the appellants’ product or process in any way differed from the product and process of M/s. Chandulal K. Patel and Company. However, the excise authorities decided against the appellants without heeding such request. On 4.8.88 a decision was taken by the assistant collector to classify the appellants product under tariff heading, 24.04. On 11.8.88 a sample of the appellants’ product was taken by the respondents but returned within one week without testing on the ground that the issue was being finalised by the assistant collector. In the appeal preferred to the collector, the appellants again raised the issue specifically that the process followed by and the product of the appellants were identical with that of M/s. Chandulal K.Patel and Company and that the appellants product should be similarly classified under heading 24.01. While upholding the decision of the assistant collector, the collector did not consider this aspect of the matter at all. The point was again taken specifically in the appellants appeal before the customs, excise and gold (control) appellate tribunal. The tribunal however dismissed the appeal and said :
“The appellants have stated that some of the manufacturers who were producing similar goods, were not paying any excise duty on their production. These matters are not before us and it is neither possible nor desirable for us to deal with these matters. Suffice it to say that each and very case has to be examined in the light of our above observations, and it is for the competent central excise officers to come to correct decisions in consonance with the principles of uniformity, equity and justice”.
4. It is difficult to understand the reasoning of the tribunal. The least that the tribunal could have done in the interest of ‘uniformity’ was to call upon the revenue authorities to explain why they were making a distinction between the appellants product and that of M/s. Chandulal K. Patel without subjecting the appellants product to any chemical analysis.
5. In their appeal from the decision of the tribunal before us the appellants have again raised the issue that the tribunal should have considered the fact that the appellants and Chandulal K. Patel & Co’s products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under tariff heading 24.04, the appellants should get the same benefit.
6. At the hearing today we sought an explanation from the learned counsel appearing on behalf of the revenue authorities as to why different stands had been taken in the cases of M/s. Chandulal K. Patel & Company and the appellant. Since the matter had not been squarely dealt with on facts at any stage by any of the authorities below, it was not possible for learned counsel to give us the reasons for drawing this distinction between the two manufacturers and differently classify what were alleged to be materially the same product.
7. In the circumstances we deem it appropriate to set aside the order of the tribunal and remand the matter to the tribunal for considering whether the product and process followed by M/s. Chandulal K. Patel & Co. is the same as that of the appellants. For the said purpose, the tribunal will send a sample of the appellants product for the chemical analysis if not already done. The tribunal will thereafter, consider the question of classification of the appellants’ product having regard to the classification of ‘Karta Chhap Zarda’ the chemical analysis report and any other material that may be placed before it by the respective parties.
8. The appeals are disposed of on the aforesaid terms. There will be no order as to costs.
1. The appellants before us have impugned the decision of the tribunal by which the tribunal upheld the decision of the excise authorities to classify the product manufactured by the appellant under tariff heading 24.04 viz., “manufactured tobacco”. According to the appellant the product was properly classifiable under heading 24.01 i.e. “unmanufactured tobacco”.
2. It is not in dispute that the appellants’ product is chewing tobacco. It is also not in dispute that chewing tobacco is not necessarily manufactured tobacco or classifiable under tariff heading 24.04. The classification of chewing tobacco as “unmanufactured’ or “manufactured’ tobacco will ultimately depend on the process adopted for and the composition of the chewing tobacco. The appellants have relied upon the instance of a particular manufacturer of chewing tobacco, namely, M/s. Chandulal K. Patel and company who also manufactures chewing tobacco under the trade name ‘Karta Chhap Zarda’ and whose product has been classified by the excise authority under unmanufactured tobacco under tariff heading 24.01. According to the appellants, their product was, in substance the same as ‘Karta Chhap Zarda’ and they had followed the same process as M/s. Chandubhai Patel & Co.
3. It appears from the records that several letters were written by the appellants to the excise authorities requesting that a sample of the appellants’ product may be chemically analysed at the appellants’ cost for the purpose of determining whether the appellants’ product or process in any way differed from the product and process of M/s. Chandulal K. Patel and Company. However, the excise authorities decided against the appellants without heeding such request. On 4.8.88 a decision was taken by the assistant collector to classify the appellants product under tariff heading, 24.04. On 11.8.88 a sample of the appellants’ product was taken by the respondents but returned within one week without testing on the ground that the issue was being finalised by the assistant collector. In the appeal preferred to the collector, the appellants again raised the issue specifically that the process followed by and the product of the appellants were identical with that of M/s. Chandulal K.Patel and Company and that the appellants product should be similarly classified under heading 24.01. While upholding the decision of the assistant collector, the collector did not consider this aspect of the matter at all. The point was again taken specifically in the appellants appeal before the customs, excise and gold (control) appellate tribunal. The tribunal however dismissed the appeal and said :
“The appellants have stated that some of the manufacturers who were producing similar goods, were not paying any excise duty on their production. These matters are not before us and it is neither possible nor desirable for us to deal with these matters. Suffice it to say that each and very case has to be examined in the light of our above observations, and it is for the competent central excise officers to come to correct decisions in consonance with the principles of uniformity, equity and justice”.
4. It is difficult to understand the reasoning of the tribunal. The least that the tribunal could have done in the interest of ‘uniformity’ was to call upon the revenue authorities to explain why they were making a distinction between the appellants product and that of M/s. Chandulal K. Patel without subjecting the appellants product to any chemical analysis.
5. In their appeal from the decision of the tribunal before us the appellants have again raised the issue that the tribunal should have considered the fact that the appellants and Chandulal K. Patel & Co’s products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under tariff heading 24.04, the appellants should get the same benefit.
6. At the hearing today we sought an explanation from the learned counsel appearing on behalf of the revenue authorities as to why different stands had been taken in the cases of M/s. Chandulal K. Patel & Company and the appellant. Since the matter had not been squarely dealt with on facts at any stage by any of the authorities below, it was not possible for learned counsel to give us the reasons for drawing this distinction between the two manufacturers and differently classify what were alleged to be materially the same product.
7. In the circumstances we deem it appropriate to set aside the order of the tribunal and remand the matter to the tribunal for considering whether the product and process followed by M/s. Chandulal K. Patel & Co. is the same as that of the appellants. For the said purpose, the tribunal will send a sample of the appellants product for the chemical analysis if not already done. The tribunal will thereafter, consider the question of classification of the appellants’ product having regard to the classification of ‘Karta Chhap Zarda’ the chemical analysis report and any other material that may be placed before it by the respective parties.
8. The appeals are disposed of on the aforesaid terms. There will be no order as to costs.
