LexCOMMR. OF CEN. EXC. AHMEDABAD versus M/S URMIN PRODUCTS P. LTD. AND OTHERS
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[2023] 13 S.C.R. 573 : 2023 INSC 951 573 CASE DETAILS COMMR. OF CEN. EXC. AHMEDABAD v. M/S URMIN PRODUCTS P. LTD. AND OTHERS (Civil Appeal No. 10159-10161 of 2010) OCTOBER 20, 2023 [S. RAVINDRA BHAT AND ARAVIND KUMAR, JJ.] HEADNOTES Issues for consideration: The primary dispute in the present seven groups of appeals revolved around classifi cation of the product in question keeping in view two competing Central Excise Tariff Sub-Headings / entries i.e. under CET SH 2403 9910 as ‘chewing tobacco’ or under CET SH 2403 9930 as ‘zarda/ jarda scented tobacco’. Ancillary issues related to invoking of the proviso to Section 11A of the Central Excise Act, 1944 and declaration made r.6 of the ‘Chewing Tobacco’ and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 (CTPM Rules). Central Excise Tax, 1944 – s.11A, proviso – Invoking extended period of limitation – Deliberate intention to avoid payment of duty by the assessee by misclassifi cation and willful misstatement of its product – Adjudicating Authority therefore justifi ed in invoking the extended period as provided in the proviso to s.11A(1). Held: Notifi cation No.2 of 2006 dated 01.03.2006 was issued in supersession of Notifi cation No.13 of 2002 dated 01.03.2002 specifying thereunder the goods covered under Section 4A of Act 1944 for MRP- based assessment. The notifi cation did not specify the goods falling under CET SH 2403 9930 (‘zarda/jarda scented tobacco’) but covered the goods falling under CET SH 2403 9910 (‘chewing tobacco’). Since the ‘zarda/ jarda scented tobacco’ was not specifi ed under MRP-based assessment under Section 4A of CE Act, the goods had to be assessed under Section 4 of the CE Act. The abatement provided to the goods classifi ed under CET SUPREME COURT REPORTS [2023] 13 S.C.R. 574 SH 2403 9910 was 50 percent. Hence, if the goods are cleared as ‘chewing tobacco’ the duty has to be paid on lower value resulting in payment of a 35 lesser amount of duty, as the value determined under Section 4A after 50 percent abatement was much lesser compared to transactional value under Section 4 of CE Act. It is for this precise reason the assessee changed the classifi cation from ‘zarda/jarda scented tobacco’ to ‘chewing tobacco’. ‘Zarda/jarda scented tobacco’ was brought into the ambit of Section 4A of the CE Act (MRP-based assessment), by virtue of amendment to Notifi cation No.2 of 2006 vide Notifi cation No.16 of 2006 dated 11.07.2006. In other words, ‘zarda/jarda scented tobacco’ was not specifi ed for assessment under Section 4A of CE Act for the period 01.03.2006 to 10.07.2006. In the light of the same, the Revenue was correct and justifi ed in issuing the show cause notice. Though one of the contentions raised by the assessee was that they had fi led a letter on 30.03.2006 to the Department clearly showing the change in the classifi cation by the assessee, however, the letter dated 30.03.2006 had been cleverly drafted and it does not mention in detail the product which they were manufacturing at that material time namely ‘zarda/jarda scented tobacco’. It is this hiding of the fact and not specifying the details in their letter that led to the issuance of the show cause notice and invocation of Section 11A and Section 11 AC of the CE Act, by the Department. It cannot be ignored that till fi ling of the letter dated 30.03.2006, the assessee itself was classifying the product as ‘zarda/jarda scented tobacco’ falling under CET SH 2403 9930 and being a large-scale manufacturer and paying large sums of amount as duty, to contend that it was unaware of the diff erence between these two products, or to contend that it had classifi ed the product as ‘zarda/ jarda scented tobacco’ by ignorance, is not a plausible justifi cation on part of the assessee. However, on the issuance of Notifi cation No.2 of 2006 dated 01.03.2006 under which ‘zarda/jarda scented tobacco’ was excluded or in other words not included in the said notifi cation, the assessee changed the description of its product from ‘zarda/jarda scented tobacco’ to ‘chewing tobacco’. The date of communication of the letter dated 30.03.2006 by the assessee also acquires signifi cance in as much as the Notifi cation No.2 of 2006 dated 01.03.2006 were to take eff ect from 01.04.2006, just two days later. The intention was to evade payment of duty payable under Section 4 of CE Act; despite knowing the fact that its product wa
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