Changing the classification of goods without proper evidence is not valid, the Chandigarh bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the demand for excise duty is not sustainable.
The appellant challenged the order dated 14.07.2021 passed by the Commissioner of CGST, Haryana by which the change of classification of the product as zarda scented tobacco was confirmed and confirmed the demand of central excise duty along with interest and equal penalty and also imposed the penalty of Rs. One crore on Shri Indra Dev Tripathi, Director and of Rs. Twenty-five lakhs on Shri Ashok Nahata, Manager.
The Appellant, M/s. Som Flavour Malasa Pvt. Ltd manufactured chewing tobacco (without lime tube) under various names and filed necessary declarations with the department i.e. Form-1 and continued to declare during the period August 2015 to January 2016.
It was observed that single-track FFS pouch packing machines were to be installed/un-installed in the factory and were to be put into use for the production/packing of the chewing tobacco without lime tubes in terms of Notification No.11/2010-CE(NT) dated 27.2.2010 as amended vide Notification No.04/2015CE(NT) dated 1.3.2015.
To verify the correct classification of the product, a sample of DB Royal Chewing Tobacco was drawn from the factory premises of the Appellants under panchnama dated 24.7.2015 and the same was sent to Central Revenues Control Laboratory (CRCL), New Delhi for testing on 28.7.2015 specifically asking „the party has classified the product as Chewing Tobacco.
The department opined that „the sample analyzed under reference has the characteristics of Zarda Scented Tobacco.
The Tribunal found that the department has failed to discharge its burden for changing the classification by adducing/ producing some material evidence. Further observed that if the department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the department has to adduce proper evidence and discharge the burden of proof.
A Coram comprising Mr P V Subba Rao, member (technical) Mr Ajay Sharma, member (judicial) held that the Revenue has not produced any material evidence on record to support the change of classification by them from „Chewing Tobacco‟ under heading 24039910 to „Jarda Scented Tobacco‟ under heading 24039930 and set aside the impugned order. The appeals filed by the appellants were allowed.
Ms Seema Jain, Advocate for the Appellant Mr Rajiv Gupta & Ms Swati Chopra & Mr Munish Arya, Authorised Representatives for the Respondent
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