CESTAT Holds Paper Biri Not Classifiable as Cigarettes, Rejects Central Excise Duty Demand [Read Order]
CESTAT upheld paper biri classification and quashed the Revenue’s cigarette-based duty demand for lack of evidence and absence of power-driven machinery or market enquiry.
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the Revenue’s appeal and upheld the assessee’s classification, holding that the authorities wrongly treated “paper biri” as cigarettes despite absence of evidence the product being manufactured without the aid of power, packed and marketed as “bidi,” and never shown to be known in common trade parlance as cigarettes.
The respondent, Salasaar Exim, was engaged in the manufacture of paper biri using manually operated wooden jigs without electricity, and cleared the product with the word “Bidi” clearly printed on the wrappers and packaging.
The department alleged that the goods were in fact filter cigarettes classifiable under 24022040, relying on similarities in size, use of filter plugs, packing in shells and slides, and procurement of cut tobacco from Golden Tobacco Ltd., while asserting that wooden jigs were “machines.”
A Show Cause Notice proposed differential duty, interest and penalty, which the Deputy Commissioner confirmed by reclassifying the product as cigarettes. However, in a subsequent order, the demand for the later period was dropped.
Before the Commissioner (Appeals), the assessee argued that wooden jigs were not machines, that Chapter 24 of the Central Excise Tariff Act, 1985, imposed no restriction on size or packing of paper biris, and that the department had conducted no market enquiry to establish the product as cigarettes.
The assessee also emphasized that cut tobacco could legally be used for paper biri and that their product was consistently sold and declared as “bidi.”
The Commissioner (Appeals) accepted these submissions, and dismissed the Revenue’s appeal.
The Bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) held that the Revenue failed to discharge the burden of proof required to disturb the declared classification, noting that there was no evidence of power-driven machinery, no market enquiry to show the goods were known as cigarettes, and no material establishing that the assessee marketed the product as cigarettes.
The Tribunal also rejected reliance on the CRCL report, observing that its reference to the COPTA definition of “cigarette” could not override tariff-based classification under the Central Excise Tariff Act.
Also Read: Excise Duty Exemption for Tobacco Refuse allowable, By-Product in Cigarette Manufacturing: CESTAT
The Bench concluded that the goods were correctly classifiable as paper biri under 24031929, that resemblance to cigarettes or similar packing could not displace statutory classification, and that the Revenue’s grounds were based on assumptions, not evidence.
Accordingly, the Tribunal upheld the Commissioner (Appeals)’s order and set aside the duty demand, dismissing the Revenue’s appeal in full.
The department was represented by A.K. Choudhary, while the respondent remained absent.
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