Zarda/jarda scented tobacco not being specified under MRP based assessment had to be assessed u/s 4 of CE Act

Commr. of Cen. Exc. Ahmedabad Vs Urmin Products P. Ltd. (Supreme Court of India)

Supreme Court held that Notification No. 2 of 2006 dated 01.03.2006 didn’t specify the goods falling under CET SH 2403 9930, i.e., ‘zarda/jarda scented tobacco’, but it covers the goods falling under CET SH 2403 9910 i.e., ‘chewing tobacco’. Thus zarda/jarda scented tobacco not having been specified under MRP­ based assessment under Section 4A of the CE Act, the goods had to be necessarily assessed under Section 4 of the CE Act.

Facts- The assessee classified the product manufactured as ‘chewing tobacco’. Undisputedly, the assessee was availing the benefit of Notification No.13 of 2002 dated 01.03.2002 and adopting MRP-based assessment. Even after the introduction of 8-digit tariff classification (w.e.f. 28.02.2005), the assessee was availing the same benefit. However, in the teeth of two classifications made under Notification dated 24.02.2005, re-organizing the CET SH 2403 9910 as ‘chewing tobacco’ and CET SH 2403 9930 as ‘zarda/jarda scented tobacco’, which attracted duty of 34% on both the products at the time, the assessee classified or re-classified the product manufactured and hitherto declared as ‘chewing tobacco’ to ‘zarda/jarda scented tobacco’. Notification No.2 of 2006 dated 01.03.2006 issued in supersession of Notification No.13 of 2002 excluded ‘zarda/jarda scented tobacco’ and did not specify CET SH 2403 9930 for MRP­based assessment, or in other words did not include or did not specify ‘zarda/jarda scented tobacco’ for MRP-based assessment. Hence, the assessee started classifying the product manufactured as ‘chewing tobacco’ though he had declared earlier as ‘zarda/jarda scented tobacco’. Thus, by virtue of such deletion/omission in light of Notification No.13 of 2002, the assessment was required to be made under Section 4 which provides for the valuation of excisable goods for purposes of charging of duty of excise. In other words, the benefits that were flowing from the operation of Section 4A having been excluded by virtue of the Notification dated 01.03.2006, the assessee reverted to ‘chewing tobacco’ to avail the benefit of Section 4A.

Conclusion- Held that that the Notification No. 2 of 2006 dated 01.03 .2006 was issued in supersession of Notification 13 of 2002 dated 01.03.2002 specifying the goods covered under Section 4A of the CE Act, for MRP based assessment. The said notification did not specify the goods falling under CET SH 2403 9930, i.e., ‘zarda/jarda scented tobacco’, but it covers the goods falling under CET SH 2403 9910 i.e., ‘chewing tobacco’. Thus zarda/jarda scented tobacco not having been specified under MRP­based assessment under Section 4A of the CE Act, the goods had to be necessarily assessed under Section 4 of the CE Act. The assessee being aware that there being no change in the nature of the products, its ingredients and also the manufacturing process had changed and misclassified the product as ‘chewing tobacco’ from ‘zarda/jarda scented’ tobacco. Had the assessee continued its classification as ‘zarda/jarda scented tobacco’, the duty payable as per transaction value under Section 4 of the CE Act would have been much more than the determination under Section 4A of CE Act after 50% abatement. It is for this precise reason for avoiding and evading payment of the higher duty, the classification was deliberately changed from ‘zarda/jarda scented tobacco’ to ‘chewing tobacco’.

Held that when specific entry is found in a fiscal statute, the same would prevail over any general entry. If there are two or more sub-headings, the heading which provides the most specific description will have to be preferred to a heading providing a more general description.

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