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2023 Supreme(SC) 1083

SUPREME COURT OF INDIA
S. RAVINDRA BHAT, ARAVIND KUMAR, JJ.
Commr. of Cen. Exc. Ahmedabad – Appellant
Versus
M/s Urmin Products Pvt. Ltd. and Others – Respondents
Civil Appeal Nos. 10159-10161 of 2010, Civil Appeal No. 5146 of 2015, Civil Appeal No. 959 of 2019, Civil Appeal No. 2469 of 2020, Civil Appeal Nos. 3596, 6519, 6521, 6522, 6523-6524, 6525, 6526, 6527, 6528, 6529, 6530, 6531-6537, 6538-6542 of 2023, Diary Nos. 2810, 3484, 3487, 3492, 3513, 3536, 3544, 3545, 3547, 6888 of 2020, Diary Nos. 14581, 44912 of 2019
Decided On : 20-10-2023

Advocates appeared:
For the Appellant(s) : Mr. B. Krishna Prasad, AOR Mr. S.K. Bagaria, Sr. Adv. Mr. Ramesh Singh, Sr. Adv. Ms. Sheena Taqui, Adv. Ms. Akansha Saini, Adv. Mr. Ajit K Sinha, Adv. Mr. Shiv Vinayak Gupta, Adv. Mrs. Bina Gupta, AOR Mr. N. Venkatraman, A.S.G. Mr. Mukesh Kumar Maroria, AOR Ms. Nisha Bagchi, Adv. Mr. H.R. Rao, Adv. Mr. S.K. Singhania, Adv. Ms. Aakansha Kaul, Adv. Mr. Shetty Uday Kumar Sagar, Adv.
For the Respondent(s): Mr. Kishan Datta, AOR Mr. A R Madhav Rao, Adv. Mr. A Mukunda Rao, Adv. Mr. Siddhant Buxy, AOR Mr. Ajay K. Jain, Adv. Ms. Seema Jain, Adv. Mr. Dushant Mahant, Adv. Mr. Vimlesh Kumar, Adv. Mr. Dileep Pillai, Adv. Mr. Atul Shankar Vinod, Adv. Mr. M. P. Vinod, AOR Mr. Vivek Kohli, Sr. Adv. Mr. S K Bagaria, Sr. Adv. Mr. Sunil Tyagi, Adv. Mr. Ashwani Sharma, Adv. Mr. Nalin Talwar, Adv. Mr. Sandeep Buraria, Adv. Mr. Archit Upadhayay, AOR Ms. Bhavya Bhatia, Adv. Mr. Kumar Ajit Singh, Adv. Mr. Rupesh Kumar, AOR Mr. R. Krishnan, Adv. Ms. Pankhuri Shrivastava, Adv. Ms. Neelam Sharma, Adv. Mr. Rajeev Sharma, Adv. Mr. Aryaman Sharma, Adv. Mr. B. Krishna Prasad, AOR

The court established that the burden of proof on classification disputes lies with the Revenue, affirming that misclassification can lead to penalties, while reclassifications must reflect actual product characteristics and adhere to market understanding.

Headnote:(A) Central Excise Act, 1944 - Section 11A - Classification of goods - The Revenue contended the incorrect classification of products by the assessee as 'chewing tobacco' instead of 'zarda/jarda scented tobacco.' The appeal was structured in seven groups to ascertain the respective classifications. The principle of common parlance was highlighted, and the burden of proof on classification disputes remained with the Revenue (Paras 33, 96-104, 128-141).

(B) Misclassification - The tribunal noted that improper classification does not preclude the Revenue from taxing appropriately. Improperly declared products can lead to penalties and reassessment (Paras 25, 37, 110-142).

(C) Evidence and Burden of Proof - The court reaffirmed that the burden to substantiate claims regarding classifications lay with the Revenue, especially in cases of mixed products. The assessment must be based on actual product characteristics and market understanding (Paras 48, 49, 123-128).

(D) Ambiguities in Tariff Classification - The tribunal emphasized that where multiple classifications exist, the more beneficial classification to the taxpayer is preferred, reasserting principles of justice and fairness in fiscal matters (Paras 28-34, 99-104).

Findings of Court:
The appeals were largely decided in favor of the Revenue, with certain cases remanded for reassessment based on updated tariff entries and classifications.

Result: Some appeals allowed, others dismissed, with remanding for specific issues (Paras 143).

Table of Content
1. delay condoned today. (Para 1 , 2 , 3 , 4)
2. court discusses groupings for efficiency. (Para 5 , 6 , 7 , 9)
3. introduction of product classification. (Para 19 , 20)
4. issues on classification raised. (Para 21 , 22)
5. arguments presented by both revenue and assessee regarding classification. (Para 23 , 41)
6. details of party submissions. (Para 24 , 25)
7. issues on limitation and classification. (Para 28 , 29)
8. court analyzes problems in evidence. (Para 30 , 31 , 33)
9. essence of the case relates to duty evasion. (Para 34 , 35)
10. determination of product nature and duty. (Para 46 , 47)
11. ratio decidendi concerning misclassification and duty evasion. (Para 60)
12. final conclusions on the classification issues. (Para 71 , 141)
13. final order allowing some appeals and dismissing others. (Para 110 , 143)
14. outline of subsequent appeals. (Para 123 , 124)

JUDGMENT :

ARAVIND KUMAR, J.

1. Delay condoned on 23.08.2023.

2. These appeals are divided into seven (7) groups for convenience, and facts of each group are enumerated under the respective groups whereunder questions or points for determination have been formulated and analysed thereunder. For the purpose of convenience, the details of the judgment with reference to each group and details thereof are enumerated herein-below in the following table no. 1:

TABLE 1

GROUP NUMBER	CONTENT - DETAILS	PAGE NUMBER
GROUP NUMBER	CONTENT - DETAILS	FROM	TO
1.	Commissioner of Central Excise Ahmedabad vs. M/s Urmin Products and Others [C.A. No. 10159-10161 of 2010]
	(i) Brief Facts	17	20
	(ii) Submissions of Parties	20	29
	(iii) Discussion and Finding	29	49
2.	Commissioner of Central Excise, Chandigarh vs. M/s. Flakes-N-Flavourz [C.A. No. 5146 of 2015]
	(i) Brief Facts	50	51
	(ii) Submissions of Parties	51	55
	(iii) Discussion and Findings	56	72
3.	Commissioner of Central Goods and Service Tax Excise and Customs Bhopal vs. Kaipan Masala Pvt. Ltd. [Diary No. 44912 of 2019; Diary No. 6888 of 2020]
	(i) Brief Facts	73	78
	(ii) Submissions of Parties	78	81
	(iii) Discussion and Findings	81	86
4.	M/s Dharampal Premchand Ltd. vs. Commissioner of Central Excise [C.A. No. 2469 of 2020 along with Diary Nos. 3492, 3487, 2810, 3484, 3513, 3536, 3544, 3545, 3547 of 2020]
	(i) Brief Facts	86	90
	(ii) Submissions of Parties	90	94
	(iii) Discussion and Findings	95	116
5.	Commissioner of Central Goods and Service Tax vs. M/s Tej Ram Dharam Paul [C.A. No. 3596 of 2023]
	(i) Brief Facts	116	119
	(iii) Discussion and Findings	121	125
6.	Commissioner of Central Excise and Service Tax Meerut vs. M/s Som Pan Products Pvt. Ltd. [D. No. 14581 of 2019]
	(i) Brief Facts	126	127
	(ii) Submissions of Parties	127	129
	(iii) Discussion and Findings	129	130
7.	Commissioner of Central Excise and ST Alwar vs. Tara Chand Naresh Chand [C.A. No. 959 of 2019]
	(i) Brief Facts	131	133
	(ii) Submissions of Parties	133	137
	(iii) Discuss and Findings	137	142
	ORDER	Page 143-144

3. On behalf of the Revenue in the various groups of matters before this Court, we have heard:

(2) Ms. Nisha Bagchi, learned standing counsel.

4. On behalf of the assessee, we have heard:

(2) Mr. A.R. Madhav Rao, Mr. Rupesh Kumar and Ms. Seema Jain, learned counsel.

5. The Appellants in Group Nos. 1, 2, 3, 5, 6 and 7 and the Respondents in Group No. 4, namely the ‘Commissioner of Central Excise’ are hereinafter referred to as “Revenue.” The Appellants in Group No. 4 and the respective responde

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2023 Supreme(SC) 1083

The court established that the burden of proof on classification disputes lies with the Revenue, affirming that misclassification can lead to penalties, while reclassifications must reflect actual product characteristics and adhere to market understanding.

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