Where both the assessee and the excise department have consistently classified a product under a specific tariff heading for years in returns and official orders, the department is precluded from unilaterally reclassifying the goods to demand differential duty.

JUSTICE DILIP GUPTA:

Excise Appeal No. 51464 of 2022 has been filed by M/s. Rajan Jhiriwal¹ to assail that portion of the order dated 31.01.2022 passed by the Additional Director General (Adjudication), New Delhi² that confirms the demand of central excise duty under section 11A(10) of the Central Excise Act, 1944³ for the reason that product manufactured and cleared by the appellant is classifiable as “zarda scented tobacco” under Central Excise Tariff Item⁴ 2403 99 30 and not CETI 2403 99 10 as “chewing tobacco” with interest under section 11AA and penalty under section 11AC of the Central Excise Act.

Excise Appeal No. 52254 of 2024 has been filed by M/s. R. R. Jhiriwal to assail that portion of the order dated 31.01.2022 passed by the Additional Director General that imposes a penalty upon him under rule 26 of the Central Excise Rules, 2002⁵.

Excise Appeal No. 52255 of 2024 has been filed by Robin Jhiriwal, Partner of the appellant, to assail that portion of the order dated 31.01.2022 passed by the Additional Director General that imposes a penalty upon him under rule 26 of the Central Excise Rules.

Excise Appeal No. 52256 of 2024 has been filed by Rajan Jhiriwal, Partner of the appellant, to assail that portion of the order dated 31.01.2022 passed by the Additional Director General that imposes a penalty upon him under rule 26 of the Central Excise Rules.

The appellant had started manufacturing two products, namely, zarda and supari with brand name “MAMA” at two separate units, namely, M/s. Rajan Jhiriwal and M/s. R.R. Jhiriwal.

The issue that arises for consideration in these appeals is whether the goods manufactured by the appellant deserves classification under CETI 2403 99 10 as “chewing tobacco” as claimed by the appellant or CETI 2403 99 30 as “zarda scented tobacco” as claimed by the department.

The records indicates that the appellant, by a letter dated 02.08.2012, intimated the Superintendent about its intention to start manufacturing MAMA zarda under the category of “chewing tobacco (powder form)” and filed Form-1 declaration under rule 6 of the Chewing Tobacco and in the Manufactured Tobacco Packaging Machine (Capacity Determination and Collection of Duty) Rules, 2010⁶.

The Assistant Commissioner of Central Excise⁷ passed an order dated 02.08.2012 in terms of rule 6(2) of the Capacity Determination Rules classifying the final products manufactured by the appellant under CETI 2403 99 10 of the Excise Tariff Act as “chewing tobacco”.

Subsequent to the issuance of Notification No. 05/2015-CE dated 01.03.2015, the appellant intimated the Deputy Commissioner of Central Excise⁸ of its decision to amend the classification of the final product from CETI 2403 99 10 (chewing tobacco) to CETI 2403 99 30 (zarda scented tobacco) and, accordingly, filed a declaration under rule 6 of the Capacity Determination Rules on 02.03.2015.

On 03.03.2015, the appellant had submitted process flow chart of final products to the jurisdictional Superintendent of Central Excise, Range-III, Alwar⁹.

In connection with the Form-1 declaration submitted by the appellant, an order dated 04.03.2015 was passed by the Deputy Commissioner under rule 6(3) of the Capacity Determination Rules classifying the final product under CETI 2403 99 10 as chewing tobacco.

On 04.03.2015, the appellant had filed online application for amendment in central excise registration.

On 04.03.2015, the Superintendent Central Excise forwarded the manufacturing process of the appellant to the Deputy Commissioner and reported in connection with the letter dated 02.03.2015 submitted by the appellant for change in classification that the final product of the appellant is classified under CETI 2403 99 10 and does not merit classification under CETI 2403 99 30.

For the subsequent periods, the Jurisdictional Assistant Commissioner also passed orders under rule 6(2) of the Capacity Determination Rules classifying MAMA zarda bran