Holding

The CEGAT erred in deciding the merits without first examining the propriety of the dismissal under Section 35(F), and its judgment is set aside.

Summary

The respondents, Alnoori Tobacco Products, were engaged in manufacturing tobacco powder and were served with show‑cause notices alleging that the product fell under tariff sub‑heading 2404.90 (manufactured tobacco) of the Central Excise Tariff Act, 1985. Their appeals before the Collector of Central Excise (Appeals) were dismissed for non‑compliance with Section 35(F) of the Act, which requires deposit of the demanded duty before an appeal can be entertained. The Customs, Excise and Gold Control Appellate Tribunal (CEGAT) nevertheless entertained the appeals on their merits and re‑classified the product under sub‑heading 2401.00 (unmanufactured tobacco). The Revenue challenged this, contending that CEGAT had no jurisdiction to go into the merits when the primary issue was the propriety of the dismissal under Section 35(F). The Supreme Court held that CEGAT failed to examine the dismissal under Section 35(F) and improperly relied on precedents without a proper factual comparison, rendering its judgment unsustainable. Consequently, the Court set aside the CEGAT order and remitted the matter back to the Tribunal for fresh adjudication.

Issues considered

The propriety of CEGAT entertaining the appeals on merits despite the Collector's dismissal under Section 35(F) of the Central Excise Tariff Act, 1985.
Whether CEGAT correctly applied precedent without proper factual analysis in classifying tobacco powder.
The applicability of Section 35(F) requirements to the dismissal of appeals.

Legislation cited

Central Excise and Salt Act, 1944
Central Excise Rules, 1944s. 174, s. 226, s. 52, s. 52A, s. 54, s. 9(1)
Central Excise Tariff Act, 1985s. 35(F)

Subjects

central exciseclassificationtariff sub‑headingSection 35(F)appellate tribunalprecedentfactual analysisjurisdiction

Judgment

COLLECTOR OF CENTRAL EXCISE, CALCUTTA A
V.

MIS ALNOORI TOBACCO PRODUCTS AND ANR.

JULY 21, 2004

[S.N. VARIAVA AND ARIJIT PASAYAT, JJ.] B

Central Excise Tariff Act, 1985.

S.35(F), Schedule-Tariff Sub-heading 2404.90-Tobacco powder/
dust obtained by crushing unmanufactured tobacco leaves-Classified C
under Sub-heading 2404.90 and demand raised-Collector (Appeals)
confirming the demand and dismissing appeals for non-compliance of
s.35(F)-Tribunal without examining the issue of non-compliance of
s.35(F), allowing the appeal on merits-Held, judgment of Tribunal is
unsustainable.
D
Precedent-Reliance on decisions-Held, court should not place
reliance on decisions without discussing their factual situations.

Judgments-Construing of-Held, judgments of courts are not to be
construed as statutes. E
The assessee-respondents, who were engaged in manufacture of
tobacco powder/dust, were served with show cause notices and demands
stating that their product fell under sub-heading 2404.90 of the
Schedule to the Central Excise Tariff Act, 1985. The demands were F
confirmed. Appeals filed before Collector of Central Excise (Appeals)
were dismissed for non-compliance of s.35(F) of the Act. The Customs,
Excise and Gold Control Appellate Tribunal allowed the appeal on
merits holding that the item was classifiable under tariff sub-heading
2401.00 as unmanufactured tobacco. Aggrieved, the Revenue filed the
present appeals. G

It was contended for the Revenue that the Tribunal should not
have gone into merits of the case as the issue before it related to the
propriety of dismissal of appeals by Collector (Appeals) for non-
compliance of the order in terms of s.35(F) of the Act. H
109
110 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.
A Disposing of the appeals and remitting the matter back to
CEGAT, the Court

HELD : 1.1. CEGAT did not consider the relevant aspects and
proceeded to decide the appeals on merits without examining the
B propriety of dismissal of appeals by the Collector (Appeals) for non-
compliance with the requirements of Section 35(F) of the Central
Excise Tariff Act, 1985. No finding has been recorded by CEGAT in
this regard. (113-D; 115-B)

2.1. Courts should not place reliance on decisions without discuss-
C ing as to how the factual situation fits in with the fact situation of the
decision on which reliance is placed. Circumstantial flexibility, one
additional or different fact, may make a world of difference between
conclusions in two cases. Observations of courts must be read in the
context in which they appear to have been stated. Judgments of Courts
are not to be construed as statutes. To interpret words, phrases and
D provisions of a statute, it may become necessary for judges to embark
into lengthy discussions but the discussion is meant to explain and not
to define. [L13-F-G; 114-E)

2.2. In the instant case, there was a categorical finding recorded
E on facts by the adjudicating authority that the tobacco powder obtained
bycrushingofun-manufactured tobacco leaves, is a different commercial
product having a distinct name and character; whereas in the case*
relied upon by CEGA T it was specifically noticed that there was no
material placed by Central Excise authorities to show that a different
commercial product had come into existence. [113-D-E)
F
*Sree Biswa Vijaya Industries v. CCE Bhubaneshwar, [1997) 96
ELT 712 (Tribunal); Shamsuddin Akbar Khan & Co. v. Commissioner
of Central Excise, BBRS (Order No. A-888/Cal/97 dated 29.7.1997),
distinguished.
G Shree Chand Agarwal v. Collector ofCentral Excise, (1990) 48 ELT
115 (Tribunal), cited.

London Graving Dock Co. ltd v. Horton, (1951) AC 737; Home
Office v. Dorset Yacht Co., [197012 All ER 294 and Herrington v. British
H Railways Board, [19721 2 WLR 537, cited.
C.C.E. v. ALNOOR! TOBACCO PRODUCTS [PASAYAT, J.] 111

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4502- A
4503 of 1998.

From the Judgment and Order dated 5.3.98 of the Central Excise and
Gold (Control) Appellate Tribunal, Eastern Bench at Calcutta in A. No.
E(SB)-665, 666/92 in F.O. No. A-254-255 of 1998.
B
K. Swami and B. Krishna Prasad for the Appellant.

Ramesh Singh, Ms. Divya Roy and Ms. Bina Gupta for the Respond-
ents.

The Judgment of the Court was delivered by
c
;
ARIJIT PASA YAT, J. : These appeals are directed against the
common judgment of the Customs, Excise and Gold (Control) Appellate
Tribunal, Eastern Branch, Calcutta (in short the 'CEGAT') which is being
assailed by the Central Excise authorities. By the impugned judgment, D
CEGAT held that tobacco powder obtained by crushing of tobacco leaves,
stems, stalks and butts are classifiable under tariff sub-heading 2401.00 as
un-manufactured tobacco and not classifiable as manufactured tobacco
under sub-heading 2404.90 of the Schedule to the Central Excise Tariff
Act, 1985 (in short the 'Tariff Act'). E
Background facts in a nutshell are as follows:

The respondents are having licence under the Central Excise and Salt
Act, 1944 (in short the 'Act'). They are engaged in manufacture of 'Gui'.
While scrutinizing the records, the Assistant Collector of Central Excise, F
Barrackpore Division, Calcutta noticed that during the period from 1.2.90
to 31.7.90 manufactured tobacco powder/dust fall under sub-heading
2404.90 of the schedule to the 'Tariff Act'. He felt that without any
justifiable reason, duty involving Rs. 8,871.65 (both basic and special) was
not paid, statutory records we.re not maintained, thereby contravening G
provisions of Rules 174, 9(1 ), 52, 52A, 54 and 226 of the Central Excise
Rules, 1944 (in short the 'Rules'). Show cause notice was issued on
30.1.1991 proposing to levy the demand from 1.8.90 to 31.12.1990.
J' .> Similarly show cause notices were also issued for the demands for the
period from l.J..1991 to 31.5.1991 and from 1.6.1991 to 24.7.1991. H
ii\;;

A
112 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

The Superintendent of Central Excise of the concerned Range issued
show cause-cum-demand notice. After hearing the respondents the Assistant
Collector held that tobacco powder/dust emerging by crushing of
'
un-manufactured tobacco leaves is a distinct product having distinct name
and character and fall under sub-heading 2404.90. The demands were
confirmed.
B
Appeals were preferred before the Collector of Central Excise
(Appeals), Calcutta along with an application for stay. The stay application
was rejected by the Collector (Appeals) holding that no case for stay of
realization of duty demanded was made out. Since the stay order was not
c complied with by depositing the amount of duty demanded, the appeals
were dismissed for non compliance of Section 35(F) of the Act. Similar
was the position in respect of demands raised against both the respondents.

The respondents preferred appeals before the CEGAT. As noted
D above, the CEGAT was of the view that the issue involved related to the
tariff sub-heading applicable to the product.

The respondents who were appellants before the CEGAT submitted
that the issue stood decided in view of the decisions rendered in two cases,
i.e., Sree Biswa Vijaya Industries v. C.C.E. Bhubneshwar, (1997) 96 ELT
E 712 (Tribunal) and Shamsuddin Akbar Khan & Co. v. Commissioner of
Central Excise, BBSR (Order no A-888/Cal/97 dt. 29.7.1997).

Learned counsel appearing for the Central Excise authorities submit-
ted that in Shree Chand Agarwal v. Collector of Central Excise, (1990)
F 48 EL T 115 (Tribunal) it was categorically held that tobacco powder in
various forms and combinations falls in the manufactured category and
therefore tobacco powder is classifiable under tariff sub-heading 2404.90.
The Tribunal noted that issue in Shree Chand's case (supra) related to
classification of tobacco dust and not of tobacco powder and what was
stated in paragraph 16 in the said case was not a binding precedent and
G was merely in the nature of obiter dictum. However, it held that other two
decisions relied upon by the present respondents were directly in issue.
Accordingly, the appeals were allowed.
.._ ~.

Learned counsel appearing for the appellant submitted that the only
H question that the CEGAT could have decided related to the propriety of
•
C.C.E. v. ALNOOR! TOBACCO PRODUCTS [PASAYAT, J.] 113

dismissal of the appeals by the Collector (Appeals) when there was non A
compliance of the order in terms of Section 35(F) of the Act. It could not
have gone into the merits. Even otherwise when there is a categorical
finding recorded by the adjudicating authority that the tobacco powder was
a different commercial commodity and an article having distinct name and
~ character, this factual finding could not have been disturbed by the CEGAT
B
without any material to the contrary. The decisions in the two cases relied

- upon by the CEGAT were based on different factual premises.

In response, learned counsel for the respondents submitted that the
factual position was identical and, therefore, the CEOAT was justified in
placing reliance on the two decisions referred to above and to hold that c
tobacco powder was not a different product from tobacco leaves.

It is undisputed that the First appeals filed by the present respondents
were dismissed on the ground of non compliance with the requirements
of Section 35(F) of the Act. The CEGAT should have primarily considered
that aspect. No finding has been recorded by the CEGAT. Additionally, D
we find that unlike the two cases relied upon by the CEGAT there was a
categorical finding recorded on facts by the adjudicating authority that the
tobacco powder obtained by crushing of un-manufactured tobacco leaves
is a different commercial product having a distinct name and character. In
the cases relied upon by the CEGAT it was categorically noticed that there E
was no material placed by the Central Excise authorities to show that a
different commercial product had come into existence.

Courts should not place reliance on decisions without discussing as
to how the factual situation fits in with the fact situation of the decision
on which reliance is placed. Observations of Courts are neither to be read
F
as Euclid's theorems nor as provisions of the statute and that too taken out
of their context. These observations must be read in the context in which
~
they appear to have been stated. Judgments of Courts are not to be
construed as statutes. To interpret words, phrases and provisions of a
statute, it may become necessary for judges to embark· into lengthy G
discussions but the discussion is meant to explain and not to define. Judges
9 interpret statutes, they do not interpret judgments. They interpret words of
statutes; their words are not to be interpreted as statutes. In London Graving
' -~
-.s.r Dock Co. Ltd. v. Horton, (1951) AC 737 at p. 761, Lord Mac Dermot
observed: H
114 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A "The matter cannot, of course, be settled merely by treating
the ipsissima vertra of Willes, J as though they were part of an
Act of Parliament and applying the rules of interpretation appro-
priate thereto. This is not to detract from the great weight to be
given to the language actually used by that most distinguished
judge."
B
In Home Office v. Dorset Yacht Co., (1970) 2 All ER 294 Lord Reid
said, "Lord Atkin's speech ..... is not to be treated ~ if it was a statute
definition It will require qualification in new circumstances." Megarry, J
in (1971) I WLR I 062 observed: "One must not, of course, construe even
C a reserved judgment of Russell L.J. as if it were an Act of Parliament."
And, in Herrington v. British.Railways Board, (1972) 2 WLR 537 Lord
Morris said:

"There is always peril in treating the words of a speech or
D judgment as though they are words in a legislative enactment, and
it is to be remembered that judicial utterances made in the setting
of the facts of a particular case."

Circumstantial flexibility, one additional or different fact may make
a world of difference between conclusions in two cases. Disposal of cases
E by blindly placing reliance on a decision is not proper.

The following words of Lord Denning in the matter of applying
precedents have become locus classicus:

"Each case depends on its own facts and a close sirrilarity
F
between one case and another is not enough because even a single
significant detail may alter the entire aspect, in deciding such
cases, one should avoid the temptation to decide cases (as said by
Cordozo) by matching the colour of one case against the colour
of another. To decide therefore, on which side of the line a case
G falls, the broad resemblance to another case is not at all decisive."

*** ***" ***
"Precedent should be followed only so far as it marks the
H path of justice, but you must cut the dead wood and trim off tliP
.. ,;.
C.C.E. v. ALNOOR! TOBACCO PRODUCTS [PASAYAT,J.] 115

side branches else you will find yourself lost in thickets and A
branches. My plea is to keep the path to justice clear of obstruc-
tions which could impede it."

In view of the undisputed position that the CEGA T did not consider
the relevant aspects and proceeded to decide the appeals on merits without B
examining the propriety of dismissal of appeals by the Collector (Appeals)
for non compliance with the requirements of Section 35(F) of the Act, the
impugned judgments are unsustainable and are set aside. We remit the
matter back to the CEGAT for adjudication afresh in accordance with law.
The appeals are accordingly disposed of with no order as to costs.
c
R.P. Appeals disposed of.

...

I •