JUDGMENT
V.K. Agrawal, Member (T)
1. The issue involved in this Appeal, filed by M/s. Kothari Products Ltd., is whether the Tariff Values fixed under Notification No. 16/98-Central Excise (NT) dated 2.6.1998 are applicable to Pan Masala Manufactured by them.
2. Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants commenced manufacture of Pan Masala not containing tobacco from 15.3.2001 and containing more than 85% betel nut by weight; that Heading 21.06 of the Schedule to the Central Excise Tariff covers Pan Masala; that as per Note 3 to Chapter 21, Pan Masala means any preparation containing betel-nuts and any one or more of the ingredients, namely (1, lime and katha (catechu), but not tobacco, whether or not containing any other ingredients, such as cardamom, copra and methanol; that sub-heading 2404.49 covers “Pan Masala containing Tobacco” that Notification No. 16/98-CE (NT) dated 2.6.1998 fixed tariff values in respect of pan Masala falling under Heading 21.06; that they paid the duty on Pan Masala manufactured by them not containing Tobacco in terms of Notification No. 16/98-(NT); that the Commissioner under the impugned Order has confirmed the demand of duty and imposed penalty holding that Notification No. 16/98-CE (NT) is not applicable to Pan Masala manufactured by them since it is not containing tobacco and the goods are liable to be assessed under Section 4 of the Central Excise Act.
3.1 The learned Advocate, further, submitted that as the Pan Masala manufactured by the Appellant does not contain any tobacco, it falls under Heading 21.06 of the Tariff; that the product impugned is squarely covered by the first para of the Notification; that the entire case of the Revenue is based on Para 2 of the Notification which reads as under:-
“This Notification shall not be applicable to goods containing not more than 10% betel nut by weight and not containing tobacco in any proportion.”
3.2 He mentioned that according to Revenue, Para 2 of the Notification excludes two categories of Products, viz. (1) Goods containing not more than 10% betel nut by weight; and (2) Goods not containing tobacco in any proportion; that according to Revenue, since their product does not contain tobacco in any proportion, the same is excluded from the purview of the Notification. The learned Advocate contended that this interpretation of Notification is ex facie erroneous and contrary to the express language of the Notification; that Para 2 of the Notification seeks to exclude the products if two conditions are cumulatively satisfied viz., (1) that the product should not contain more than 10% betel-nut by weight and (2) it should not contain tobacco in any proportion; that unless both these conditions are cumulatively satisfied, the exclusion clause would not apply; that this is evident from the expression “and” used in para 2 of the Notification; that admittedly the impugned Pan Masala contains more than 85% betel nut by weight; that hence the first condition of Para 2 is not satisfied and consequently Para 2 has no application to the present case; that the Revenue’s interpretation would make the entire Notification redundant and otiose and the Notification would not apply to any category of pan Masala. He relied upon the decision in the case of Swarup Fibre Industries Ltd. v. Commissioner of Central Excise, 1990 (48) ECC 69 (T) : 1990 (48) ELT 118 (T) wherein it has been held that “It is a well settled proposition of law that words in a statute should be so construed as to give them a meaning and make them work and not as to render them nugatory.” He finally submitted that the main Para of the Notification applies only to Pan Masala not containing tobacco as the Notification covers Pan Masala falling under Heading No. 21.06; that when that is the only product covered by the Notification. Para 2 of the Notification cannot be interpreted to exclude that product itself out of the Notification; that the Revenue’s interpretation amounts to stating that while the main para of the Notification fixed tariff value for Pan Masala not containing tobacco, by virtue of Para 2, the Notification is not applicable to Pan Masala not containing tobacco; that the correct interpretation of Para 2 would be that it seeks to exclude those Pan Masala not containing tobacco in which the betel nut content is less than 10%; that this interpretation would make the Notification workable and not redundant.
4. Countering the arguments, Shri Vikas Kumar, learned Senior Departmental Representative, submitted that the tariff values fixed by the Notification No. 16/98 (NT) are not applicable to goods containing not more than 10% betel nut by weight and not containing tobacco in any proportion; that as admittedly the goods in question does not contain any tobacco, they are excluded from the purview of the Notification; that all the conditions specified in the Notification are to be complied before the Tariff values fixed thereunder can be applied to any Pan Masala; that the interpretation placed by the learned Advocate would make the words “and not containing tobacco in any proportion” in Para 2 of the Notification redundant and of no effect which is impermissible.
5.1 We have considered the submissions of both the sides. Notification No. 16/98-CE (NT) dated 2.6.1998 fixes tariff value in respect of the goods, specified in the Table annexed to Notification and falling under sub-heading No. 2106.00 of the Tariff. Para 2 of Notification makes it inapplicable to goods containing not more than 10% betelnut by weight and not containing tobacco in any proportion. It has been emphasized by the learned Advocate that Tariff values have been fixed in respect of goods falling under Heading 21.06 which covers Pan Masala and as per Note 3 to Chapter 21, Pan Masala should not contain tobacco and if Para 2 of Notification is interpreted to mean that tariff values will not apply to Pan Masala not containing tobacco in any proportion”, the entire Notification would become redundant and otiose. The submissions no doubt, has force. But perusal of the show cause notice reveals that the Schedule to the Central Excise Tariff was amended by the Finance Act, 2001. Prior to the Amendment heading 21.06 used to read as under:
"21.06 2106.90 Pan Masala Note 3 to Chapter 21 of the Tariff used to read as under. 3. In this Chapter "Pan Masala" means any preparation containing betel nuts and any one or more of the following ingredients, namely, lime, katha (Catechu), and tobacco whether or not containing any other ingredients such as cardamom, copra, menthol." 5.2 Note 3 to Chapter 21 was amended by the Fourth Schedule to the Finance Act, 2000 as under: "3. In this Chapter, "Pan Masala" means any preparation containing betel-nuts and any one or more of the following betel-nuts and any one or more of the following ingredients, namely:- (i) lime; and (ii) kattha (catechu) but not tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol;" 5.3 Further the following Note 6 was inserted in Chapter 24 of the Central Excise Tariff:- "6. In this Chapter 24, "Pan Masala containing tobacco", commonly known as 'gutkha' or by any other name, means any preparation containing betel-nuts and tobacco and any one or more of the following ingredients, namely:- (i) lime; and (ii) kattha (catechu) whether or not containing any other ingredients, such as cardamom copra and menthol;" 5.4 In Chapter 24, sub-Heading No. 2404.40 was also substituted as under: "--Chewing tobacco and preparation containing chewing tobacco; Pan Masala containing tobacco; 2404.41--Chewing tobacco and preparation containing chewing tobacco 2404.49--Pan Masala containing tobacco."
6. It is thus apparent that before amendment Pan Masala falling under Heading No. 21.06, as per Note 3 to Chapter 21 may contain tobacco. Pan Masala containing tobacco was made to fall under sub-Heading No. 2404.49 by making amendment in the Schedule to the Central Excise Tariff by Section 134(a) of the Finance Act, 2001 read with Fourth Schedule. Notification No. 13/97-C E (NT) has been issued on 2.6.98 when Pan Masala falling under Heading 21.06 may contain tobacco. In this background, the interpretation of Para 2 of the said Notification has to be considered. Para 2 makes the notification non-applicable “to goods containing not more than 10% betel nut by weight and not containing tobacco in any proportion” It is thus apparent that the Government has fixed the tariff values only in respect of Pan Masala containing betel nut more than 10% by weight and containing tobacco in any proportion. It appears, as nothing has been brought on record, that Notification No. 16/98-CE (NT) was not amended with the changes made out in Chapters 21 and 24 of the Schedule to the Notification. As admittedly the products manufactured by the Appellants do not contain in any tobacco in any proportion, Notification No. 16/98-CE (NT) dated 2.6.98 is not applicable to the impugned products. We accordingly uphold the demand of Central Excise duty as confirmed in the impugned Order. However, we are of the view that this is not a fit case warranting imposition of any penalty, particularly when the goods had been removed after filing declarations with the Revenue and under the cover of duty paying documents. We thus set aside the entire penalty imposed on the Appellants.
7. The Appeal is disposed of in the above terms.