2004 (8) TMI 459 - AT - Central Excise

Summary

Issues:
Classification of chewing gum base under Chapter sub-heading 1704.10 vs. residual entry 1704.90.

Analysis:
The appellant contested the classification of chewing gum base under Chapter sub-heading 1704.10 by the Commissioner (Appeals) and argued for classification under the residual entry 1704.90. The appellant emphasized that the chewing gum base, being one of 22 ingredients used in making chewing gum, should not be equated to the final product of chewing gum. They supported their argument by citing a Supreme Court case and a Tribunal judgment that distinguished between bubble gum and chewing gum for classification purposes. The appellant highlighted that the chewing gum base does not undergo the necessary processes to become a final product and is not marketed as chewing gum in a consumable form. The appellant's Chartered Accountant relied on the HSN explanatory note to support the contention that chewing gum refers to a complete product suitable for immediate consumption, unlike the chewing gum base. The appellant presented a detailed manufacturing process involving multiple steps to demonstrate the transformation of raw materials into the final product of chewing gum.

The Tribunal analyzed the manufacturing process provided by the appellant, which involved mixing various raw materials to form the base, adding sugar, glucose, and flavors to create gum, and undergoing processes like rolling, scoring, curing, coating, and polishing to produce the final product. The Tribunal noted that the chewing gum base is just one component among 22 ingredients and does not reach the stage of being a consumable product without undergoing the complete manufacturing process. Referring to the HSN notes, the Tribunal concluded that chewing gum is a ready-to-market product suitable for immediate consumption, unlike the chewing gum base. The Tribunal disagreed with the Commissioner's finding that the chewing gum base falls under sub-heading 1704.10, which covers chewing gum coated with sugar or not. Instead, the Tribunal agreed with the appellant's argument that the chewing gum base should be classified under the residual entry 'other' (1704.90) as it does not meet the criteria to be considered as chewing gum. The Tribunal set aside the Commissioner's order and allowed the appeal, granting consequential relief as necessary.