2004 (12) TMI 576 - AT - Central Excise

Summary

Issues:
1. Classification of starch with 40%+ moisture content under Heading 1103 for duty liability.
2. Whether the in-process material emerging during the manufacture of sago can be considered commercially known starch.
3. Justification of duty demand on the material in question.

Analysis:
1. The appellant, a manufacturer of sago, contested duty demand on starch with 40%+ moisture content, claiming it is not commercially known starch. The Tribunal held that such starch falls under Heading 1103 as "starches" and is excisable. The appellant's argument of marketability was dismissed based on the sale of similar starch to another unit.

2. The appellant argued that the in-process material from sago manufacturing does not meet the standards of commercially known starch as per HSN notes and Indian Standards. They highlighted the characteristics of starch as per standards, emphasizing the material's wet stage and water content. The respondent, however, justified the duty demand citing all starch varieties falling under the tariff heading.

3. The Tribunal observed the material in question as in-process, not meeting final stage specifications for recognized commercial identity as starch. It noted the absence of required concentration, form, and characteristics specified by HSN and ISI for starch. Relying on the principle that in-process materials lacking commercial identity are not dutiable, the Tribunal ruled in favor of the appellant. It waived the pre-deposit of duty, considering the appellant's strong prima facie case and the undue hardship pre-deposit would cause, allowing a stay on recovery during the appeal.