2007 (4) TMI 21 - AT - Central Excise

Classification Revenue contended that the appellant good (fruit juices) are covered under Chapter 22, SH 2202.99 but as per appellant it classifiable under SH 2001.10 of CETA- Held the said good classifiable under Chapter Heading 2001.10

Issues:
Classification of fruit juices under Central Excise Tariff Act - Sub-heading 2001.10 vs. Chapter 22, sub-heading 2202.99.

Analysis:
1. The issue in the present appeal revolves around the classification of fruit juices manufactured and cleared under the brand name "Tropicana." The appellants argue for classification under sub-heading 2001.10 of the Central Excise Tariff Act, while the Revenue contends they should be classified under Chapter 22, sub-heading 2202.99.

2. The appellants procure concentrated juices with known Brix values and add water to achieve a similar or higher Brix value as non-concentrated juice. They assert that the juices fall under Chapter Heading 20.01, akin to Chapter Heading 20.09 of the HSN Explanatory Note, which allows for concentrated juices soluble in water.

3. Concentrated juices can be distinguished based on their Brix value, and fruit and vegetable juices may contain listed substances while retaining their original character under Chapter Heading 20.01.

4. The appellants claim their products are reconstituted juices, obtained by adding water to concentrated juice within limits, thus classifiable under Chapter Heading 2001.10 and exempt from duty under Notification No. 3/2001.

5. The Commissioner disputed this classification, alleging excessive water addition beyond what's necessary for reconstitution. However, the appellants maintain compliance with Codex standards for Brix value, crucial for determining the product's classification as fruit juice.

6. Alternatively, if not classified as fruit juice, the appellants argue for classification under Chapter Heading 2202.40 as a fruit juice-based drink, exempt under Notification 6/2002, challenging the Commissioner's classification under 2202.99 based on an outdated circular.

7. The introduction of entry 2202.40 supports the argument that fruit juice-based drinks, including those with concentrates, should be classified under this entry, not 2202.99.

8. The appellants assert that their classification lists and declarations under Rule 57G have been consistent, refuting any suppression or misdeclaration, rendering the demand time-barred.

9. The Revenue argues that the appellants' lack of knowledge regarding the original juices' Brix values hinders proper reconstitution, justifying the demand confirmation and invoking the extended period due to alleged water addition suppression.

10. The Tribunal notes the appellants' production of reconstituted juices from concentrates by adding water, emphasizing the requirement that water added should not exceed that in similar non-concentrated juices of normal composition, as per HSN Explanatory Notes.

11. Since the reconstituted juices' Brix values differed from Codex standards, the product is classified as fruit juice under Chapter Heading 2001.10, supported by the absence of evidence of excessive dilution beyond Codex limits.

12. The Tribunal upholds the classification under Chapter Heading 2001.10, setting aside the Commissioner's classification under 2202.99, and dismisses the time-barred demand due to unsubstantiated suppression charges.

13. Consequently, the demand amounting to Rs. 9,99,01,650/- is deemed time-barred, leading to the setting aside of penalties imposed on the company and the General Manager.

14. The Tribunal sets aside the Commissioner's order entirely, allowing the appeals in favor of the appellants.

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