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2015 (6) TMI 1014 - AT - Central ExciseClassification - spice powders and mixed spices which are commonly called as masalas - classified under Chapter 0910 9100 of CETA OR Chapter 2103 9040 - Held that - By respectfully following the judgments of in the case P.C. Duraisamy Vs. CCE (2001 (9) TMI 106 - HIGH COURT OF JUDICATURE AT MADRAS ) and the Tribunal s decision in the case of Narendra Kumar & Co., (2008 (7) TMI 224 - CESTAT MUMBAI ), we hold the products of various masalas manufactured and cleared by the appellants as listed out in the respective OIO s are rightly classifiable under chapter heading 0904 to 0910 and not under chapter 2103.90 of CET.
Issues Involved:
1. Classification dispute of mixed spices (masala powder) under Chapter 9 or Chapter 2103 of the Central Excise Tariff Act (CETA), 1985. Detailed Analysis: I. Classification Dispute: The core issue in this case revolves around whether various masala powders produced by the appellants should be classified under Chapter 9 (specifically under heading 0910 9100) as spices or under Chapter 2103 9040 as mixed condiments and mixed seasonings. Arguments by Appellants: The appellants argued that their products are mixtures of spices, covered under Chapter 9, citing Chapter Note 1 and Supplementary Note 3 of Chapter 9, which state that mixtures of spices retaining their essential character should be classified under Chapter 9. They relied on the High Court of Madras decisions in P.C. Duraisamy Vs. CCE and Sakthi Masala Pvt. Ltd., which supported their classification under Chapter 9. They also referenced the Tribunal's decision in Narendra Kumar & Co. Vs. CCE, which distinguished between spices and mixed condiments, asserting that their products are not ready-to-eat but aid in food preparation. Counterarguments by Revenue: The Revenue contended that the products should be classified under Chapter 2103 as they are mixed condiments and seasonings. They argued that the addition of other ingredients like salt, rice powder, and preservatives means the products lose their essential character as spices. They emphasized that the classification should be based on the usage and market understanding of the products, which are identified as sambar powder, curry powder, etc., rather than spices. Tribunal's Observations and Findings: 1. Manufacturing Process and Ingredients: The Tribunal noted that the manufacturing process involves roasting, cooling, pulverizing, and blending various spices, which are then marketed under different names like sambar powder, rasam powder, etc. These products contain 95-96% spices and other edible items such as salt and rice powder. 2. Chapter Notes and HSN Explanatory Notes: The Tribunal referred to Chapter Note 1 and Supplementary Note 3 of Chapter 9, which indicate that the addition of other substances to spices does not affect their classification as long as they retain their essential character. The HSN Explanatory Notes also support this interpretation. 3. Legal Precedents: The Tribunal relied heavily on the decisions of the High Court of Madras in P.C. Duraisamy Vs. CCE and Sakthi Masala Pvt. Ltd., which quashed similar show-cause notices and upheld the classification of such products under Chapter 9. The Tribunal also referred to its own decision in Narendra Kumar & Co. Vs. CCE, which classified similar products under Chapter 9. 4. Board Circulars: The Tribunal considered various Board Circulars, including Circular No. 205/96 dated 30.4.1996, which clarified that products like sambar powder and rasam powder, consisting mainly of spices, should be classified under Chapter 9. Conclusion: The Tribunal concluded that the products in question retain their essential character as spices and should be classified under Chapter 9 (heading 0910 9100). The demands for excise duty and penalties imposed by the adjudicating authorities were set aside. The appeals were allowed with consequential relief. Separate Judgments: The Tribunal delivered a consolidated judgment for all the appeals, as the issues involved were identical. The judgment was pronounced by the Technical Member, R. Periasami, and the Judicial Member, P. K. Choudhary.
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