2011 (11) TMI 286 - AT - Central Excise

Plea for waiver of pre-deposit - classification shifted by the Revenue from Heading 0404 90 90 attracting nil rate of duty to Tariff Entry 1901 9090 attracting 16% rate of duty on the ground that the appellants have added maltodextine to the milk powder being manufactured by them Held that - The issue is contentious and arguable. No final view can be taken at this prima facie stage. Thus appellants are directed to deposit Rs.1.00 crore as a condition of hearing to their appeal within a period of 8 weeks from date of order.

Summary

Issues: Classification of NIDO milk powder under Heading 04.04 or Chapter Heading 1901, Condition of pre-deposit of duty and penalty waiver

In the judgment delivered by the Appellate Tribunal CESTAT, New Delhi, the issue at hand revolved around the classification of NIDO milk powder manufactured by the appellants. The appellants contended that the product should be classified under Heading 04.04, while the Revenue argued for classification under Chapter Heading 1901. The Revenue asserted that the addition of maltodextine to the milk powder shifted the classification to Tariff Entry 1901 9090, attracting a 16% rate of duty. The adjudicating authority highlighted that the presence of added artificial flavored substances like maltodextine in the milk powder disqualified it from being classified under Heading 0404. The authority referred to the general explanatory notes of Chapter 4 of HSN, emphasizing that products obtained from milk by replacing natural constituents with other substances fall outside Chapter 4. The appellants' argument that the addition of maltodextine was in negligible quantities was refuted, as the quantum of addition was deemed irrelevant in determining the classification issue.

The tribunal, after considering the contentions and relevant tariff entries, acknowledged the contentious nature of the issue. They directed the appellants to deposit an amount of Rs.1,00,00,000/- as a condition for hearing their appeal within 8 weeks, noting that the appellants had not demonstrated financial hardship. Upon this deposit, the pre-deposit of the remaining duty amount and the penalties imposed would be waived, and the recovery stayed during the appeal's pendency. The tribunal emphasized that no final view could be taken at the prima facie stage due to the complexity of the matter, indicating that the appellants had not sufficiently substantiated their case to warrant an unconditional stay of the pre-deposit condition. The judgment underscored the need for compliance with the deposit directive within the stipulated timeframe for further proceedings in the case.