2012 (12) TMI 831 - AT - Central Excise

Classification of sugarfree chewing gum Sub-heading 2106 90 99 v/s 2106 90 91 - Held that - The products in question are food preparations not elsewhere specified or included (Heading 21.06). Explanatory Notes to HSN Heading 21.06 also justify this classification. As per these notes, Heading 21.06 includes, inter alia , Sweets, gums and the like (for diabetics in particular) containing synthetic sweetening agents (Eg Sorbitol) instead of sugar . Admittedly, the subject products are gums containing synthetic sweetening agents instead of sugar. Therefore they have been rightly classified under Heading 2106 of the CETA Schedule. However, the HSN Explanatory Notes appear to be of no aid to sub-classification of the goods, therefore, classification of the goods as diabetic foods must be based on evidence of the chewing gums having been medically prescribed as diabetic foods and marketed as diabetic foods . The Revenue whose burden it was to gather such evidence to justify classification of the chewing gums as diabetic foods under S.H. 2106 90 91 failed to do so. On the contrary the assessee has been able to show that the subject products were not marketed as diabetic foods, thus the orbit chewing gums were rightly classified under the residuary sub-heading 2106 90 99 - in favour of assessee.

Summary

Issues:
Classification of sugarfree chewing gum under Sub-heading 2106 90 99 or Subheading 2106 90 91 of the Central Excise Tariff Act for the period of dispute (April 2006 to December 2007).

Analysis:
The judgment involves an appeal challenging the classification of sugarfree chewing gum by the assessee under Sub-heading 2106 90 99 against the department's classification as diabetic food under Subheading 2106 90 91. The Commissioner of Central Excise had classified the product as diabetic food, attracting duty and demanding differential duty for two periods, along with interest and penalty. The appellant argued that the product was not meant for diabetic patients, despite being sugarfree, and was not marketed as diabetic food. The department contended that the goods should be classified as diabetic foods based on certain decisions and marketing as sugarfree chewing gums. The Tribunal considered the submissions and found that the subject products fell under Heading 2106 of the Central Excise Tariff Act, specifically under the residuary heading "---other". The dispute was regarding the sub-classification of the goods under different sub-headings, including diabetic foods.

The Tribunal examined the HSN Explanatory Notes, which included sweets, gums, and similar items for diabetics containing synthetic sweetening agents instead of sugar under Heading 21.06. While the subject products contained synthetic sweetening agents and were rightly classified under Heading 2106, the classification as "diabetic foods" required evidence of medical prescription and marketing as such. The Revenue failed to provide evidence to justify the classification as diabetic foods under Subheading 2106 90 91. The Tribunal concluded that the subject products were not marketed as diabetic foods, leading to the rejection of the impugned demand of duty.

In light of the above findings, the Tribunal held that the sugarfree chewing gums were correctly classified by the appellant under the residuary sub-heading 2106 90 99, rendering the demand of duty unsustainable. As a result, the impugned orders related to the subject goods were set aside, and the appeals were allowed.