2014 (6) TMI 677 - AT - Customs

Waiver of pre deposit - Classification of goods being Sweet Pearl P.200 - Food Flavouring Material - food preparations versus food additive - Classification under Heading 2905 4920 or under Heading 2106 90 60 - Mis declaration of goods - Held that - From the test report from CFRL, we find that the product in question is a separately defined chemical compound and based on the Chapter Notes under Chapter 29, prima facie, there is no scope for taking it out of Chapter 29 and classifying it under Chapter 21 especially because heading 2106 is for Food Preparations . - A food additive per se need not be a food preparation. The test report shows it to be chemical compound of 99% purity and not a preparation made of many elements. Therefore, we grant waiver of pre-deposit for admission of appeal and further there shall be stay on collection of such dues during the pendency of the appeal - Stay granted.

Summary

Issues: Classification of imported substance under customs tariff headings; Demand of duty, interest, penalty, and redemption fine; Appeal for waiver of pre-deposit for admission of appeal.

In this judgment by the Appellate Tribunal CESTAT CHENNAI, the issue revolves around the classification of an imported substance by a chewing gum manufacturer. The substance, initially declared as "Sweet Pearl P.200" under Heading 2905 4920, was later suspected by Revenue to fall under Heading 2106 90 60 as "Food Flavouring Material." The Central Food Research Laboratory (CFRL) identified the substance as 'Maltitol,' a food additive used as a sweetening agent. The Export Inspection Agency opined that the substance was fit for use but did not identify it chemically. Revenue provisionally assessed the consignments under Heading 2106 90 60, demanding duty on past clearances and imposing penalties. The applicant appealed against this decision, seeking a waiver of pre-deposit for admission of the appeal.

The applicant argued that the substance was a 'Polyol' of 99% purity, similar to 'Mannitol' and 'Glycerol' listed under Chapter 29. They contended that as a chemical compound, the substance should be classified under Chapter 29, not Chapter 21 for food preparations. The applicant provided information from Wikipedia supporting the use of Maltitol as a sugar substitute in chewing gums. They emphasized that only food preparations containing multiple products should be classified under Chapter 21, not individual chemical compounds, citing Chapter Note 1 (a) of Chapter 29.

On the other hand, the Revenue representative countered that the substance was a 'food additive' and used as a binder in chewing gum, falling under 'edible preparations' as per Chapter Heading 2106 note 9. They highlighted that the appellant later declared the substance as an 'artificial sweetener.' After considering both arguments, the Tribunal found that the substance was a separately defined chemical compound, not a food preparation. They ruled that based on Chapter Notes under Chapter 29, the substance should remain classified under Chapter 29 and not be reclassified under Chapter 21. Therefore, the Tribunal granted a waiver of pre-deposit for admission of the appeal and ordered a stay on the collection of dues during the appeal's pendency.