2014 (7) TMI 190 - AT - Central Excise

Classification of goods - Chocolate hub - Classification under heading 1905.90 or under heading 1803.00 - Held that - Chapter heading 1803 covers chocolate in any form heading 1905 covers biscuits. Whether or not containing cocoa. Admittedly, the goods in question are nothing but the biscuits covered by chocolate. As such, it can be safely concluded that the product in question is the preparation of biscuits and properly classifiable under chapter heading of biscuits. Inasmuch as it is not specifically covered by any preceding sub heading of chapter heading 1905, the same would be classifiable under heading 1905.90. We find that issue is covered by precedent decision of the Tribunal. In the case of Nestle (India) Ltd. vs. CCE Mumbai reported in 2000 (124) ELT 898 (Tri) , biscuits and waffles covered with chocolate were held classifiable under heading 19.05 irrespective of preparation of chocolate by weight or value. Similarly in the case of Little Star Foods Pvt Ltd. vs. CCE, Hyderabad waffles and wafers coated with chocolate were held as falling under chapter 1905 and preparation of chocolate was held as irrelevant. - appellants product chocolate clubs would be properly classifiable under heading 1905.90 - Decided in favour of assessee.

Summary

Issues:
Correct classification of the product "Chocolate clubs" under heading 1905.90 or 1803.00.

Analysis:
The appeal was filed against the order passed by the Commissioner (Appeals) in de novo proceedings after being remanded by the Tribunal. The dispute revolved around the classification of the product "Chocolate clubs" by the appellants under heading 1905.90, while the lower authorities classified it under heading 1803.00. The appellants argued that they were not manufacturing chocolate or biscuits but creating a composite product of "Chocolate covered biscuits," which should be classified under CETH No. 1905.90 as a preparation from biscuits. They contended that the treatment given to the purchased biscuits with chocolate did not amount to manufacturing. The lower authorities, however, held that the product fell under heading 1803.00 as it involved the use of cocoa and chocolate preparations, which are classified under Chapter 18 of the Central Excise Tariff.

The conflicting entries for classification were under heading 1905 and 1803. The Revenue argued that since the biscuits were covered with chocolate, they could not be considered biscuits falling under heading 1905, and instead, the product should be classified as chocolate under heading 1803. The Tribunal analyzed the entries and noted that the product in question was essentially biscuits covered by chocolate, making it a preparation of biscuits. As it did not fit under any specific subheading of chapter heading 1905, it was properly classified under heading 1905.90. The Tribunal cited precedent decisions, such as Nestle (India) Ltd. vs. CCE Mumbai and Little Star Foods Pvt Ltd. vs. CCE, Hyderabad, where similar products were classified under chapter 1905 regardless of the weight or value of chocolate preparation.

Based on the precedent decisions and the analysis of the conflicting entries, the Tribunal concluded that the product "Chocolate clubs" should be classified under heading 1905.90. Consequently, the impugned orders were set aside, and the appeal was allowed in favor of the appellants.