2015 (4) TMI 418 - AT - Central Excise

Classification of Fresubin - Classification as food supplement or instant food mix - duty exemption under Notification no. 3/2006 dated 01.03.2006 - Held that - appellant had categorically stated that Fresubin is made from, or mixture of the basic food ingredients namely, corn starch, sucrose, milk protein and vegetable oil of required level/percentage, with the addition of minerals and vitamins for food enrichment. It has also been stated that the said food ingredients are mixed, cooked and dried into powder and that when the said powder is mixed with water, a ready to consume food/diet is made, which is known in the commercial dialect as Instant Food Mix . The said submissions of the appellant before the departmental officers have also been endorsed by the authority on the subject i.e. The Institute of Chemical Technology, University of Mumbai, vide certificate dated 16.05.2007, wherein while mentioning the food ingredients contained in Fresubin , it has been certified that since the said product is to be used as liquid food/diet by just adding water, the same should be termed as Instant Food Mix . The reason assigned in the impugned order for non-consideration of the said certificate are that there is no mention of drawl of samples from the disputed goods, and that there is no disclosure regarding the name or authority on whose initiative the same had been issued. We are of the opinion that the competency of the said institute in furnishing the certificate cannot be questioned by the revenue, especially in absence of a contrary certificate being obtained from a recognized agency of repute. Moreover, when the lower authorities have accepted the classification of Fresubin under sub heading 21069099 of heading 2106 , as food preparations not elsewhere specified and the goods, in question, can be consumed simply by mixing with water, the same have to be treated the food mixes including Instant food mixes to the purpose of notification No. 3/06-CE. Even if, Fresubin is used by patients recovering from illness, it will not cease to be a food mix. Where S. No. 30A covers all kind of food mixes including instant food mixes of sub heading 210690, for the purpose of this entry, no distinction can be made between food mixes specially designed for sick people and the food mixes for others and there would be no justification for treating the same as not covered by this entry. - impugned orders are set aside - Decided in favour of assessee.

Summary

Issues:
Classification of product "Fresubin" as 'food supplement' or 'instant food mix' for duty exemption under Notification No. 3/2006 - CE.

Analysis:
The appellant claimed that "Fresubin" is an 'instant food mix' eligible for duty exemption under Notification No. 3/2006 - CE, but the Central Excise department classified it as a 'food supplement'. The appellant argued that "Fresubin" is made from basic food ingredients, qualifies as an 'instant food mix', and cited expert certification and a tribunal decision to support their claim. The department relied on Circular No. 841/18/2006-CX to assert that "Fresubin" does not qualify as an 'instant food mix'.

The Tribunal considered whether "Fresubin" falls under Chapter Heading 2106 as a 'food supplement' or 'instant food mix'. The appellant's product was made from basic food ingredients, and the Tribunal noted that it could be consumed by adding water, falling under sub heading 21069099. The dispute centered on whether it met the criteria of SI. No. 30A of Notification No. 3/06-CE for 'food mixes including instant food mixtures'.

Notification No. 3/2006-C.E. covered 'All kind of food mixes, including instant food mixes' under Tariff item 2106 90. The department argued that "Fresubin" was a food supplement, not a basic food product, and thus not eligible for the exemption. The Tribunal reviewed submissions by the appellant and expert certification supporting the classification of "Fresubin" as an 'instant food mix'.

The Tribunal found that the appellant's submissions were not adequately considered by the lower authorities. It noted that the expert certification and the basic food ingredients used in "Fresubin" supported its classification as an 'instant food mix'. The Tribunal emphasized that the product's use for patients did not disqualify it as a food mix. It cited a previous tribunal decision to support its interpretation.

The Tribunal rejected the department's reliance on a CBEC Circular, stating it was not applicable to the case. Ultimately, the Tribunal set aside the impugned orders and allowed the appeals in favor of the appellant, ruling that "Fresubin" should be classified as an 'instant food mix' for duty exemption under Notification No. 3/2006 - CE.