2015 (8) TMI 194 - SC - Central Excise

Classification of waffles and wafers - Classification under Entry 1905.31 or under 1905.90 - Held that - In fact, to put it precisely, it is known as waffles and wafers. It is also not in dispute that the aforesaid products are not coated with chocolate. Therefore, the only dispute is as to whether these products contains chocolate or not. It may be noticed that out of all the products under Chapter heading 19.05, viz., biscuits, cakes and pasteries, or waffles and wafers, some contains cocoa, as is clear from the description contained in the main Heading and if only cocoa is added or is contained in these products, that would not make it chocolate. Thus, there has to be a difference between cocoa and the chocolate that is made out of cocoa. CESTAT has not gone at all into the aspect, viz., as to whether the product contains only cocoa or it contains chocolate. We may record that it is not in dispute that there is either cocoa or chocolate which is sandwiched between the two wafers. Thus, it was incumbent upon the CESTAT to see that the said ingredient is cocoa simplicitor or it is chocolate. - Matter remanded back - Decided in favour of Revenue.

Summary

Issues: Classification of certain products under Chapter Heading 19.05 - whether they are covered by Entry 1905.31 or 1905.90.

Analysis:
The dispute in the present appeals revolves around the classification of specific products of the respondent under Chapter Heading 19.05. The products in question are Chekkers Choco 40 P, Chekkers Fly Choco, Chekkers Choco 640 P, and Chekkers Choco ATC. The crux of the matter lies in determining whether these products should be categorized under Entry 1905.31, which pertains to products "Coated with chocolate or containing chocolate," as contended by the Revenue, or under the residual sub-category "Other," i.e., Entry 1905.90, as argued by the assessee. The key contention is whether these products contain chocolate or merely cocoa. The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) failed to address this crucial aspect in its order, leading to the Supreme Court setting aside the impugned order and remitting the matters back to the CESTAT for a fresh consideration.

The Supreme Court emphasized the distinction between cocoa and chocolate, highlighting that the mere presence of cocoa in the products does not automatically classify them as chocolate. The Court noted that the products in question, waffles and wafers, do not dispute their lack of chocolate coating. However, the determination of whether they contain chocolate or just cocoa sandwiched between the wafers remains unresolved. The respondent's argument that the presence of chocolate should be inside the wafers, not sandwiched between them, adds another layer of complexity to the classification issue. These critical aspects were overlooked by the CESTAT, which erroneously proceeded on the assumption that the products were biscuits, necessitating a fresh examination of the classification by the tribunal.

In a separate judgment, the Supreme Court remanded two additional appeals back to the CESTAT for reconsideration due to the identical issue at hand, despite the different products involved. The Court's decision underscores the necessity for a thorough analysis by the CESTAT to determine whether the products in question fall under the specific entry for products containing chocolate or the broader residual category. Both parties are granted the opportunity to present their arguments afresh before the tribunal, ensuring a comprehensive evaluation of the classification issue based on the distinction between cocoa and chocolate and the specific characteristics of the products in question.