2007 (10) TMI 272 - AT - Central Excise

Grinding and mixing Guar Dal for obtaining Guar gum held that impugned process amounts to manufacture - held that the Guar Gum would be properly classifiable under Chapter 11.01, as a product of milling industry which attract nil rate of duty impugned order confirming demand and imposing penalties are set aside

Summary

Issues: Classification of Guar Gum under Central Excise Tariff - Proper classification under Chapter 11.01 or 13.01 - Liability for duty and penalties.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Ahmedabad, involved the classification of Guar Gum under the Central Excise Tariff, specifically determining whether it should be classified under Chapter 11.01 or 13.01. The dispute arose as M/s. Ravi Gum Industries, engaged in manufacturing Guar gum through job work processes, did not have central excise registration or follow formalities, believing their activities did not amount to manufacture. The Tribunal considered various decisions, including the case of Dilip Gum Industries Ltd. v. Commissioner, which classified Guar Gum under heading 13.01. However, subsequent decisions in cases like M/s. Kraps Chem Pvt. Ltd. v. CCE, Daman and M/s. Kolety Gum Industries clarified that Guar Gum should be classified under Chapter 11.01, attracting a 'nil' rate of duty as a product of the milling industry. The Tribunal highlighted that the earlier decision in Dilip Gum Industries did not set a binding precedent, as it did not consider all gums falling under Chapter 13.01 and recognized tamarind kernel powder falling under Chapter 11. Based on these findings, the Tribunal set aside the demand and penalties imposed, allowing the appeals and granting relief to the appellants.

This judgment clarifies the proper classification of Guar Gum under the Central Excise Tariff, emphasizing that it falls under Chapter 11.01, attracting a 'nil' rate of duty as a product of the milling industry. The Tribunal's analysis of previous decisions like Dilip Gum Industries Ltd. and subsequent cases provided a clear framework for determining the classification of Guar Gum, ensuring consistency in interpretation and application of the tariff provisions. By setting aside the impugned order confirming the demand and penalties, the Tribunal upheld the classification under Chapter 11.01, providing relief to the appellants and establishing a precedent for similar cases in the future.