2008 (11) TMI 192 - AT - Central Excise

Classification of Mouth freshener - From the reading of the Chapter 20.01, it is seen that it covers preparation of vegetables, fruit, nuts and other edible parts of plants. It also covers preparation which may contain added sugar or other sweetening matter. Preparation of fruits, nuts etc. naturally will contain certain added ingredients. It is not mere collection of all different types of fruits, nuts or other parts of plants. Addition of material like saffron has not been shown to change the characteristic of preparation substantially or significantly. - When the product is covered under the description of the Chapter 20, the need to go to the Chapter 21 which is residuary in nature does not arise revenue appeal demanding duty under sub heading 2108.99 rejected

Summary

Issues:
Classification of the product "Mouth Freshener" under Chapter Sub-Heading 2001.10 vs. 2108.99

Analysis:
1. The appeals before the Appellate Tribunal CESTAT, NEW DELHI involved the classification of the product "Mouth Freshener" manufactured by the respondent under Chapter Sub-Heading 2001.10 and 2108.99. Appeal No. E/4518/04 was by the Department against the classification under Chapter Sub-Heading 2001.10 by the Commissioner (Appeals), while Appeal Nos. E/3026 & 3027/04 were against the demand confirmed by the original authority treating the product under Chapter Sub-Heading 2108.99, which was set aside by the Commissioner (Appeals).

2. The respondent manufactured the "Mouth Freshener" using various raw materials and processes like cleaning, grinding, sieving, removal of moisture, coating of sweeteners, and mixing of flavors and perfumes. The Commissioner (Appeals) had favored the respondents in terms of classification and the demand of duty.

3. The Department argued that the "Mouth Freshener" was not a preparation of foods under Chapter 20 due to the addition of extracts and perfumes, altering the character of the mixture of fruits. They referred to the Explanatory Notes under HSN related to Chapter 20.08. The Department relied on a previous decision in Mukh Shudhi Foods Pvt. Ltd. v. C.C.E., Indore.

4. The respondents contended that the product should be classified under Chapter 20 before considering Chapter 21. They argued that the essential characteristics of the product were derived from fruits, nuts, and seeds, making it classifiable under Chapter 20. They also claimed that the product could be consumed as such. The respondents cited decisions in C.C.E., Indore v. Ajmer Food Industries and Maharishi Ayurveda Corpn. Ltd. v. C.C.E., Meerut to support their argument.

5. After considering both parties' submissions, the Tribunal noted that Chapter 21 dealt with products like extracts, essence, roasted chicory, and baking powder, while Chapter 20 covered preparations of vegetables, fruits, nuts, or other plant parts. The Tribunal found that the product in question could be consumed as it was and contained fruits, nuts, and other plant parts, making it a preparation under Chapter 20. The Tribunal concluded that there was no need to classify the product under Chapter 21, as it was appropriately classified under Chapter 20. Therefore, the classification upheld by the Commissioner (Appeals) was deemed justified, and the demands confirmed by the original authority were quashed accordingly.

6. Ultimately, the Tribunal found no reason to interfere with the Commissioner (Appeals)'s orders and rejected the appeals, upholding the classification of the "Mouth Freshener" under Chapter Sub-Heading 2001.10.