2017 (5) TMI 1238 - AT - Central Excise

Classification of goods - Milk Shake Mix (MSM) - Soft Serve Mix (SSM) - Coffee Cream - Cream packed - the Ld. Commissioner have confirmed the classification of the products in question under Sub Heading 1901.19 of the CET Act as food preparation of the goods - appellant adopted classification in Sub Heading 04.04 - whether goods classified under Sub Heading 1901.19 of the CET Act or under Sub Heading 04.04? - Held that - similar issue decided in the case of AMRIT FOODS Versus COMMISSIONER OF CENTRAL EXCISE, MEERUT-I 2006 (3) TMI 523 - CESTAT, NEW DELHI , where it was held that the milk product will go to the Heading 19.01 only if it contains other ingredients not permitted by Heading 04.01 to 04.04. It was further held that no other ingredients except permissible stabilizers have been added. Addition of stabilizers is essential to maintain the consistency and shelf life of the products. HSN Explanatory Note also qualifies the addition of stabilizers without changing its classification from Chapter 4 to 19 - the products in question will be under the Chapter Sub-heading 0404.90 - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of Dairy Products under Central Excise Tariff Act

Issue 1: Classification of Milk Shake Mix (MSM) and Soft Serve Mix (SSM)
The appellant, a manufacturer of dairy products, appealed against the classification of their products under Sub Heading 1901.19 of the Central Excise Tariff Act by the Commissioner, rejecting the appellant's classification under Sub Heading 04.04. The Tribunal analyzed the ingredients of the products, specifically the stabilizers, to determine the correct classification. The Tribunal referred to Chapter Note 4 of Chapter 4, emphasizing that products with natural milk constituents, not containing additional ingredients beyond stabilizers, should be classified under Heading 04.04. The Tribunal highlighted that stabilizers maintain product consistency and shelf life without altering the basic character of the product. Relying on precedent and explanatory notes, the Tribunal classified the products under sub-heading 0404.90, allowing the appeal.

Issue 2: Effect of Stabilizers on Classification
The Tribunal addressed the argument that the addition of stabilizers could change the classification to a food preparation under Chapter Heading 19.01. The Tribunal examined the purpose and composition of the stabilizers used in the products and concluded that the stabilizers aimed to maintain product consistency, improve texture, and extend shelf life. The Tribunal emphasized that stabilizers, as per chemical definitions, prevent changes in the product's form or nature. By analyzing Chapter Note 4 and the open-ended description of products under Heading 04.04, the Tribunal held that the addition of stabilizers did not alter the classification as dairy produce. Thus, the Tribunal dismissed the appeal by the Revenue, upholding the classification under Chapter Sub-heading 0404.90.

Conclusion
The Tribunal, following the Supreme Court's decision in a similar case, classified the dairy products under Chapter Sub-heading 0404.90, emphasizing the role of stabilizers in maintaining product quality without changing the fundamental nature of the products. The detailed analysis of the ingredients, legal provisions, and precedents guided the Tribunal's decision, providing clarity on the correct classification under the Central Excise Tariff Act.