2017 (9) TMI 408 - AT - Central Excise

Classification of goods - Potato flakes or Aloo Mash - whether classified under CTH 11052000 or under CTH 20052000? - demand of differential duty - revenue contended that, the appellants appeared to be manufacturing Aloo Mash and preservative were also added - Held that - Revenue could not establish that statement of original authority in Para-31 of impugned Order-in-Original that a sample of Aloo Mash manufactured by appellant was sent for chemical examination was recorded on the basis of facts - on going through the submissions made by the appellant before the original authority the process of manufacture stated at Para-28 of the Order-in-Original, the meaning of Mash submitted by the Learned Counsel for appellant and chapter notes of Chapter 20 and the processes which are covered under Chapter 7, 8 and 11, the subject goods have been admittedly subjected to the process of flaking and there is no process carried out to form a mash of potatoes in the factory of the appellant - the subject goods are classifiable under Tariff Item No. 11052000 - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under Central Excise Tariff Act, 1985

Detailed Analysis:

1. Classification of Goods:
The appeals arose from a common impugned Order-in-Original passed by the Commissioner of Central Excise, Meerut-II regarding the classification of goods manufactured by the appellants. The Revenue contended that the goods were Aloo Mash and should be classified under Tariff Item No. 20052000, while the appellants claimed they were Potato Flakes and should be classified under Tariff Item No. 11052000. The original authority held that the goods were Aloo Mash and confirmed the demand for Central Excise duty amounting to ?51,33,790. The appellants challenged this decision before the Tribunal.

2. Arguments by Appellants:
The appellants argued that since there was a specific entry for flakes of potato under Tariff Item No. 11052000, there was no need to consider any other classification. They also pointed out that the process of manufacture did not involve reducing potatoes to a soft pulp, as required for Aloo Mash. The appellants relied on the chapter notes of Chapter 20 and the processes specified in Chapter 7, 8, and 11 to support their classification under Tariff Item No. 11052000.

3. Arguments by Revenue:
The Revenue submitted a report indicating that preservatives were found in the goods manufactured by the appellants, supporting the classification under Tariff Item No. 20052000. However, upon examination of the evidence submitted by Revenue, it was found that only raw materials used by the appellants were tested, not the final product.

4. Tribunal's Decision:
After considering the submissions and evidence, the Tribunal found that the goods were subjected to the process of flaking, not to the process required for making Aloo Mash. Therefore, the Tribunal accepted the appellants' arguments and held that the goods should be classified under Tariff Item No. 11052000. The impugned Order-in-Original was set aside, and the appeal was allowed, granting the appellants consequential relief.

In conclusion, the Tribunal's decision was based on the specific process of manufacture and the requirements for classification under the Central Excise Tariff Act, 1985. The evidence presented by both parties was carefully examined to determine the correct classification of the goods in question, ultimately leading to the setting aside of the original classification and a favorable decision for the appellants.