2018 (7) TMI 685 - AT - Central Excise

Classification of manufactured goods - choco-dipped wafer layers and wafer covered with delicious chocolate layer - According to the appellant these goods are classifiable under Central Excise tariff heading 1905-32-19, while the Department wants to classify it under tariff heading 1905-32-11 - whether the classification can be based on the Statutory definition in another law viz., Prevention of Food Adulteration Act, 1954 which describes standards for a product to be sold as chocolate? - Held that - This issue is no longer res integra as Hon ble Apex Court in the case of Commissioner of Central Excise, New Delhi Vs. Connaught Plaza Restaurant (P) Ltd 2012 (12) TMI 149 - SUPREME COURT has held that the definition under the Prevention of Food Adulteration Act cannot be utilized to decide the tariff classification - also, the Food Safety and Standards Act, 2006, through its section 97 has appealed 8 acts including the Prevention of Food Adulteration Act, 1954, which the appellant sought to rely upon. Even otherwise, the definition under the Prevention of Food Adulteration Act cannot be relied upon to decide the classification under Excise Tariff. Whether the material in question is chocolate or cocoa? - Held that - As far as the classification of the material in question is concerned, Chapter 19 does not deal with the definition of chocolate although it refers to wafers containing chocolate and other wafers. Chocolate is defined in the explanatory notes to HSN in 18.06 - neither it mandates to have cocobutter in the mixture for it to be chocolate nor is there any prohibition on the use of vegetable fat other than coco-butter in the mixture for the material to be classified as chocolate. Thus, the material in question is classifiable as chocolate. Whether the wafers can be said to be containing chocolate if the chocolate is only present between the two thin layers and not integrated into the wafer itself? - Held that - It is not necessary that a wafer to be called so, has to consist of only one layer. What the appellant is selling and what is sought to be classified is a wafer containing more than one layer. It is never in dispute that what they are selling are wafers and that they contain cocoa and other ingredients. There is nothing in the Central Excise Tariff or in the HSN which mandates the chocolate to be incorporated in the batter of the wafer or into any particular layer. The products manufactured by the appellant are classifiable under 1905-32-11 - appeal dismissed - decided against appellant.

Summary

Issues involved:
Classification of goods under Central Excise tariff headings; Interpretation of statutory definitions in the context of classification; Whether wafers containing cocoa should be classified as wafers containing chocolate.

Detailed Analysis:

Classification of Goods under Central Excise Tariff Headings:
The case involved a dispute over the classification of wafers with a cream layer made of cocoa powder, sugar, emulsifiers, and hydrogenated vegetable fats. The appellant argued for classification under heading 1905-32-19, while the Department contended for classification under heading 1905-32-11. The key distinction was whether the products should be considered as wafers containing chocolate or other wafers.

Interpretation of Statutory Definitions for Classification:
The appellant relied on the Prevention of Food Adulteration Act, 1954, to argue that since their product cannot be marketed as wafer containing chocolate due to the use of hydrogenated vegetable fats instead of cocoa butter, it should not be classified as such. However, the Department relied on the Central Excise tariff and the HSN explanatory notes to classify the goods based on the presence of chocolate between the wafer layers.

Classification of Wafers Containing Cocoa as Wafers Containing Chocolate:
The Tribunal analyzed the definitions of chocolate and wafers under the Central Excise tariff and HSN. It was established that the presence of cocoa paste, sugar, and other ingredients, including vegetable fats, does not preclude a product from being classified as chocolate. Additionally, the Tribunal found that for a wafer to be classified as containing chocolate, it was not necessary for the chocolate to be integrated into a specific layer of the wafer. Therefore, the products in question were classified as wafers containing chocolate under heading 1905-32-11.

Conclusion:
The Tribunal dismissed the appeals and upheld the Orders-in-Appeal, concluding that the products manufactured by the appellant were correctly classified under heading 1905-32-11 as wafers containing chocolate. The judgment highlighted the importance of interpreting classification based on Central Excise tariff headings and relevant statutory definitions, rather than external laws governing product standards.