2018 (9) TMI 14 - AT - Central Excise

Classification of goods - Chocolate namely Parle 2-in-1 Eclairs - Kismi Toffee and Kismi Toffee Bar. - appellants are classifying the said goods under Tariff Item No.17049020 as Boiled Sweets whereas Revenue wanted to be classified all the said items under Tariff Items No.17049030 as White Chocolate - Benefit of N/N. 03/2006-CE dated 01/03/2006 (Sr.No.16) and N/N. 12/2012-CE dated 17/03/2012 (Sr.No.19). Held that - White chocolate should contain cocoa butter . As per the test report it is clear that the sample does not contain any cocoa butter and white chocolate requires fat content of 25% as per the Food Safety Standards (Food Products Standard Food Additives) Regulations 2011 whereas the fat content in the goods in question is 8% only. Therefore from the test report it can be said that the goods in question are not white chocolate. Therefore the said item do qualify for exemption as per the Notification No.03/2006-CE dated 01/03/2006 (Sr.No.16) also Notification No.12/2012-CE dated 17/03/2012 (Sr.No.19). Admittedly the goods manufactured by the appellants are Sugar Confectionary is neither chocolate nor bubble gum - the appellants are entitled to pay concessional rate of duty as allowed by the Notifications. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under Tariff Items, Benefit of Notification No.03/2006-CE, Benefit of Notification No.12/2012-CE

Classification of Goods under Tariff Items:
The case involved the classification of goods manufactured by the appellants, namely 'Chocolate' products, under Tariff Items. The appellants classified the goods as 'Boiled Sweets,' while the Revenue contended that the goods should be classified as 'White Chocolate.' The dispute arose due to differing classifications, leading to show cause notices being issued to the appellants. The authorities held that the goods should be classified as 'White Chocolate,' resulting in the denial of benefits under specific Notifications.

Benefit of Notification No.03/2006-CE and Notification No.12/2012-CE:
The appellants were denied the benefit of Notification No.03/2006-CE and Notification No.12/2012-CE due to the classification of their goods as 'White Chocolate' by the Revenue. Consequently, duty was demanded from the appellants, along with the imposition of interest and penalties. The appellants challenged this denial of benefits before the Tribunal.

Detailed Analysis:
The Tribunal heard arguments from both parties and considered a test report obtained regarding the ingredients of the goods in question. The test report revealed that the goods did not meet the criteria to be classified as 'White Chocolate' as per the HSN explanatory note. White chocolate, as defined, should contain specific ingredients like Sugar, Cocoa butter, Milk powder, and Flavouring agents, with limited traces of cocoa. The test report indicated that the goods lacked cocoa butter and did not meet the required fat content for white chocolate. Therefore, the goods did not qualify as white chocolate and were eligible for exemption under the cited Notifications, which granted concessions for items falling under Chapter 170490 categorized as Sugar Confectionary, excluding white chocolate and bubble gum.

Judgment:
Based on the analysis of the test report and relevant legal provisions, the Tribunal found no merit in the impugned orders denying the benefit of the Notifications. Consequently, the Tribunal set aside the orders, allowing the appeals of the appellants with any consequential relief. The decision clarified that the goods in question were correctly classified as Sugar Confectionary and not as white chocolate, entitling the appellants to the concessional rate of duty as provided by the Notifications.