2023 (11) TMI 483 - AT - Customs

Classification of imported goods - Cheese Polvaromas (semi-finished) / Cheese Polvaromas (semi-finished flavour compound) - to be classified under CTH 3302 1090 or under CTH 2106 9060? - demand of differential duty - confusability of the impugned goods besides imposition of penalties. HELD THAT - In this case, impugned goods are imported for use in manufacture of dry seasoning powder. The products that are classifiable under Chapter Heading 2106 mostly consist of food and edible preparations which are meant to be used either directly or after processing such as cooking, dissolving or boiling in milk or water or other liquids, for human consumption. As per the HSN Notes, the said heading i.e., 2106 excludes mixture of odoriferous substances, which can be either natural or synthetic or mixed or both, which are used as raw materials in the perfumery, food or drink industries. There is no dispute and it is an admitted fact that the impugned products cannot be directly used by the end users or consumers in any food/food preparation and they are used as industrial raw materials and mixed with other ingredients to manufacture their final product Dry Mixed Seasoning . Dry Mixed Seasoning is used by their customers as raw material in manufacture of the customers finished products. Impugned goods are not directly edible and meant to be used to impart flavour / olfactory characteristics to the products in which it is used. To be classified under CTH 2106, the product should be used as food or beverages either as such or after a minimum processing such as dissolving, boiling in water / milk or other liquids for home consumption. What is imported are not edible but merely used to impart cheese flavour. As such what is imported may be of animal origin i.e., Cheese, but, having components of synthetic aromatics, their appropriate classification is under CTH 3302 of the CTA, 1975. The impugned goods are classifiable under CTH 3302 1090 of the Customs Tariff Act and there is no merit in the appeal filed by the Department. Accordingly, the appeal is rejected.

Summary

Issues Involved:
1. Classification of imported goods.
2. Invocation of extended period for demand of differential duty.
3. Confiscation of the impugned goods.
4. Imposition of penalties.

Summary:

Classification of Imported Goods:
The primary issue is the classification of "Cheese Polvaromas" under the Customs Tariff Act, 1975. The Department argued that the goods should be classified under CTH 2106 9060 as "food flavouring material," asserting that the goods are derived from cheddar cheese paste and are not synthetic aromas. The Respondent contended that the goods are mixtures of synthetic aromatics and should be classified under CTH 3302 1090. The Tribunal noted that the imported goods are not directly consumable and are used as industrial raw materials, thus fitting the description under CTH 3302 1090, which covers mixtures of synthetic aromatics used in the food industry.

Invocation of Extended Period for Demand of Differential Duty:
The Department invoked the larger period of limitation, alleging willful misclassification by the Respondent. The Respondent countered that there was no misrepresentation or suppression of facts, and the classification was based on available information and previous acceptance by the Department. The Tribunal found no evidence of willful misclassification or suppression, thus rejecting the invocation of the extended period.

Confiscation of the Impugned Goods:
The Department proposed the confiscation of live consignments and past consignments under Section 111(m) of the Customs Act, 1962, on grounds of misdeclaration. The Tribunal, however, found that the goods were correctly classified under CTH 3302 1090 and thus not liable for confiscation.

Imposition of Penalties:
The Department also proposed penalties under Sections 112(a) and 114A of the Customs Act, 1962. The Tribunal held that since the classification under CTH 3302 1090 was correct and there was no misdeclaration or suppression, penalties could not be imposed.

Conclusion:
The Tribunal upheld the classification of the goods under CTH 3302 1090, rejected the Department's appeal, and found no merit in the invocation of the extended period, confiscation, or imposition of penalties. The cross objections filed by the Respondent were disposed of accordingly.