2002 (11) TMI 170 - AT - Central Excise

Summary

Issues: Classification of milk-based products under Central Excise Tariff Act

Classification Issue:
The appeal concerns the classification of milk-based products manufactured by the appellants, specifically whether they fall under Heading 04.04 of the Central Excise Tariff Act (CETA) attracting nil rate of duty or under sub-heading No. 1901.19 of the CETA. The appellants argue that their products should be classified under Heading 04.04 based on Chapter Note 4 of Chapter IV of the CETA, which includes various milk products and fats derived from milk. They contend that the addition of stabilizers does not change the basic character of the products and that the products can be used without stabilizers. The appellants rely on a previous decision involving similar products to support their classification argument.

Contentions and Arguments:
The learned Advocate for the appellants argues that the products should be classified under Heading 04.04, emphasizing that the stabilizers added are for maintaining a uniform emulsion during transportation and do not alter the essential nature of the products. In contrast, the learned JDR for the Revenue asserts that the products are akin to ice cream and should be classified under Chapter Heading 19.01 related to food preparation. The Revenue highlights the ingredients present in the products, their intended use for institutional sales, and the manufacturing process similarities to ice cream. The Revenue also references a previous case involving the classification of ice cream mix to support their argument.

Analysis and Decision:
After considering the arguments from both sides and reviewing the relevant case laws and records, the Tribunal finds that the penalty imposed by the Commissioner is unjustified due to lack of clarity on the contravened sub-clause. However, regarding the classification issue, the Tribunal upholds the Commissioner's decision. The Tribunal agrees with the Revenue's position that the products in question should be classified under Chapter Heading 19.01, based on the manufacturing process and the nature of the products. The Tribunal notes that the Commissioner thoroughly considered all aspects before making the classification decision, finding no fault in the order. Therefore, the Tribunal partially allows the appeal by setting aside the penalty but upholding the classification and duty demand as confirmed by the Commissioner.

In conclusion, the judgment addresses the classification issue of milk-based products under the Central Excise Tariff Act, emphasizing the importance of considering manufacturing processes, product characteristics, and relevant tariff provisions in determining the appropriate classification for duty purposes.