2005 (1) TMI 168 - AT - Central Excise

Classification of goods - Wafer with Chocolate Cream - chemical composition - Applicability of HSN guidelines versus ISI specifications - HELD THAT - Considering the material on record it is found that based on the classification of the Chocolate Cream placed between two sliced biscuits-wafers and the fact that the said Chocolate cream would be classifiable under heading 1803 taken irrespective of the fact of percentage of Cocoa in the entity, the ground taken that the decision relied upon by the Commissioner (Appeals) in the appellant's own case 1986 (9) TMI 211 - CEGAT, NEW DELHI was as regards the classification in case of Bourbon Cream manufactured by the respondents in the year 1986, which was under the erstwhile tariff and was based on the applicability of ISI specification for use of chocolate and that decision cannot be applied to the facts of this case as ISI and the Prevention of Food Adulteration Act, would not rule the classification to be arrived under the tariff based on HSN cannot be accepted, as the classification of the chocolate cream which forms a layer between two slices of biscuits cannot determine the classification of the biscuits itself. There is no material to consider that the biscuit is a cocoa product merely because of its certain percentage of cocoa which do not even predominate, were found in such entity. The entities are understood and have to be classified, as such they cannot be called chocolate for the reason as given. As regards the third ground taken by the appellant's of markings on their packages/wrappers to indicate them as chocolates that word chocolate advertised on them will not ipso facto lead the entities be classified as chocolate following the well settled law that advertised cannot be a guide or determinant to classification, as held by the Bombay High Court in the case of Blue Star Ltd. vs UOI 1979 (3) TMI 64 - HIGH COURT OF JUDICATURE AT BOMBAY . Thus, we find no valid ground in Revenue's appeal to upset the same classification of the biscuits wafer in this case. The appeal is consequently rejected.

Summary

Issues Involved:
1. Classification of products containing chocolate cream.
2. Applicability of HSN guidelines versus ISI specifications.
3. Relevance of chemical composition in classification.
4. Impact of product labeling and trade parlance on classification.

Summary:

1. Classification of Products Containing Chocolate Cream:
The primary issue was whether the products (Chekkers Choco 40 P, Chekkers Fly Choco, Chekkers Choco 640 P, and Chekkers Choco ATC) should be classified as wafer biscuits or chocolate wafer products. The Revenue argued that since the wafers contained chocolate cream, they should be classified u/s Chapter 1905.31. However, the Appellate Authority held that the chocolate cream did not qualify as "Chocolate in any form" u/s Chapter 1803.00 but was covered as other food preparation containing cocoa u/s Chapter 1804.00, thus classifying the wafers u/s Chapter 1905.90.

2. Applicability of HSN Guidelines versus ISI Specifications:
The Revenue contended that the Central Excise Tariff Act, 1985, harmonized on the lines of HSN, should be followed for classification disputes, as confirmed by the Supreme Court in CCE, Shillong v. Wood Craft Product Ltd. The Appellate Authority's reliance on ISI specifications and the Prevention of Food Adulteration Act was deemed misplaced since these guidelines were not aligned with the HSN.

3. Relevance of Chemical Composition in Classification:
The Appellate Authority relied on a Chemical Examiner Test Report, which described the chocolate cream as a brown pasty mass containing 7.9% cocoa by weight. The Authority concluded that this did not qualify as chocolate. However, the Tribunal found this view erroneous, noting that the HSN definition of chocolate does not prescribe a fixed percentage of cocoa. The presence of substantial cocoa content and other ingredients typical of chocolate preparation supported the classification of the cream as chocolate.

4. Impact of Product Labeling and Trade Parlance on Classification:
The Appellate Authority argued that labeling the product as "Chocolate Cream" did not automatically classify it as a chocolate wafer. The Tribunal, however, noted that the presence of chocolate in the cream and its labeling were consistent with the product's nature. The Supreme Court's trade parlance test, as applied in CCE v. Fusebase Eltoto Ltd., supported this view, indicating that consumer perception and product utility play a role in classification.

Conclusion:
The Tribunal found no valid grounds in the Revenue's appeal to reclassify the wafer biscuits as chocolate products. The classification of the biscuits wafer u/s Chapter 1905.90 was upheld, and the appeal was consequently rejected.