2000 (7) TMI 308 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product "choco cream toffee (double trouble)" under the Central Excise Tariff.
2. Determination of whether the product contained cocoa.
3. Interpretation of tariff headings and explanatory notes.

Issue-wise Detailed Analysis:

1. Classification of the Product:
The primary issue in this appeal was the classification of "choco cream toffee (double trouble)" manufactured by M/s. Ravalgaon Sugar Farm Ltd. The appellants sought classification under sub-heading No. 1704.90 of the Central Excise Tariff, which covers sugar confectionary not containing cocoa. However, the Central Excise authorities classified it under sub-heading No. 1804.00, which pertains to other food preparations containing cocoa. The Assistant Collector's classification was confirmed by the Collector of Central Excise (Appeals), Pune.

2. Determination of Whether the Product Contained Cocoa:
The appellants contended that the product contained unsweetened covering chocolate, which is made of cocoa, but argued that chocolate should not be treated as cocoa for tariff purposes. The respondent countered that since chocolate is made from cocoa, any product containing chocolate inherently contains cocoa. The Tribunal referred to the Explanatory Notes to the Harmonised Commodity Description and Coding System (HSN), which state that only cocoa butter is not regarded as cocoa, whereas other products containing cocoa are considered cocoa products.

3. Interpretation of Tariff Headings and Explanatory Notes:
The Tribunal examined the relevant tariff headings: Heading No. 17.04 covers sugar confectionary not containing cocoa, and Heading No. 18.04 covers other food preparations containing cocoa. Note I (a) under Chapter 17 excludes sugar confectionary containing cocoa from its scope, directing such products to Chapter 18. Note 2 under Chapter 18 further clarifies that Heading No. 18.04 includes sugar confectionary containing cocoa. The Tribunal emphasized that the term "containing" implies the presence of a specified substance within the item, regardless of whether it is direct or indirect.

Detailed Analysis:
- Chocolate and Cocoa Relationship: The Tribunal detailed the process of making chocolate from cocoa beans, explaining that all chocolate is derived from cocoa beans. Consequently, any product containing chocolate inherently contains cocoa.
- Test Reports: The product was tested by the Dy. Chief Chemist, Central Excise Laboratory, Bombay, and it was confirmed that the choco cream toffee contained cocoa. The appellants' argument that they used chocolate and not cocoa directly was dismissed, as the tariff entry specified "other food preparations containing cocoa."
- Previous Classification: The Tribunal noted that until 19-3-1990, the appellants classified their product under Heading No. 18.04, acknowledging the use of cocoa. The change in classification sought by the appellants after this date was due to a change in duty rates, not a change in the product's composition.
- Legal Precedents: The Tribunal reviewed previous decisions, including Collector of Central Excise, Nagpur v. Dinshaw Frozen Foods and Nestle (I) Ltd. v. Collector of Central Excise, Mumbai, but found them not applicable to the current case as they dealt with different contexts and products.

Conclusion:
The Tribunal concluded that "choco cream toffee (double trouble)" contained cocoa and was correctly classified under Heading No. 18.04, sub-heading No. 1804.00 of the Central Excise Tariff. The appeal was rejected, affirming the classification determined by the Central Excise authorities.