1999 (12) TMI 554 - AT - Central Excise

Summary

Issues:
Classification of canned mushrooms under Customs Tariff Act and liability for levy of CESS under Agricultural and Processed Food Products Export Cess Act, 1985.

Analysis:
1. The main issue in this case is whether canned mushrooms should be classified under sub-heading No. 2003.10 of the Customs Tariff Act and whether they are liable for levy of CESS under the Agricultural and Processed Food Products Export Cess Act, 1985.

2. The Revenue argues that mushrooms should be classified as vegetables under the CESS Act and Customs Tariff Act. The Act specifies that CESS shall be levied on fruits, vegetables, and their products, and the term "vegetable" should be understood in the context of the Customs Tariff.

3. The Revenue further contends that edible mushrooms are included in Chapter 7 of the Customs Tariff Act under the category of vegetables. The processing of mushrooms to meet U.S. Federal Regulations makes them preserved mushrooms falling under Heading 2003.10.

4. On the other hand, the Respondent argues that mushrooms are fungus, not vegetables, and are grown in controlled conditions different from traditional vegetable farming. They cite botanical classification and market perception to support their argument.

5. The Tribunal analyzed the statutory provisions and found that the CESS Act does not define "vegetable," hence mushrooms should be classified as per the Customs Tariff Act, which includes edible mushrooms under vegetables in Chapter 7.

6. The Tribunal also noted that the processing of mushrooms into canned form qualifies them as preserved mushrooms under Chapter sub-heading 2003.10. The argument that mushrooms are not sold as vegetables in the market was rejected based on statutory classification.

7. Ultimately, the Tribunal upheld the Revenue's appeal, setting aside the Order-in-Appeal, and ruled that canned mushrooms should be classified as vegetables under Chapter 20 as per the show cause notice and Order-in-Original due to the statutory provisions and processing methods applied.

This detailed analysis highlights the arguments presented by both parties, the statutory provisions governing the classification of mushrooms, and the Tribunal's reasoning in deciding the classification and levy of CESS on canned mushrooms.