2012 (11) TMI 1020 - AT - Central Excise

Classification of goods - Classification of Chapter Heading 2301.11 or Chapter Heading 1701.90 - Held that - Chapter 23 of the Central Excise Tariff covers residue and waste from the food industry whereas Chapter 17 of the Central Excise Tariff specifically covers sugar. As per Chapter Note No. 2 of Chapter 17 of the Central Excise Tariff, sugar means any form of sugar in which the sucrose contents, if expressed as a percentage of the material dried to constant weight at 10 C would be more than 90%. In the present case the samples of brown sugar was sent to Central Excise Laboratory, Mumbai for testing and as per the Chemical Examiner the percentage is more than 90%. In view of this, we find merit in the contention of the Revenue that the brown sugar is classifiable under Chapter Heading 17 of the Central Excise Tariff - Decided in favour of Revenue.

Summary

Issues:
Classification of brown sugar for duty under Central Excise Tariff - Applicability of Chapter Heading 17 or 23 - Interpretation of relevant tariff provisions - Validity of impugned order passed by Commissioner (Appeals) - Duty liability of Respondents.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI was filed by the Revenue against the order passed by the Commissioner (Appeals) regarding the classification of brown sugar for duty under the Central Excise Tariff. The respondents, engaged in the manufacture of sugar and molasses, cleared brown sugar at nil rate of duty under Chapter Heading 2301.11, which was disputed by the Revenue. The adjudicating authority confirmed a duty demand of Rs. 1,73,305/- and imposed a penalty on the respondents.

Upon review, it was noted that the respondents' appeal before the Commissioner (Appeals) was allowed based on a precedent involving Bharat Sugar Mills Ltd. v. CCE. The Revenue challenged this decision, arguing that the brown sugar was marketable and therefore liable to duty under Chapter Heading 17 of the Central Excise Tariff, not Chapter Heading 23 as claimed by the respondents.

The Tribunal analyzed the precedent case of Bharat Sugar Mills and distinguished it from the present situation. The key issue was whether the brown sugar sold by the respondents should be classified under Chapter 17 (sugar) or Chapter 23 (residue and waste from the food industry) of the Central Excise Tariff. The Central Excise Laboratory confirmed that the brown sugar samples had a sucrose content exceeding 90%, meeting the definition of sugar under Chapter 17.

Based on this analysis, the Tribunal found merit in the Revenue's contention that the brown sugar should be classified under Chapter Heading 17 of the Central Excise Tariff. Consequently, the impugned order was set aside, and the appeal was allowed, restoring the decision of the adjudicating authority. The judgment clarified the classification for duty liability of the respondents, emphasizing the interpretation of relevant tariff provisions and the distinction between sugar and residue from the food industry.

This detailed analysis of the judgment highlights the legal interpretation of tariff provisions, the significance of laboratory testing in determining classification, and the impact of precedent cases on decision-making in excise duty matters.