2014 (12) TMI 33 - AT - Central Excise

Classification of Threptin and Prorich diskettes - Classification under CETH 2106 10 00 or under 2106 90 99 - protein concentrates and textured protein substances or food preparations not elsewhere specified or included - Benefit of Notification 3/2006, dated 1-3-2006 - Held that - Products are marketed as a protein supplement and contains 30% of protein by weight. Bulk of the product is made up of carbohydrates, which accounts for 48 to 58% of the weight of the product. Therefore, it cannot be said that protein is predominant by weight over other substances. If a product has to be considered as a protein concentrate the minimum concentration that is required would be at least 50% of the weight of the product so that protein predominates over other materials. That is not the fact obtaining in the present case. - As per the expert opinion obtained and produced by the appellant, and also from the technical literature available on the subject matter, it is seen that, to constitute protein concentrate, at least 70% of protein is required, both, in respect of soya protein products as also milk protein products. In the present case, the protein content is only 30% and nowhere near to 70% as mentioned in the technical literature. The expert opinion and the technical literature relied upon by the appellant has not been rebutted in a meaningful way by the Revenue nor any contrary opinion has been produced by the Revenue in support of their contention. As per the technical literature available, even skimmed milk powder contains 33% to 37% of protein and full cream milk powder contains 23% to 27% of proteins, but we do not classify milk powder as a protein concentrate. From the manufacturing process adopted by the appellant, these processes are not undertaken and, therefore, it cannot be said that the impugned goods are textured protein substances. It is a settled position in law, that it is for the Revenue to lead evidence in classification matters and not for the appellant - Revenue has completely failed in this regard. On the contrary, the appellant has led evidences by way of expert opinion and technical literature to show that the products manufactured by them did not come within the category of protein concentrates or textured protein substances. The appellant s products are consumed as such by people who are recuperating from illness and, therefore, it is a ready to eat packaged product. Consequently, the product merit classification under CETH 2106 90 99 and the appellant is rightly entitled to the benefit of Notification 3/2006, dated 1-3-2006. - Decided in favour of assessee.

Summary

Issues: Classification of products under Central Excise Tariff Heading (CETH) 2106 10 00 as "protein concentrates and textured protein substances" or under CETH 2106 90 99 as "food preparations not elsewhere specified or included" for excise duty purposes.

Analysis:
1. Common Issue in Appeals: The judgment involves seven appeals arising from Orders-in-Original passed by the Commissioner of Central Excise, Customs & Service Tax, Raigad Commissionerate, all concerning the classification of products manufactured by M/s. Raptakos Brett & Co. Ltd. as either "protein concentrates and textured protein substances" under CETH 2106 10 00 or as "food preparations not elsewhere specified or included" under CETH 2106 90 99 for excise duty purposes.

2. Appellant's Position: The appellant argued that their products, 'Threptin' and 'Prorich' diskettes, do not qualify as protein concentrates as the protein content is only 30% by weight, with carbohydrates being predominant. Expert opinions from Professor S.S. Lele and Professor Dr. Jagadish Sarvotham Pai supported this view, emphasizing that protein concentrates typically contain over 70% protein. Technical literature also indicated that products with less than 70% protein do not meet the criteria for protein concentrates.

3. Appellant's Submissions: The appellant highlighted that their manufacturing process does not involve the elimination of constituents of defatted soyabean flour, a requirement for protein concentrates as per HSN Explanatory Notes. They argued that the products are consumed directly and not used in food preparation, further supporting classification as 'food preparations not elsewhere specified or included.'

4. Revenue's Argument: The Revenue contended that the products were marketed as protein supplements and should be classified as protein concentrates based on their high protein content, despite the appellant's claims of low protein percentage. They emphasized the essential character of the products as protein supplements.

5. Judgment and Analysis: The Tribunal analyzed the expert opinions, technical literature, and the manufacturing process to determine the appropriate classification. It noted that for a product to be considered a protein concentrate, a minimum of 50% protein content by weight is required, which was not met in this case. The absence of spinning and extruding processes also indicated that the products did not qualify as textured protein substances.

6. Legal Principles: Citing the burden of proof on the Revenue in classification matters, the Tribunal referenced previous court decisions emphasizing functional utility and predominant usage for classification. Applying these principles, the Tribunal ruled in favor of the appellant, classifying the products under CETH 2106 90 99 as "food preparations not elsewhere specified or included," entitling them to the benefit of a concessional excise duty notification.

7. Conclusion: The Tribunal allowed the appeals, providing consequential relief to the appellant in accordance with the law. The judgment highlighted the importance of scientific and technical evidence in classification disputes and upheld the appellant's classification arguments based on expert opinions, technical literature, and the functional utility of the products.