2015 (12) TMI 665 - SC - Central Excise

Manufacture - classification - fish, prawns, and other prepared food items packed in polythene pouches with brand name SUMERU - classifiable under Chapter 16 or Chapter 3 - Held that - The Tribunal vide its final order dated 17.10.2006 while allowing the appeal of the respondents held that on the basis of expert evidence and opinion, the products have not gone under any process. Therefore, the said products should be classified under Chapter 3 and not under Chapter 16. Emphasis was laid on the difference between two expression preserve and prepared i.e. prepare is more towards edible and preserve may not related to edible - conclusion is primarily rested on opinion of the expert bodies which include the Director of Marine Products Export Development Authority as well as the Director of Central Institute of Fisheries Technology. It is also pertinent to mention that the Department did not even cross-examine the experts who had given the opinion in question on the basis of which goods have rightly been classified under Chapter 3 by the Tribunal - Decided against Revenue.

Summary

Issues: Classification of food products under Central Excise Tariff Act, 1985

Analysis:
The case involved the classification of food products manufactured by the respondents under the Central Excise Tariff Act, 1985. The respondents were engaged in the manufacture of processed, preserved, and frozen fish, prawns, and various food preparations, including chicken patty and breaded fish finger. The products were marketed under the brand name 'SUMERU' and were alleged to be chargeable to duty under Chapter 16 of the Central Excise Tariff Act, 1985.

The Department suspected the respondents of evading Central Excise duty and conducted a search at their manufacturing premises, seizing documents and samples of the products. Expert reports confirmed the presence of poly phosphate in the samples. A show cause notice was issued, leading to a demand of &8377;42,30,909/-, classifying the goods under Tariff Sub-Heading 1601.10.

The respondents appealed to the Customs, Excise, and Service Tax Appellate Tribunal, which held that the products should be classified under Chapter 3 instead of Chapter 16. The Tribunal emphasized the difference between 'preserve' and 'prepared,' stating that the products had not undergone a process to be classified under Chapter 16.

The Department challenged the Tribunal's decision, arguing that the conclusion was based on expert opinions without cross-examination. The Supreme Court found no merit in the Department's appeal, noting that the classification under Chapter 3 was justified based on expert opinions from reputable bodies. As a result, the appeals were dismissed, upholding the Tribunal's decision.