2016 (9) TMI 225 - AT - Central Excise

Classification - mixed spices (masala powder) - whether to be classified under Chapter 9 or under Chapter 2103 of CETA 1985 - period involved is from 1.4.2010 to 30.9.2014 - Held that - by following this Bench order in appellant s own case reported in 2015 (6) TMI 1014 - CESTAT CHENNAI where the classification dispute was extensively for an earlier period and held that mixtures of spices with other substances (masala powder) manufactured and cleared under various brand names by the appellants herein are rightly classifiable under 0910 9100 of CET and the demand of excise duty and penalties were set aside by allowing the appeals, the impugned orders are set aside. - Decided in favour of appellant with consequential relief

Summary

Issues Involved:
1. Classification dispute of mixed spices (masala powder) under Chapter 9 or Chapter 2103 of CETA 1985.

Issue-wise Detailed Analysis:

1. Classification Dispute of Mixed Spices (Masala Powder):
The primary issue in these appeals is the classification of mixed spices (masala powder) manufactured by the appellants. The appellants argued that their products should be classified under Chapter 9 of the Central Excise Tariff Act (CETA) 1985, specifically under sub-heading 0910 9100, which pertains to spices. The Revenue, however, contended that these products should be classified under Chapter 2103, which covers mixed condiments and mixed seasonings.

The appellants relied on a previous decision in their own case (Final Order No. 41820 to 41839/2015 dated 11.06.2015), where it was held that mixtures of spices with other substances (masala powder) are classifiable under Chapter 9. The Tribunal in that case extensively examined the processes of manufacture, the ingredients, and the applicable legal provisions, including the chapter notes and HSN explanatory notes.

The Tribunal found that the mixtures of spices, even with added substances like salt, rice powder, dal powder, and preservatives, retained the essential character of spices. Chapter Note 1 of Chapter 9 and the supplementary note to Chapter 9 of CETA, along with HSN explanatory notes, supported the classification under Chapter 9 as long as the essential character of the spices was retained.

The Tribunal also considered various judgments and circulars, including the Board's Circulars dated 15.04.1996 and 30.04.1996, which clarified that products like sambar powder, rasam powder, and other masala powders should be classified as spices under Chapter 9.

The Tribunal further noted that the Revenue's reliance on the classification based on the usage of the product, arguing that mixed spices lose their identity, was not supported by evidence. The Tribunal emphasized that the classification should be based on the essential character of the product and market understanding.

In the present case, the Tribunal reiterated its findings from the previous order, emphasizing that the products in question, being mixtures of spices with other substances, are rightly classifiable under Chapter 9. The Tribunal also referred to the jurisdictional High Court of Madras decisions in the cases of P.C. Duraisamy and Sakthi Masala Pvt. Ltd., which supported the classification of such products under Chapter 9.

Conclusion:
The Tribunal concluded that the mixed spices (masala powder) manufactured and cleared by the appellants are classifiable under Chapter 9, specifically under sub-heading 0910 9100 of CETA. Consequently, the demand for excise duty and penalties imposed in the adjudication orders were set aside. The appeals were allowed with consequential relief, and the impugned orders were set aside.