2017 (6) TMI 310 - AT - Central Excise

Classification of goods - Milk Treat - classified under CTH 19053211 or under CTH 19053219? - Held that - the wafers coated with Chocolate or containing Chocolate are classifiable under Tariff Heading 19053211, therefore, it has to be found out whether the product in question has been coated with Chocolate or containing Chocolate - The explainery notes clearly states that Sugar confectionary including White Chocolate and not containing Cocoa is classifiable under Chapter Heading 1704 and it includes White Chocolate compressed of Sugar, Cocoa butter, Milk Powder, flavoring agents but not containing more than mere traces of Cocoa (Cocoa butter is not regarded as Cocoa). Admittedly, the ingredients used in manufacturing of Milk Treat does not contained any Cocoa or Chocolate but only contained Cocoa butter and Cocoa butter is specifically excluded and does not cover under Chapter 18 of the Central Excise Tariff Act, therefore, the White Chocolate cannot be said as Chocolate - the product Milk Treat is not covered under Tariff Heading 19053211. The product in question under Tariff Heading 19053219 which has been correctly classified by the appellants - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of product Milk Treat under Tariff Heading 19053211 challenged by the Revenue.

Analysis:
The appellants manufactured Milk Treat under Chapter 18 and 19 of the Central Excise Tariff Act, 1985. The Revenue disputed the classification under Tariff Heading 19053211 instead of Tariff Heading 19053219, issuing show cause notices for multiple periods. The appellant argued for classification under Tariff Heading 19053219, citing benefits of specific notifications and distinguishing between White Chocolate and Chocolate. They relied on HSN notes and previous tribunal decisions to support their classification. The appellant contended that Cocoa butter should not be equated with Cocoa, as per HSN notes under Chapter 17, and argued that the product did not contain Cocoa powder but only Cocoa butter. They also emphasized that the issue had been settled in their favor previously, and extended period for demand was not applicable. The appellant further challenged the imposition of penalties.

In opposition, the Revenue argued that White Chocolate is a variety of Chocolate, referencing a previous decision that had been upheld by the Hon'ble Apex Court.

The appellant countered the Revenue's argument by highlighting that the previous decision had been set aside by the Hon'ble Apex Court and remanded for reconsideration. The AR supported the impugned orders, emphasizing that the appellants used Cocoa butter in manufacturing Milk Treat, which is derived from Cocoa, leading to the classification under Tariff Heading 19053211.

After considering the submissions, the Tribunal analyzed the relevant tariff headings and HSN notes. It noted that White Chocolate was excluded from Chapter 18 and clarified that Cocoa butter should not be considered as Cocoa. The Tribunal concluded that the product Milk Treat, not containing Cocoa or Chocolate but only Cocoa butter, should be classified under Tariff Heading 19053219. Therefore, the impugned orders were set aside, and the appeals were allowed.

This detailed analysis of the legal judgment showcases the arguments presented by both parties, the interpretation of relevant tariff headings and HSN notes, and the ultimate decision reached by the Tribunal regarding the classification of the product Milk Treat under the Central Excise Tariff Act.