2018 (1) TMI 1197 - AT - Central Excise

Classification of goods - Aachi brand Bajji Bonda Mix - Adai Mix - idly chilli powder - The department was of the view that the correct classification of idly chilli powder would fall under 2103 10 / 2103 90 40 and Bajji Bonda Mix and Adai Mix would fall under CSH 2108 99 / 2106 9099 of First Schedule to CETA, 1985 - Held that - The Tribunal has held that idly chillil powder would merit classification under Chapter 9 and that Bajji Bonda Mix and Adai Mix would not fall under Chapter 9. The appellant in that case had not contested the classification of Bajji Bonda Mix and Adai Mix and had accepted the classification proposed by the department. Presently, the department proposes to classify Bajji Bonda Mix and Adai Mix under Chapter 2108 / 2106. Thus, the allegation in the show cause notice with respect to Bajji Bonda Mix and Adai Mix is whether it would fall under 2108 or 9, whereas the Tribunal in the case of Eastern Condiments Pvt. Ltd. 2015 (6) TMI 1014 - CESTAT CHENNAI has held them to be under Chapter 2103 9040. Thus, in view of the settled legal position in the case of Eastern Condiments Pvt. Ltd. 2015 (6) TMI 1014 - CESTAT CHENNAI , we do not find any merit in the ground raised by the department in the present appeals. Time Limitation - Held that - since the issue is of classification, which is an interpretational one, and the respondents cannot be alleged to be guilty of suppression of facts, demand is hit by limitation. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Classification of 'Aachi brand Bajji Bonda Mix', 'Adai Mix', and 'idly chilli powder' under relevant chapters of CETA, 1985.

Detailed Analysis:

Issue 1: Classification of 'Aachi brand Bajji Bonda Mix' and 'Adai Mix'
The department contended that 'Bajji Bonda Mix' and 'Adai Mix' should be classified under CSH 2108 99 / 2106 9099 of the First Schedule to CETA, 1985. The original authority agreed with this classification, emphasizing that these products are not solely flour-based and are meant for consumption after processing like frying. However, the Commissioner (Appeals) disagreed, classifying them under Chapter 11 as products of the milling industry, primarily consisting of rice flour, gram flour, and other flours. The department argued that the Commissioner's classification was incorrect as Chapter 11 pertains to food preparations consumed after frying. The Tribunal referred to a previous case involving similar items and upheld the classification of 'Bajji Bonda Mix' and 'Adai Mix' under Chapter 2103 9040, in line with the decision in the Eastern Condiments case. The Tribunal found no merit in the department's argument against this classification based on the settled legal position.

Issue 2: Classification of 'idly chilli powder'
The department argued that 'idly chilli powder' should be classified under Heading 210310 / 21039040 due to its composition, which includes a significant percentage of non-spices. The Commissioner (Appeals) classified it under Chapter 9, which carries a nil rate of duty during the relevant period, based on its powder form and intended use as an accompaniment for food rather than a spice or masala. The department contended that 'idly chilli powder' cannot be a substitute for pure chilli powder and should not be classified under Chapter 9. The Tribunal, referencing the Eastern Condiments case, upheld the classification of 'idly chilli powder' under Chapter 9, in line with the previous decision. The Tribunal found the department's argument regarding the classification of 'idly chilli powder' unconvincing, supporting the Commissioner (Appeals)'s decision.

Issue 3: Limitation on the demand
The Commissioner (Appeals) held that the demand was barred by limitation, as the issue of classification is interpretational, and the respondents cannot be accused of suppressing facts. The Tribunal agreed with this finding, indicating that the demand could not be sustained due to the interpretational nature of the classification issue and the absence of evidence of suppression of facts by the respondents.

In conclusion, the Tribunal dismissed the appeals, upholding the classification of 'Bajji Bonda Mix', 'Adai Mix', and 'idly chilli powder' as determined by the Commissioner (Appeals) based on the settled legal position established in previous cases. The Tribunal also concurred with the Commissioner's decision regarding the limitation on the demand, finding no grounds for interference with the impugned order.