2019 (8) TMI 689 - AT - Customs

Classification of imported goods - Granola Bars - mixture of whole grain rolled oats - classified under heading 1905 9090 of the First Schedule to Customs Tariff Act, 1975 or under heading 1904 9000 of the First Schedule to Customs Tariff Act, 1975 - HELD THAT - The composition of the bars comprises various products and that the oats used are subsumed in the final product which are known as granola bars representing not the grain that it contains but the composition as a whole. The alteration of character is a consequence of the baking after mixing which is substantively different from adding to pre-cooked or prepared grain. It would, therefore, not be appropriate to fit the imported goods under the category of cereals or prepared food in the absence of coverage by the residuary entry. Furthermore, it is seen that the first appellate authority has, instead of justifying the classification adopted by the assessing authority, canvassed thereon for the rejection of the classification claimed by the importer. This, in our opinion, detracts from being in accord with the mechanism of re-classification. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of 'granola bars' under Customs Tariff Act, 1975.

Analysis:
The appeal involved a dispute regarding the classification of 'granola bars' imported by M/s General Mills India Ltd. The goods were initially classified under heading 1904 9000 by the assessing authority, while the appellant sought classification under heading 1905 9090. The revenue implication of this classification discrepancy was the additional duties of customs that may be levied. The first appellate authority upheld the original classification, leading to the appeal.

The product in question was described as a mixture of whole grain rolled oats combined with various ingredients like sugar, canola oil, crisp rice, soya protein, honey, and brown sugar syrup, baked and cut into rolls before packing.

The appellant relied on previous Tribunal decisions and a Supreme Court judgment to support their classification argument. However, the Authorized Representative contended that previous decisions did not create an estoppel for revising classification in subsequent imports. They argued that courts consider the alternatives before them and rejection of one classification does not automatically approve the claimed classification. They cited relevant case law to support their stance.

The Tribunal analyzed the Harmonized System of Nomenclature to determine the appropriate classification. It was noted that heading 1904 encompassed prepared foods obtained by swelling or roasting cereals, while the proposed classification by the assessing officer fell under the residuary category. The Tribunal found that the composition of 'granola bars' altered the character of the oats used, making it inappropriate to classify them solely as cereals or prepared food under the residuary entry.

Additionally, the Tribunal observed that the first appellate authority failed to justify the classification adopted by the assessing authority or demonstrate the proposed classification as more suitable than the one claimed by the importer. This lack of proper justification rendered the lower authorities' findings untenable. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

In conclusion, the Tribunal's decision focused on the correct classification of 'granola bars' under the Customs Tariff Act, 1975, emphasizing the importance of justifying classifications based on the specific characteristics of the imported goods.