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TMI Blog1994 (6) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... se and malto dextrin (special glucose) were drawn and sent to the Chemical Examiner, Central Revenue Control Laboratories, Hill Side Road, New Delhi. The Chemical Examiner s reports say that the sample satisfies the Indian Standard Specification No. 873-1974 given for liquid glucose. It is other than preparation. The percentage of reducing sugar expressed as anhydrous dextroses 38.8% in case of one sample and 28.5% in case of other sample. It was mentioned that the product satisfied are of other than preparations. Therefore, show cause notice was issued vide letter 23rd September, 1990 wherein the respondent was asked to show cause to the Assistant Collector, Central Excise Division as to why their product liquid glucose and malto dextrin should not be classified under sub-heading 1702.19 of the Central Excise Tariff Act, 1985 attracting basic excise duty at the rate of 15% ad valorem and why their classification lists No. 4/CL/91 effective from 1st May, 1991 and No. 24/CL/91 effective from 25th July, 1991 should not be approved after vacating the words under protest for items liquid glucose and Malto dextrin under sub-heading 1702.19 as the chemical reports show them as liquid g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80% falls under sub-heading 1702.21. In view of this acquous products wherein percentage of anhydrous dextrose is 28.5% or 38.8% can be said to be the other sugars or chemical pure glucose, when products containing anhydrous dextrose is more than 80% are construed as preparation of other sugars. Accordingly, he had taken the view that the liquid products containing anhydrous dextrose less than 80% by weight shall merit classification under sub-heading 1702.29 as others. Accordingly, he had ordered the classification of liquid glucose and malto dextrin under sub-heading 1702.29 and had approved the classification list No. 4/CL/91 with effect from 1st May, 1991 and No. 24/CL/91 with effect from 25th July, 1991 be approved accordingly. 3. The revenue being not satisfied with the order passed by the Assistant Collector had filed a review application before the Collector (Appeals) under Section 35E(2) of the Central Excises and Salt Act, 1944 and the Collector (Appeals) had confirmed the findings of the Assistant Collector and had rejected the appeal. 4. Being aggrieved from the aforesaid order, the revenue has come in appeal before the Tribunal. 5. Mrs. J.M.S. Sundaram, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te with Ms. Nisha Bagchi, the learned advocate has appeared on behalf of the respondent. The learned Senior Advocate pleaded that the respondent is engaged in the preparation of liquid glucose and malto dextrin for which he is claiming classification under Tariff Item 1701.29 of the Central Excise Tariff as preparations of other sugars . Shri Sorabjee, the learned Senior Advocate argued that it is an admitted position that the respondent s preparation is not chemically pure glucose and it is also an admitted position as emerges from the reports of the Chemical Examiner dated 5-8-1991 incorporating the ISI definition by reference as also from the Board Order No. 1/93-C.E., dated 11th March, 1993 is that the respondent s products are refined and concentrated aqueous solution of D glucose, maltose and other polymers of D glucose obtained by controlled hydrolysis of starch containing material. He referred to page 7 of the paper book where the Chemical Examiner s report has mentioned that the sample is in the form of transparent, viscous liquid. It satisfies the Indian Standard Specification No. 873-1974 given for liquid glucose. It is other than preparation. The percentage of reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are preparation of other sugars as per Indian Standard Specification No. 873-1974. These preparations are used in confectionary, biscuits and food canning industries where requirements of reducing sugar is less than 47%. In para No. 03 it has been mentioned that the Heading 17.02 of Chapter 17 has clearly classified other sugars under two descriptions i.e. other sugars including chemically pure lactose, maltose, glucose and fructose in any form and preparation of other sugars. In para No. 04 it has been mentioned that other sugars include chemically pure glucose i.e. dextrose which is in two forms i.e. in powder form or in crystalline form and clearly classifiable under sub-heading 1702.19 and preparations of other sugars have clearly been specified under sub-heading i.e. 1702.21 and 1702.29 i.e. 1702.21 for those preparations where reducing sugars expressed as anhydrous dextrose amount is more than 80% by weight and 1702.29 for other preparations where reducing sugars expressed as anyhydrous dextrose amount is less than 80% by weight." In para No. 06 it has been mentioned that Liquid glucose is not chemically pure glucose by any stretch of imagination as chemically pure g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, not tenable.." Shri Sorabje, the learned Senior Advocate, further argued that Heading 1702.30 pertains to sugar syrups not containing added flavouring or colouring matter, artificial honey, whether or not mixed with natural honey, caramel. Shri Sorabjee has pleaded for the dismissal of the appeal. 7. Mrs. J.M.S. Sundaram, the learned SDR, argued that the product falls under Heading 1702.19 is not correct. She argued that it is not the case of the Department that it is chemically pure sugar. She argued that it falls under Heading 1702.19 as other sugars, including chemically pure lactose, maltose, glucose and fructose in any form and preparations thereof and falls under other sugars. She argued that sugar comes first and not the preparation which comes first. She again referred to Chemical Examiner s report where it was mentioned that the product was liquid glucose other than sugars has to exist first. She argued that the Board s circular is binding on the lower authorities. She pleaded for the acceptance of the appeal. 8. We have heard both the sides and have gone through the facts and circumstances of the case. Both the sides have filed written arguments and we have d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in reply to the show cause notice mentioned as under :- 01. That we had filed a classification list inadvertently claiming classification of our Liquid Glucose and Malto Dextrin under sub-heading 1702.19 and on realising the error we filed a revised classification list under reference vide our letter No. SSC/CE/429 dated 22nd April, 1991 to the Superintendent, Central Excise, Range II, Phagwara for correct classification of the said products under sub-heading 1702.29. 02. That we are manufacturing Liquid Glucose/Malto Dextrin which are preparations of other sugars as per Indian Standard Specification No. 873-1974. These preparations are used in confectionary, biscuits and food canning industries where requirements of reducing sugar is less than 47%. 03. That Heading 17.02 of Chapter 17 has clearly classified other sugars under two descriptions i.e. Other sugars including chemically pure Lactose, Maltose, Glucose and Fractose in any form and preparation of other sugars. 04. That other sugars include chemically pure glucose i.e. Dextrose which is in two forms i.e. in powder form or in crystalline form and clearly classifiable under sub-heading 1702.19 and preparations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment s interpretation on which the Show Cause Notice is based is merely misconceived, incorrect and as such legally not sustainable. 12. That the Show Cause Notice, based only on inferences, assumptions, and presumptions and also without any tangible evidence, is vitiated in itself by an error of law as has been held by Supreme Court in the case of Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. (J 172) and accordingly such a Show Cause Notice is liable to be set aside on this short ground alone." Shri Sorabjee, the learned Senior Advocate has referred to the decision of the Tribunal in the case of Collector of Central Excise v. Anil Starch Products reported in 1989 (41) E.L.T. 539 (Tri.). Para No. 14 from the said judgment is reproduced below :- 14. It is nobody s case that the subject goods are Dextrose Monohydrate or Anhydrous Dextrose. The Department contends that it is Glucose in whatever form" or Liquid Glucose . From the extracts from the book Materrials and Technology referred to earlier, placed before us, it is seen that Glucose Syrup is a viscous, non-crystallizing syrup prepared by the partial hydrolysis of starch. There is a passage to the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s :- Something that is prepared; something made, equipped or compounded for a specific purpose, caffeine is one of the more common ingredients found pharmaceutical. In the Ballentine s Law Dictionary, third Edition page 980 the meaning of the word preparation is as under :- Preparation. That which is prepared, something made, equipped, or compounded for a particular purpose Anno : 77 ALR2d 1246. A drug, A patent medicine. An element considered in determining the offense of an attempt to commit a crime. Devising or arranging the means or measures necessary for the commission of the offense, as distinguished from an attempt which is the direct movement toward commission after the preparations are made. 21 Am J2d Crim L.g. 111. No definite line can be drawn between an attempt and preparation to commit a crime, but the question is one of degree. The accused has frequently been held to have passed beyond preparation , although interrupted before the last of his intended steps. United States v. Coplon (CA2 NY) 185 F2d 629, 28 ALR2d 1041." We have reproduced the Chemical Examiner s Report above. A perusal of the same shows that the percentage of reducing sugar expresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acy, in bread making, in the manufacture of fruit preserves and artificial honey and in the brewing industry. (3) Glucose, which occurs naturally in fruits and honey. Together with an equal part of fructose it constitutes invert sugar. The heading includes dextrose (chemically pure glucose) and commercial glucose. Dextrose (C6H12O6) is a white crystalline powder. It is used in the food and pharmaceutical industries. Commercial glucose is obtained by hydrolysing starch with acids and/or enzymes. It always contains, in addition to dextrose, a variable proportion of di-, tri- and other polysaccharides (maltose, maltotriose, etc.). It has a reducing sugar content, expressed as dextrose on the dry substance, of not less than 20%. It is usually in the form of a colourless, more or less viscous liquid (glucose syrup, see Part (B) or of lumps or cakes (glucose aggregates) or of an amorphous powder. It is used mainly in the food industry, in brewing, in tobacco fermentation and in pharmacy." 9. The adjudicating authority as well as the appellate authority in the order have referred to the tariff as well as relevant portion of HSN. From a perusal of the Heading 1702 and sub-heading 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73-1974 according to which the products in question are a refined and concentrated aqueous solution of D-Glucose, maltose and other polymers of D-Glucose which is obtained by controlled hydrolysis of starch containing material and it contains in addition to dextrose a variable proportion of di, tri and other polysaccharides (Maltose Maltriose) etc. It has been stated that the process of controlled hydrolysis results in mother liquid which is a combination of other sugars i.e. maltose bi, tri and polysaccharides etc. in the form of acqueous solution which is further subjected to refining, purifying, filtering and concentration resulting in the ultimate product namely, Liquid Glucose/Maltodextrine. It has been contended that the process of refining and concentrating the solution of other sugars results in products which are preparations of other sugars. In this regard the respondents have also referred to meaning of the word preparation in Webster s Third New International Dictionary and Ballentrine s Law Dictionary. It has been contended that the products in question being `preparations of other sugars, (in terms of the Rule 3(a) of the Rules for Interpretation of the Schedule for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Tariff Schedule, the products `Liquid Glucose and Maltodextrine fall in the category of Other Sugars and they are not treated as preparations :- (A) OTHER SUGARS This part covers, other than sugars of heading 17.01 or chemically pure sugars of heading 29.40 in solid form (including powders), whether or not containing added flavouring or colouring matter. The principal sugars of this heading are :- (1) ........................... (2) .......................... (3) ........................... Commercial glucose is obtained by hydrolysing starch with acid and/or enzymes. It always contains, in addition to dextrose, a variable proportion of di-, tri- and other polysaccharides (maltose, maltotiose, etc.). It has a reducing sugar content, expressed as dextrose on the dry substance, of not less than 20%. It is usually in the form of a colourless, more or less viscous liquid [glucose syrup, see Part (B)] or of lumps or cakes (glucose aggregates) or of an amorphous powder. It is used mainly in the food industry, in brewing, in tobacco fermentation and in pharmacy. (4) .......................... (5) .................................... (6). Malto-dextrins (or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar of 1702.11 they would be correctly classifiable as Other Sugars under the sub-heading 1702.19 which unlike certain items viz. lactose, maltose, and glucose in any form specified under that sub-heading, need not necessarily be in chemically pure form. 17. The respondents products being only a variety of `Other Sugars of Heading 17.02, even according to the dictionary meaning of the word `preparation they cannot be treated as `preparations of other sugars since for conversion of the sugars in question into preparation something will have to be made out of such sugars i.e. they will have to be mixed or compounded with other materials. In fact the classification of Glucose `D under Tariff Item 1702.21 [1990 (47) E.L.T. - T.8] cited by the appellants supports the view that `Liquid glucose and `Malto-dextrin are not `preparations of other sugars , since they have not been subjected to any further processing through addition or mixing of other items like Dextrose, Monohydrate, Calcium Phosphate and Vitamin D etc. as in the case of Glucose -D. 18. It is seen that the view that the disputed products just by themselves without addition of other ingredients or by process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under sub-heading 1702.29 of the Central Excise Tariff, 1985 as held by the President or under sub-heading 1702.19 as held by the Member (Technical). Dt. 11-02-1994 Sd/- (Harish Chander) President Sd/- (P.K. Kapoor) Member (T) 22. [Order per : P.C. Jain, Member (J)]. - Point of difference is set out above at page 26. 23. The disputed products, namely, liquid glucose and malto-dextrine arise as a result of partial hydrolysis of starch containing material. According to the Chemical Examiner s reports, reproduced at page 12 (para 8) both the products are in the form of viscous liquid. They satisfy the Indian Standard Specification No. 873-1974 given for liquid glucose. It is also stated by the Chemical Examiner that the disputed products are other than preparation . Percentage of reducing sugar expressed as anhydrous dextrose is 38.8% in one product and 28.5% in the other product. 24. Revenue, which is appellant herein, has stressed that the Chemical Examiner has clearly opined that the products are other than preparation and therefore, sub-heading 1702.29 is ruled out. It is also stated that the HSN Explanatory Notes support the classification under sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t other sugars and then making their preparation. There is no rule of law that in making preparation of other sugars, latter must be brought into existence as separate commodities first and then `preparation should be made. Such a plea is against any commercial sense when the same product could be made in a cheaper manner. Board s circular, he submits, is not binding on quasi-judicial authorities. He relies on AIR 1969 S.C. 48, AIR 1970 S.C. 1472 and AIR 1982 S.C. 67. On the plea of HSN Explanatory Notes, learned advocate points out that these do not have any statutory force. These are also not of any persuasive value because the HSN Headings 17.02 and CETA, 1985 Heading 17.02 are not fully aligned. For this proposition he relies on 1988 (37) E.L.T. 253 (para 6). 26. In her rejoinder, learned SDR, Smt. Sundaram submits that Chemical Examiner s report is evidence of an expert and is at once reliable and admissible. She relies on 49 E.C.R. 526 supra. She submits that the two headings - in HSN and CETA, 1985 - are aligned, although there is a difference in sub-headings. HSN Explanatory Notes would be a reliable guide for classification. Regarding the Board s circular, she submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , containing in the dry state at least 20% but less than 50% by weight of fructose 1702.50 Chemically pure fructose 1702.60 Other fructose and fructose syrup, containing in the dry state more than 50% by weight of fructose 1702.90 Other, including invert sugar. This heading covers other sugars in solid form, sugar syrup and also artificial honey and caramel. Heading 17.02 of CETA, 1985 Other sugars, including chemically pure lactose maltose, glucose and fructose in any form and preparations thereof; sugar syrups not containing added flavouring or colouring matter, artificial honey, whether or not mixed with natural honey; caramel." Other sugars, including chemically pure lactose and fructose in any form: 1702.11 Palmyra Sugar 1702.19 Other Preparations of other sugars : 1702.21 in which the reducing sugars expressed as anhydrous dextrose amount to more than 80% by weight. 1702.29 Other 1702.30 Sugar syrups not containing added flavo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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