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TMI Blog1999 (9) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... sules involves no manufacturing activity and only the binding agents are put to spirulina powder and these binding agents do not have therapeutic value and are inert, the change of form from powder to capsule would not make any difference to classification under the C.E.T.A. 1985. 3. Revenue, having considered the contents of the label affixed on the container of the product sold by the appellant felt that it was an edible preparation in fully packed unit containers. It was also noticed that the appellants had obtained a licence from the U.P. State authorities for manufacture of the said food product . Consequently, a show-cause notice was issued as to why the said product be not classified as edible preparation not elsewhere specified under Tariff Heading 21.08 as it existed at the relevant time. 4. Ld. original authority on the contention of the appellants herein has found as follows :- On this aspect, I observe that claim of M/s LLL may be found acceptable only up to the stage if spirulina in its natural form as vegetable product is concerned and not in processed form. They have made ample efforts to explain the botanical definitions, characteristics and properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Chapter 12 of the HSN relating to natural products and therefore this Chapter has not been included in the Schedule to C.E.T.A. 1985. Explanatory Notes to HSN under Heading 12.12 clearly stated that This heading covers all seaweeds and other algae, whether or not edible. They may be fresh, chilled, frozen, dried or ground. Seaweeds and other algae are used for various purposes (e.g., pharmaceutical products, cosmetics, human consumption, animal feeding, fertilisers). It is not anybody s case that the product is dead single cell algae (falling under Heading 21.02). He, therefore, submits the mixing the ground (powdered) algae with a binding agent so as to facilitate its filling in capsules does not change the name, character and use of the product. It still remains spirulina with the same character and use. No manufacture has therefore taken place. The product is, therefore, not excisable because, there is no entry in Schedule to C.E.T.A. corresponding to Chapter 12 of HSN. Alternatively, he argues that it would at best fall under Tariff Heading 14.01 which, inter alia, includes: vegetable products not elsewhere specified or included. Countering the classification under Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein henna powder after cleaning and grinding of henna leaves into powder has been treated as an excisable product and the process of cleaning and grinding of henna leaves has been considered to be a process of manufacture and hence, excisable. 9. In his rejoinder, ld. Advocate points out that the analogy of Tribunal s judgment in Henna Export Corporation does not apply in the present case inasmuch as henna leaves could not be used otherwise and they were made usable by making of henna powder, therefore, a different product can be said to have come into existence. This finding is clear from the Tribunal s following observations at page 913 :- Therefore, by the process adopted by the appellants, the leaves are made into powder which is the state in which henna powder becomes fit for consumption. Therefore, it is held that there is a process of manufacture involved attracting Central Excise duty. Ld. Advocate submits that although the adjudicating authority has held that spirulina is used only in capsule form and not otherwise, but he submits that this is merely an ipse-dixit of the authorities and is not based, on any evidence. Spirulina in its original form is as much usa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record the effect of binder used by them. It has been the contention of the appellants that binder is mixed only to facilitate easy filling of the powdered spirulina into capsules. Otherwise the material will fly away while filling the product in a small container like capsule. The appellants have brought on record the meaning of binder as understood in technical literature in various books. In this connection, attention has been drawn to the effect of binder in the food industry in the Foods and Food Production Encyclopedia by Douglas M. Considine, P.E.: The term binder accurately connotes the function of this additive - an agent that promotes holding or sticking parts and pieces of food substances together, a very important factor in terms of the texture of the end-product. Properties of an effective binder include: (1) a color that is compatible with the product; (2) capable of absorbing and holding water; (3) neutral flavour; (4) excellent stability; and (5) for many products, an ability to emulsify fats. In Hawley s Condensed Chemical Dictionary, Eleventh Edition - binder in relation to food industry has been described as a material used in sausage manufacture tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t spirulina in the capsule is not an excisable product being a natural product. 13. At this stage, it is also useful to refer to the general Explanatory Notes in relation to Headings 12.01 to 12.07 of HSN which covers seeds and fruits of a kind used for extraction of edible or industrial oils and fats. It has been stated in the said notes that seeds and fruits covered by the aforesaid headings of HSN may be whole, broken, crushed, husked or shelled. They may also have undergone moderate heat treatment designed mainly to ensure better preservation, for the purpose of de-bittering or to facilitate their use. However, such treatment is permitted only if it does not alter the character of the seeds and fruits as natural product and does not make them suitable for a specific use rather than for general use. In the light of the emphasised portion of the General Notes, though in relation to seeds and fruits, we may state and examine whether mixing of the binder with the dried and ground algae alters the character or the algae as natural products and makes it suitable for a specific use rather than for general use. We observe that the lower authorities have not given any evidence whatsoe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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