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TMI Blog2009 (2) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... CETH 1905.11 (1st SCN) and 1905.90.20 (2nd SCN), and demanding the resultant duty alleged to have been evaded. Interest and penalty provisions were also invoked. 2. Both the SCNs were decided by the Assistant Commissioner of Central Excise (ACCE), Tollygunj Division vide his Order-in-Original No. AC/Tolly/ Kol-V/No. 3/2007 dated 30-3-2007. His discussions and findings in the said order are as under : The allegation is mainly based on statement dated 31-3-2005 of Sri Sikharesh Saha, Manager Operations under Section 14 of Central Excise Act, 1944. Being the key person in operations, his statement holds great significance in the matter of production. In that statement dated 31-3-2005 while replying to a specific question on the manufacturing process of Tea Time Puff and the raw material used in such production, he narrated that :- Basic raw materials - Flour, Margarine, Water, Salt Sugar. The dough is first made putting flour, water and salt. Then that was chilled. After 45 minutes rest the same laminated with margarine using sheeter machine. Then cutted as per size and baked in 240 degree centigrade (appx.) for 15 minutes. After rest of 20 minutes, then baked for another 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product under CETH 1905.12 (1st SCN)/1905.90.20 (2nd SCN). 5. Being aggrieved, the said assessee preferred an appeal (along with Stay Petition) on 9-7-2007 on the following grounds of appeal. I. The dispute is with regard to classification of tea time puff, which according to the appellants cannot be categorized as biscuits . The item has got a number of layers baked and joined together. It is actually an indigenous product, which has a long history and is locally known as khari or khasta and is available and produced all over the country. It is an original native Indian product and is consumed widely by the poor and middle class as a substitute to biscuits. The production process and ingredients used in the manufacture of Tea Time Puff is exactly similar to that used in the manufacture of patties, except for the filling used in patties as stated above. It has got nexus with patties but not with biscuits. Hence, they are correctly classifiable as patties and not biscuits. II. The Ld. AC failed to appreciate that the process of manufacture of tea time puff is by joining the patties puff layers together, layer after layer as is done for any patties, and it does not corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oled and the baking is done twice for 15 minutes duration and at the temperature of 230 C (degree centigrade) as mentioned in the book Modern Cookery (Vol-2, 3rd Edition written by Thungam E. Phillip) widely followed by the trade. Part-Ill: The Appellant has shown the Tea Time Puff as Other Bakers Ware under S.H. No. 1905.90.90, knowingly to evade the duty of excise while there is scope of showing the same as there is no separate Sub Heading of Other Bakers Ware Biscuit is also bakers ware. So, proper classification shall be under the head of biscuit . The appellant themselves in their ground of Appeal mentioned that Tea Time Puff is nothing but Khari or Khasta. In the market parlance also, Khari and Khasta are termed and consumed as biscuit . Mere giving a sophisticated name viz. tea time puff can in no way be termed as patties. 8. Next hearing was held on 12-12-2007 before my predecessor. Shri N.N. Ghosh Supdt. and Shri B. Hembram Inspector appeared for the Department and stated that the process of manufacture of biscuits and the tea time puff is more or less the same. The process of manufacture of both the products however could not be produced by them. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue (more butter/dry fruit e.g. raisin etc.). Samples of biscuits and cookies were submitted. The appellants also said that though they were initially calling it Puff but later on they have checked up the practice in other parts of the country and have accordingly renamed it as Khari which is in common use. They gave a printout. They also submitted copies of some invoices from other Commissionerates where similar goods are being classified under Heading 190590 at NIL rate. Both sides agreed that the impugned product is similar to patties in that both are layered and ingredients are similar, except that the major dissimilarity is that there is no filling. The deptt. officers gave written submissions including extract from the Modern Cookery book and said the production process of Khara Biscuits as given at Sl. No. 139 therein is similar to impugned goods and hence they should be classified as biscuits. They were asked to give one copy to the party for their comments. They were also asked to give the clearance documents. 12. The aforesaid written submissions given by the Department on the date of hearing are as under : Issue under dispute :- The product Tea Time Puff i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rature of 230-240 degree centigrade. The process of cooling and baking is repeated in both the cases. When process of manufacture of the impugned product is similar to that of biscuits, it is nothing but a kind of biscuit irrespective of it being made of layered puff and as such, it is classifiable against the heading Biscuit under earlier Sub heading 1905.11 and under New Sub-heading as 1905.90.20. 13. The relevant extract from the book Modern Cookery by Thangam Philip, as produced by the Department, is as under :- 14. The printout of khari given by the appellants during the said PH is as under : 15. In addition, they had given some invoices on perusal of which it is seen that vide invoice no. 25203 dated 1-8-2008 and 25148 dated 1-8-2008 (read with the annexures thereto) M/s. Monginis Foods Mumbai have cleared goods described as Khari under the category of Other bakery which has been classified u/h 1905.90.90 and no excise duty has been paid on the same. 16. As mentioned above, a copy of the department s written submissions filed during the PH had been given to the appellants. The appellants vide their further letter dated 6-10-2008 submitted as under : As desir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Khari Khari is an indigenous Bakery Product unlike Biscuit or Cookies, which is of foreign origin. Under Trade Usage, Khari is distinctly identified as a separate category from Biscuits. Khari tastes distinctly different from Biscuits and has a totally different mouth feel. Customers and general public identify Khari as a distinct product category. Traditionally and by trade usage, Khari has been identified as an extension of Puff or Bread (like bread sticks) used by common or low-income group people as a snack. Khari has never been identified as a biscuit although the consumption pattern of biscuit is same like Khari. It is largely manufactured by cottage and micro industry in the unorganised sector. The raw materials used for the manufacture of Khari are like any other Bakery product with Wheat Flour and Shortening (Vegetable Fat) being the major ingredients. The manufacturing process is different compared to Biscuits inasmuch as Khari is a puff product without any filling while biscuits or cookies are either moulded, deposited or wire cut and also contains value addition (dry fruits, chocolate, butter fat, nuts etc.) Biscuit manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with salt Flour is sieved with salt. Same 2. Add water and lemon juice and knead to a smooth dough. Form dough by adding ice and iced water only. Lemon juice is not used 3. Keep dough covered with wet cloth for 20-25 minutes Dough is sheeted, laminated with shortening and kept in Cooler at temperature less than or equal to 5 degrees for 30 minutes. Dough is not covered with wet cloth. Instead kept in Cooler after lamination. 4. Roll the dough as thin as possible into a rectangular shape. Dough is sheeted again and folded and again kept in Cooler for another 30 minutes. Dough is not rolled thin but sheeted again and kept in Cooler. 5. Cream and fat is evenly spread over the dough. Dough is sheeted to final thickness and cut into rectangular sizes. Cream and fats are not applied at this stage of processing. 6. Cut into 3 pieces lengthwise. The centre piece should be broader than the side pieces. Not done. This process is not followed in Switz 7. Pull and roll the side pieces into a pencil shape, rolling one inside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods Rate of duty (1) (2) (3) (4) 19.05 Bread, Pastry, Cakes, Biscuits and other baker s wares, whether or not containing cocoa, communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products - Biscuits : 1905.11 -- In or in relation to the manufacture of which any process is ordinarily carried on with the aid of power 16% 1905.19 -- Other Nil 1905.20 - Cakes and pastry 16% - Waffles and wafers : 1905.31 -- Coated with chocolate or containing chocolate 16% 1905.39 -- Other 16% 1905.90 - Other Nil In the above structure, the appellants are contending for 1905.90 as other bakers ware and the department wants to classify under 1905.11 as biscuits . 19.2 On adoption of the 8-digit tariff w.e.f. 28-2-2005, the said heading became as under (which is relevant to a part of the period covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls under Heading 1905.90 (earlier tariff)/1905 90 90 (new tariff), but the adjudicating authority has disagreed inter alia for the reason that in his opinion, there is no such sub-heading in the tariff under the description of other bakers wares . For ready reference, I may reproduce here the relevant part of his finding (as also given at page 2 of this order [Page 820] (emphasis mine) :- The said noticee s claim is that their product is classifiable under other Bakers ware falling under chapter sub-heading 1905.90. There is no such sub-heading in Central Excise Tariff Act, 1985 under the description of other bakers ware . Biscuit is also a bakers ware . For biscuit, there is only two subheading prescribed in the said Tariff Act, 1985. One is for the kind of biscuit which is ordinarily carried on with the aid of power (1905.11) and the other is for the biscuit manufactured without the aid of power (1905.19). Undoubtedly, the said assessee manufactured the Tea Time Puff with the aid of power. And sub-heading 1905.90 is for waffles and wafers, the process of manufacturing of which is quite different from that of biscuit. 20.2 On a very careful consideration, I find myself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e description of an article or group of articles under a heading is preceded by - , the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by - - , the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of article or group of articles which has - . When the Tariff was replaced by the present 8-digit tariff w.e.f. 28-2-2005, the said note was modified as under : Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by - , the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by - - , the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has - . Where the description of an article or group of articles is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communion wafers 1905.31 or 1905.39 depending on presence of chocolate or otherwise empty cachets of a kind suitable for pharmaceutical use 1905.90 sealing wafers 1905.31 or 1905.39 depending on presence of chocolate or otherwise rice paper 1905.90 similar products 1905.90 *** In the order which these appear in the main heading From the above, it is clear that the learned adjudicator s other finding (that there is no such sub-heading (i.e. 1905.90) in Central Excise Tariff Act, 1985 under the description of other bakers ware is also not sustainable since the term other bakers wares does appear in the main heading and the only place it can fall is 1905.90 ! 20.8 Therefore, it is clear that if the impugned product (tea time puff) is not a biscuit, then it can only go under 1905.90 [since it is obviously not cakes and pastry or waffles and wafers ]. 20.9 The new tariff is to be understood in a similar manner with the only difference being that instead of two levels of categorisation i.e single and double dash, the new tariff has a categorisation at 4 levels. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld assume importance when the goods are marketable as was held in Atul Glass Industrial (Pvt.) Ltd. v. CCE [1986 (3) SCC 480] and Indian Aluminium Cables Ltd. v. Union of India [1985 (3) SCC 284]. In Asian Paints India Ltd. v. CCE [1988 (2) SCC 470] which was a case of emulsion paint, at para 8, it was said : It is well settled that the commercial meaning has to be given to the expressions in tariff items. Where definition of a word has not been given, it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it. Similarly, in Collector of Central Excise v. Fusebase Eltoto Ltd. - 1993 (67) E.L.T. 30 (S.C.), the Hon ble Supreme Court held as under (emphasis respectfully added by me) : 7. The Collector (Appeals) upheld the above quoted findings of the Assistant Collector. The Tribunal did not touch the question as to how the product called broadcast television receiver set is identified by the class or section of people dealing with or using the product. That is the test to be followed when the relevant notifications do not contain any definition of the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e puff. Image CCC is of products commonly known as patties and the image DDD is of some typical Biscuits/cookies. 26. Now, it is the appellants contention that their product (BBB) which is a layered product is more akin to patties (with the only difference being that patties usually have some fillings whereas their product does not have any fillings) rather than to biscuits which are usually not layered products and are made by using moulds. I find this to be a reasonable argument. 27. I am unable to see as to how the impugned product as shown at image BBB is the same as what is usually referred to as biscuits in the popular or commercial sense. Biscuit as is commonly understood in trade is certainly the kind of product(s) shown at image DDD. When someone says biscuit , the mental picture that forms is like the image DDD and not like the image BBB. 28. The appellants have produced an internet printout (page 7) [page 824] wherein similar layered products are referred to as puff or khari. It is significant that the top left side there lists out some categories where biscuits and khari are separately listed. On the other hand, the Department has produced no evidence (in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, the way they are worded, do not give any leeway for going into the question of ingredients. If it were so, then it would have been specified, as, for example, has been done in the case of 1905.31 where the ingredient chocolate has specifically been mentioned. 34. It is also relevant that the appellants have produced before me the aforesaid invoices wherein the product known as Khari is being classified in another Commissionerate under the Heading 1905 90 90. 35. I am, therefore, of the opinion that the impugned product, the tea time puff/tea time khari manufactured by the appellants [as shown at image BBB] cannot be classified under Heading 1905.11 of the earlier tariff or 1905 90 20 of the new tariff and will rightly fall under 1905.90 of the earlier tariff and 1905 90 90 of the new tariff. 36. Thus, the duty demand cannot be sustained and accordingly the demand for interest or the imposition of penalty is also not warranted. The imposition of penalty was, in fact, not warranted even otherwise for the reason (as rightly contended by the appellants) that this was a case of classification dispute and there is no finding given about any suppression or wilful misstatement etc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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