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TMI Blog2013 (8) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... it only improves the quality of food and can by no means by called as food itself. Product Indigenous or Not - Whether the product can be considered to have been manufactured wholly of indigenous raw materials or not - Held that:- The manufacturing process explained and from the records what emerges is that the cassia meal gets segregated and separated and taken out of the product before further processing starts by using imported raw materials - it cannot be said that importer raw materials have been used in the manufacture of waste - The word goods was to be considered as waste from food industry which was what was exempted from payment of duty if the condition was fulfilled - it appears that what was intended was that for manufacture of waste, indigenous raw materials only should have been used. Alternative claim for exemption under notification No.23/03 as waste of oil seeds - Held that:- There was no merit in the alternative claim made by the assesses - assesses own production literature and the details available on their website show that they had described cassia as a new hydrocolloids supplying to the group of galacto mannans like guar, thara and locoest bee gum (LBG) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture and export of cassia gum. The appellants procure cassia seeds. The seeds are initially separated from other materials, such as straw, stone, sand, etc. They are heated in a microniser and passed through rollers. From the pressure of the rollers, the heated seeds crack. Cassia seeds consist of three distinct parts namely, the outer skin known as husk, the embryo at the centre known as the germ, and cotyledons known as the endosperm. The endosperm of the seed (embryo of the seed) is separated from the husk and germ. The husk and germ (cassia meal) are disposed off, in gunny bags to manufacturers of cattle feed. The meal is added to cattle feed in negligible quantities, for imparting colour to the cattle feed. The endosperm is further milled, and purified to make cassia gum powder, by various processes. The cassia gum is exported. Its main use is as a gelling agent and stabilizer for use in food products, for animal and human consumption A notice dated February 5, 2010 was issued to the appellant, demanding duty on clearances of cassia meal during the period January 2005 and December, 2009 invoking the extended period of limitation. The notice also proposed penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions to submit that just because waste is sold at some price, it does not change its character as waste since as observed by the Apex Court even rubbish is sold. In this case the appellants themselves had sold mentioning the goods in question as the cassia meal/puwad seed chuni powder (Cattle Feed Supplement). Further, they had also put a big rubber stamp on the invoice CATTLE FEED. It would show that the appellants themselves treated this item as a cattle feed supplement/cattle feed and did not consider it as a waste. Secondly after the issuance of show cause notice the appellants also obtained legal opinion from advocates Lakshmi Kumaran Sridharan and Shri L.P. Asthana. Both the advocates have given the opinion that goods can be considered as waste from food industries and would be covered under Sl.No.21 of exemption Notification No.23/2003-CE dated 31.03.2003. The classification of the product was also held to be under the heading 2302 by both the advocates. The advocates opinion obtained by the appellants also would show that goods are excisable. Therefore whether cassia meal is a by-product or waste, the fact that it is excisable has to be upheld. 5. Next point to be dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round canvassed before us to support the submission that this is a waste is that of Development Commissioner. The Development Commissioner in his letter dated 02.07.10 responded to the appellant s letter dated 15.03.10 and 08.06.10 and stated that in view of the explanations given regarding the exact nature of the product supported by technical institutions, the Development Commissioner KASEZ has been pleased to treat cassia meal as waster materials generated in the process of manufacture of cassia gum powder. In view of the examination of the technical opinions submitted by the appellants before us, unlike Development Commissioner we are not pleased to hold cassia meal as waste material on the basis on these opinions and the clarification given by the appellants which is contrary to their own stand and their own invoice. 8. Another submission made was that cassia meal has to be considered as a waste since it is of negligible value as compared to the value of cassia gum powder. It is an unintended item arising in the process and has no utility or application for them and it has been sold in the market to manufacturers of cattle field principally as a colouring agent for want of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s arising from purchasing of indigenous raw material. 12. Nevertheless since the issue was argued in detail and it would not be appropriate to leave it totally, we proceed to consider whether cassia meal can be considered as a waste of food industry at all if it is assumed to be a waste contrary to what we have held above. For this purpose we have to consider whether the product cassia meal can be considered as a waste of food industry. The notification or the Central Excise Act does not define food nor they define food industries. The appellants have relied upon the definition of food under Section 3(i) of the Food Safety Standards Act, 2006 which defines food as under: (j) food means any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food, to the extent defined in clause (ZK) genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat cassia meal has been used for the manufacture of food for human use. Cassia gum which is the main product is also only a food additive. Chemical examiner has also given the reply as to why a food additive need not always be food by citing the example of aluminium silicate as a food additive in the European Directive Principles. No contrary technical opinion has been presented before us to contradict this submission that a food additive need not always be food. Therefore just because cassia gum is a food additive, the product cannot be considered as one of food industry unless it is shown that it is food. 13.3. In fact the Commissioner has gone further and examined the meaning of food additive and has also examined how the produce manufactured by the appellant is used. He has shown that the product cassia gum manufactured by the appellants only gives the following benefits namely:- Improve texture and mouth feel; improve end product appearance; provide stabilisation during the production process and of the end product; improve flavour release; allow low fat formulation; serve as the effective gelling agent; improve cost effectiveness. 13.4. The information available on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2(a) of the Essential Commodities Act 1955 which defines an "essential commodity" to mean "cattle fodder including oilcakes and other concentrates" and by sub-clause (v) an "essential commodity" means "food stuffs, including edible oilseeds and oils." The Hon'ble Court, in view of the evidence present observed that "Cattle fodder" is expressly brought within the compass of essential commodities by section 2(a) (i). It would be illogical if, in that context, rice bran is excluded from the purview of essential commodities on the ground that it is eaten by the poultry and not by Homo Sapiens. The Hon ble Court concluded on the basis of the dictionary meaning of the word 'food' which they interpreted as 'what one takes into the system to maintain life and growth or what is taken into the body of an organism in order to sustain growth is 'food'. This view of the Court supports the departmental stand that the product 'Cassia Gum Powder' is not food. The Hon'ble Supreme Court has categorically held that 'food is something which should be taken into the system by living organisms to maintain life and growth, but in the present case the product 'Cassia Gum Powder' as per the admission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainly attract the expression 'food preparations' because aata is used for the purpose of baking bread or preparing roti. In our judgment, Item No. 1 of the schedule to the exemption notification gives an inclusive definition of 'food products' and 'food preparations' and bare perusal of the same makes it clear that even though the item cannot be consumed as a food, still the exemption would be available if the item falls under the entry 'food preparations. 7.4.9.2. From the above it can be seen that the Court held Baking Powder to be a 'Food Preparation' in view of it being prepared from various edible ingredients, which is not applicable in the present case as 'Cassia Gum Powder' is prepared from poisonous 'Cassia Seeds'. Further, the Court observed that use of baking powder improves the taste of the product, this aspect is also not true in the present case as 'Cassia Gum Powder' is used mainly to provide consistency to the canned food. The Court has also observed that such issue must be solved in a commonsense way and the Court should ascertain as to how the expression 'baking powder' is understood in common parlance and observed that any housewife would treat baking powder as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genous raw materials only should have been used. In this case from the manufacturing process explained and from the records what emerges is that the cassia meal gets segregated and separated and taken out of the product before further processing starts by using imported raw materials. Under these circumstances it cannot be said that importer raw materials have been used in the manufacture of waste. Therefore the ld. Commissioners conclusion that imported raw materials have been used for waste also and therefore exemption under notification No.23/03 is not available is not correct and cannot be sustained. 15. The next claim is alternative claim for exemption under notification No.23/03 as waste of oil seeds. This also has been considered in great detail in the impugned order. Ongoing through the technical opinions submitted by the appellants, nowhere we find that cassia seeds have been found to be oil seeds. Moreover assessees own production literature and the details available on their website show that they have described cassia as a new hydrocolloids supplying to the group of galacto mannans like guar, thara and locoest bee gum (LBG) and they have never described it as an oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for sub contracting the work. Manufacturing process was also given in detail. 16.3. Further, clarifying the details of invoices, the appellants replied on 04.04.05 wherein the sale of cassia meal and the fact that appellants treat it as exempted was mentioned. In January 2007 the appellants had intimated the department that cassia meal is arising as a by-product and is being sold to manufacturers of cattle feed considering the same as oil seed waste and had intimated that it does not attract excise duty. A perusal of the three letters would clearly show that appellants believed that the cassia meal was a by-product and was exempt. Subsequently they also claimed exemption under oil seeds. However, in earlier two letters there was no claim of exemption as oil seed waste. Basically the extended period has been invoked on the ground that in the returns the exempted goods details were not mentioned; the appellants claimed it as a waste whereas but they were selling it as by-product; they have claimed it as oil seed waste whereas cassia was not an oil seed. Even though there was confusion as mentioned by the Commissioner after the audit of 2006 and further investigation, it has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his purpose of recovery of duty on waste which has arisen without the use of non-duty paid imported/indigenous raw materials. There is no dispute that imported/ indigenous raw material and capital goods have been used for the production of finished product namely cassia gum powder and the same has been exported and export obligation has also been fulfilled. 18. In the facts and circumstances of the case and in view of the fact that we have held that extended period cannot be invoked, we also consider it appropriate that no penalty is imposable on the appellants and therefore penalty imposed is set aside. 19. Revenue is in appeal against the decision of the ld. Commissioner allowing the benefit of cum duty price and thereby reducing the demand for duty and taking a view that since goods are not available, the same cannot be confiscated. 20. As regards cum duty price, we find that the ld. Commissioner has relied upon the decision of Hon ble Supreme Court in the case of Maruti Udyog Ltd. reported in 2002 (141) ELT 3(S.C.). In the Revenue s appeal reliance has been placed upon the decision of the Tribunal in the case of Eon Farmers Ltd. reported in 2010 (250) ELT 225 (Tri.-Del.) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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