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TMI Blog2015 (1) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3-4/COM/PKL/2006 dated 30.03.2006/12.4.06. In terms of the said Order-in-Original the adjudicating authority confirmed a demand of Rs. 3,17,47,298/- along with interest and equal mandatory penalty on the ground that the appellants had evaded duty on their product which was modified maize starch classifiable under sub heading 350520 while they mis-declared the same as maize starch and classified under 11.03 thereby evading duty indulging in wilfull misstatement/suppression of facts. 3. The only issue involved in this case is whether the impugned goods are maize starch classifiable under Tariff heading 11.03 or it is modified maize starch classifiable under Tariff heading 35.05. It is pertinent to mention that maize starch classifiable under heading 11.03 was exempt from duty during the relevant period while modified maize starch classifiable under heading 35.05 was not. 4. Before we proceed further it will be useful to briefly mention the process of manufacture of the impugned goods: The maize undergoes the processes of maize cleaning, steeping and grinding. These processes separate the starch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or chemical, including the change in brightness shifted the ordinary starch to the category modified starch classifiable under chapter 35 of Central Excise Tariff and as a consequence the impugned duty liability and penalty followed as the appellants were also held guilty of wilfull misstatement/suppression of fact with intent to evade duty. 7. The Ld, advocate laboriously and in great detail described the manufacturing process and the reason and effect of using small quantity of potassium permanganate and sodium meta bi sulphite to show that these were only for the purpose of enhancing the brightness of starch and did not result in modified starch. He cited various pieces of literature on the subject as well as the chapter notes of chapter 11 and 35 of the Central Excise Tariff and also the relevant Explanatory Notes to HSN to buttress the point. We are not summarizing them here because they will get adverted to and analysed during the discussion in the following paras. The appellants also stated that they used to manufacture modified starch of chapter 35 also on which they used to pay duty and added that modified starch is way more expensive than ordinarily starch and thus even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination/cross examination of the chemical examiner. In order to facilitate the same, the impugned order is set aside and the appeals are allowed by way of remand. No such examination/cross examination of the CRCL official took place and this alone is arguably a fatal blow to the impugned order. However, as the adjudicating authority has ignored the test reports, absence of cross examination has not caused any prejudice against the assessee. 11. It is well settled that in the matters relating to classification the HSN explanatory notes are an authentic guide. The HSN note relating to chapter 11.08 states that: Starches, which chemically are carbohydrates, are contained in the cells of many vegetable products. The most important sources of starch are the cereal grains (e.g., maize (corn), wheat and rice), certain lichens, certain tubers and roots (potato, manioc arrowroot, etc.) and the pith of the sago palm. Starches are white odourless powders composed of fine grains which crackle when rubbed between the fingers. They generally give an intense dark blue colour with io ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 63) that: After the native starch has been prepared, as outlined in the preceding chapters, it is frequently modified or altered in some characteristic to make the starch more suitable for some particular use. These modifications vary in degree from those in which there is practically no chemical change in the molecules of the starch granule to those in which a significant change can be detected. In a paper Corn Starch Modified and Uses, by F.T. Orthoefer of A.E. Stanley Manufacturing Co. Decatur Illinois (contained in Corn Chemistry and Technology), it is stated that Bleaching is performed on aqueous slurries Sodium bisulfate may be used for neutralization. The color bodies solubilized by bleaching are removed during filtering and washing of the starch before drying. 13. The adjudicating authority's observation that any physical change like change in brightness/whiteness will result in 'modified starch' covered under Ch. Heading 35.05 is devoid of any basis. Further mere conjecture (on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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