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TMI Blog2017 (3) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... e the basic characteristic of the product and the product remains a nutritious milk drink only - the appropriate classification for the impugned product will be under Chapter tariff item 0404 90 00 of the Central Excise Tariff Act, 1985, as contended by the appellant - appeal allowed - decided in favor of appellant. - E/379/2011 - A/52513/2017-EX[DB] - Dated:- 24-3-2017 - Mr. M.V. Ravindran, Member (Judicial) And Mr. V. Padmanabhan, Member (Technical) Shri B.L. Narsimhan, Advocate for the appellants Shri Yogesh Agarwal DR, for the respondent ORDER Per V. Padmanabhan The appeal is directed against Order-in-Original No.18-20/Commissioner/ 2010 dated 29.10.2010 passed by Commissioner of Central Excise, Delhi. 2. The period involved in this present classification dispute is March 2008 to April 2010. The appellant manufactured Milk Powder in the nomenclature of NIDO Nutritious milk for growing kids . The appellant classified the above product under Tariff Item 0404 90 00. The Revenue sought to reclassify the above product under Tariff Item 1901 90 90. Three show cause notices were issued by Revenue covering the period of dispute and the adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 19 of Central Excise Tariff. 5. The appellant s contention is that the addition of negligible quantity of artificial flavouring substance to the milk powder will not take the product out of the purview of Chapter 0404. They have argued that Chapter 4 will cover all the dairy products and includes the products consisting of natural milk constituents to which vitamins, minerals and small quantity of stabilizing agents are added. The product will get moved out of Chapter 4 to Chapter 19 only in those cases where it is in the form of food preparation of goods of heading 0401 to 0404. The milk products would fall in heading 1901 only if the same is excluded from Chapter 4 by virtue of not being specified there or by virtue of it containing certain ingredients which are not natural milk constituents and are also not permitted in the products of tariff heading 0404; for example, milk preparation obtained by replacing one or more constituents will go under Chapter 19. Accordingly, they have submitted that addition of artificial flavouring substance which merely constitutes 0.3% of the total composition, will not take their product out from Chapter 4 to Chapter 19. They have also reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be classifiable under Chapter 1901. 8. We reproduce below the two competing tariff entries:- Chapter 4 Dairy Produce, etc. Tariff Item Description of goods Unit Rate of duty 0404 Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included 0404 10 - Whey and modified whey, whether or not concentrated or containing added sugar or other sweetening matter: 0404 10 10 - --- Kg. Nil 0404 10 20 --- --- Kg. Nil 0404 10 90 --- --- Kg. Nil 0404 90 00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the HSN Notes, it would be useful to refer to the explanatory notes for guidance for classification of the impugned product. This Chapter covers: (I) Dairy Products: (A) Milk, i.e. full cream milk and partially or completely skimmed milk. (B) Cream. (C) Buttermilk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream. (D) Whey (E) Products consisting of natural milk constituents, not elsewhere specified or included. (F) Butter and other fats and oils derived from milk; dairy spreads. (G) Cheese and curd. The products mentioned at Items (A) to (E) above may contain, in addition to natural milk constituents (e.g. milk enriched in vitamins or mineral salts), small quantities of stabilizing agents which serve to maintain the natural consistency of the product during transport in liquid state (disodium phosphate, trisodium citrate and calcium chloride, for instance) as well as very small quantities of anti-oxidants or of vitamins not normally found in the product. Certain of these products may also contain small quantities of chemicals (e.g. sodium bicarbonate) necessary for their processing; products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this view of the matter, there is no justification to shift the classification of the main product from 0404 to 1901, on account of addition of a minuscule quantity of flavouring substance. 10. The appellant has relied upon the Tribunal decisions in the case of Amrit Foods as well as Nestle India Limited. However, the Commissioner has brushed aside the reliance placed on these judgments. In the case of Amrit Foods, the dispute before the CESTAT was inter alia regarding the classification of milk shake mixes. The product constituents were milk, milk powder, sugar, glucose and stabilizers. The assessee classified the product under tariff heading 0404. However, the adjudicating authority classified the product under tariff heading 1901 on the ground that the product contained stabilizers, whose main purpose was emulsification of oil in water throughout the self life, to improve the body and texture and to impart smoothness to the product, which as per the adjudicating authority, was not the case. The adjudicating authority relied upon the Chapter Note 4 of the Chapter 4 of Central Excise Tariff Act, 1985, wherein stabilizers were not specifically mentioned and thus, the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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