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TMI Blog2017 (3) TMI 1636X X X X Extracts X X X X X X X X Extracts X X X X ..... with other items such as cereal, groats, yeast, etc., or the milk constituent is replaced by an other substance such as oleic fats. From what is stated before us, we are convinced that this is not a case. Addition of small quantity of artificial flavouring substance does not change the essential nature of the product from what is covered under 0404. It does not make it a food preparation of milk instead of a “product consisting of natural milk constituent” - 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. Even when the stabilizers were not specifically mentioned in the Chapter Note 4 of the Central Excise Tariff Act, still the milk shake mixes containing the same were held classifiable under the Tariff Heading 0404 by the Hon’ble Supreme Court in the case of Commissioner of Central Excise Versus M/s Amrit Food (A. Division of Amrit Corporation Ltd) [2015 (9) TMI 1269 - SUPREME COURT], on the ground that stabilizers do not interfere with basic characteristics of the milk products and are added merely to impart stability to the product - same analogy can be drawn i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e i.e. Methyl Vanillin Flavour. With the addition of the above ingredients, Revenue was of the view that the item manufactured would go out of the purview of Tariff Item 0404 since only sugar or other sweetening matter is allowed to be added to natural milk constituent under Heading 0404. The reasoning adopted was that with the addition of this item, the item becomes food preparation of goods of Headings 0401 to 0404 and is to be classified under Tariff Item 1901. In the impugned order, the adjudicating authority held that flavouring substance i.e. Methyl Vanillin Flavour is an item which is not permitted to be added to natural milk constituent in Heading 0404. Accordingly, he proceeded to shift the classification to Chapter 19 under Item 1901 90 90. He drew the inference from the explanatory notes to hold that if flavouring agents are specifically added to the products of Chapter Heading 0404, the resultant product does not fall under Chapter 4, but falls under Chapter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 324) E.L.T. 418 (S.C.). Accordingly, he submitted that the product in the case in hand will be classifiable under Chapter 0404 90 00 as claimed by the appellant and not under Chapter 1901 90 90, as decided in the impugned order. 7. Ld. DR justifies the impugned order. He submitted that the impugned products will not be classifiable under CETH 0404 since the Legislature through an amendment in the heading has deleted the word flavouring . Therefore, he argued that if the product manufactured contains flavouring substance, if not fall under Tariff Heading 0404. He submitted that the term food preparation is not a technical or legal word but a term of ordinary usage and means that food which is edible and it should be a preparation which does not occur naturally but prepared by manufacturing process. The product in question is food preparation inasmuch as milk powder with addition of other constituents becomes the food preparation of Heading 0404. With addition of flavouring substance, such food preparation will be classifiable under Chapter 1901. 8. We reproduce below the two competing tariff entries :- Chapter 4 - Dairy Produce, etc. Tariff Item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1901 90 90 --- Other The disputed product, NESLAC NUTRITIOUS Milk Drink is made up of milk predominantly but is added with a few additional ingredients. The show cause notice cited the ingredients of flavouring substance i.e. Methyl Vanillin Flavour. With the addition of these items, the view taken by Revenue is that the item will no longer remain classifiable under CETH 0404 but classified under Chapter 19. In the impugned order, ld. Commissioner has taken the view that addition of Methyl Vanillin Flavour is permissible since it is in the nature of sweetening agent. But he held that addition of artificial flavouring agent will modify the item into a food preparation of goods of Headings 0401 to 0404 and hence, it will be classifiable under [Tariff Item] 1901 90 90. Since CETH is fully align with 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 complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powder would fall under Heading 1901 only if the same is excluded from Chapter 4. That brings us to the question whether adding artificial flavouring substance will jettison the product from Chapter 4 to Chapter 19. The reference to HSN Notes to Chapters 4 and 19 clearly indicates that there is no reference to flavouring substance being one of the prohibited ingredients for the product in Chapter 4. HSN Notes also make it clear that product would fall under Chapter 1901 only when natural milk constituents are added with other items such as cereal, groats, yeast, etc., or the milk constituent is replaced by an other substance such as oleic fats. From what is stated before us, we are convinced that this is not a case. Addition of small quantity of artificial flavouring substance does not change the essential nature of the product from what is covered under 0404. It does not make it a food preparation of milk instead of a product consisting of natural milk constituent . 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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