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TMI Blog2018 (10) TMI 1788X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment? HELD THAT:- As the appellant does not manufacture the product of Malt extract to group on (i) is not relevant and so is the case for products falling in group, (ii), which consists of all the material derive from flour, groats or meals, which derive from essential character from such material which is not the case here. Though the starch content in cake decor is quite substantial by weight, i.e. 40% to 45% (which is next only to sugar at 45% to 50%), however, still, in terms of the HSN Notes to Chapter heading 19.01, as extracted above, it emerges that the percentage content of starch is not relevant for classification of the product under this heading. What is relevant is that the product should derive its essential character from starch which is also supported by the HSN Notes to the Chapter Heading 2106 - Further in the present case, the main ingredients providing the essential character to the product are colours and flavours. The essential character of the product is imparted by colours and flavours. The Ld. Commissioner at paragraph 52.2 has accepted this fact but has concluded the classification of the product would be under the Chapter Heading 1901, on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such circumstances, it is not possible to sustain the demand for the extended period. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... iled these appeals. 5. Ld. Advocate on behalf of the appellant also submitted as under : (i) That the appellant has appropriately classified the subject item under chapter Heading 2106 90 99 of the CETA and cleared them at Nil rate of duty up to 28-2-2011 by availing the benefit to exemption from Central Excise Duty under Notification No. 3/2006, dated 1-3-2006 and thereafter on concessional rate of duty in terms of Sl. No. 19 of Notification 1/2011, dated 1-3-2011. The products were classified under three sub-categories on the basis of their composition and their use for the purpose of classification under CETA, which included (a) cake decors (b) cake concentrates (c) ready to use mixes. The products were not only used in the makings of cakes but had various other applications such as cake decors, energy drink, nutritional supplements, instant food mixes Kheer and Halwa etc., thus, these were appropriately classified under item Heading No. 2106 90 99. (ii) That the items cake mixes have been permitted to be imported under Customs Tariff Chapter Heading 2106 90 99 under Customs Tariff Act, 1975 and hence same classification neads to be adopted under CETA, as the two Tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure was made known to the Departmental vide the appellant's letter dated 16-11-2011. In the letter list of all the products being manufactured by the appellant, along with their ingredients and uses, were submitted to the Department. The Department had not raised any objection regarding the classification adopted by the appellant under Chapter heading 2106 9099 at the relevant time. (v) Ld. Advocate also extensively dealt with the classification of the products under Tariff Heading 2106 by placing reliance Harmonize System of Nomenclature (HSN). The chapter 21.06 heading includes, inter alia : 1. Powder for table cream, jellies, ice creams or similar preparations, whether or not sweetened. However, powder based on flour, meal, starch malt extract or goods of heading 04.01 to 04.04, whether or not containing added cocoa, fall in heading 18.06 to 19.01 according to their cocoa content (see the General Explanatory Note to Chapter 19). The other powders are classified in heading 18.06 if they contain cocoa. Powders which have the character of flavoured or coloured sugar used for the preparation of lemonade and the like fall in heading 17.01 or 17.02 as the case may be. (vi) Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CESTAT New Delhi in case of Nestle India Limited v. CCE, LTU Delhi, 2017-VIL-292-CESTAT-New Delhi = 2018 (8) G.S.T.L. 211 (Tri.-Del.), wherein the dispute was as to whether by addition of artificial flavouring substances, which have not been specified under Chapter Notes to Tariff Heading 0404, the product Nestle milk drink powder would be classifiable under Tariff Heading 1901. This decision was also followed in case of Nestle India Private Limited v. CCE, Delhi, 2017-TIOL-1682-CESTAT-DELHI. Further reliance was placed on the decision of this Tribunal in case of Amrit Foods v. CCE, Meerut-I, 2006 (202) E.L.T. 545 (Tri.-Del.) for the classification of milk shake mixes, which identical to the cake concentrate. Hon'ble Tribunal upheld the classification of the product under Heading 0404 of CE Tariff and not under 1901. (ix) Ld. Advocate also submitted that there is no estoppel in taxation laws and earlier classification of the product under 2106 would not preclude their product classification under Chapter 4 or Chapter 11 of Central Excise Tariff depending on the constitution of ingredients used in making of the said product. The reliance was placed on the decision of Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd baker mixes, biscuit mixes, bread improvers etc. As per Explanatory Notes to the HSN, Chapter heading 1901 covers the number of food preparations of flours, groats or meal of starch or malt extract, which derive their essential characters from such materials, whether or not these ingredients predominate by weight or volume generally used for food, which are made either directly from such material of Chapter 10 or from the products of Chapter 11 or from food flour meals and powder of vegetable and with other chapters (Serial produce and meal, starch, food or food flour meal and powder) or from the goods of Heading 0.4.012 to 0.4.012. Further Chapter heading 1901 of CETA covers three group of products, namely; (i) Malt extract, (ii) Food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified. (iii) food preparations of goods of heading 04.01 to 04.04, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included. As the appellant does not manufacture the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading 1905 of CETA, and hence merits classification under Tariff Item 1901 20 00 of CETA. However, we find that this classification is not correct in view the fact that HSN Notes to the heading 1901 provides that; "This heading covers a number of food preparations with a basis of flour, groats or meal, or starch or of malt extract, which derive their essential character from such materials whether or not these ingredients predominate by weight or volume" 10. Thus, though the starch content in cake decor is quite substantial by weight, i.e. 40% to 45% (which is next only to sugar at 45% to 50%), however, still, in terms of the HSN Notes to Chapter heading 19.01, as extracted above, it emerges that the percentage content of starch is not relevant for classification of the product under this heading. What is relevant is that the product should derive its essential character from starch which is also supported by the HSN Notes to the Chapter Heading 2106. Further in the present case, the main ingredients providing the essential character to the product are colours and flavours. As the name and the product literature suggests, the product is cake decor and it intended to be u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used as instant energy agent or to replaced all as supplement in chapaties and roties. 13. The Commissioner has classified this product as product of chapter Heading 1920 20 00 based on the constitution and their use, however, but to us it erroneous in view of HSN Notes to Chapter 4 which states that the small amount of anti Oxidants, chemical, anti-cake agent, preservative and sugar are permitted to be added as per chapter note of chapter 4 of CETA. Further, in terms of HSN Notes to the Tariff Heading 1901, only those milk products which contained ingredients which are not natural milk constituents are permitted to be added and that would not take the product out of purview of Chapter of Heading 04. Further, in terms of HSN Note to chapter Heading 1901, only those milk products are classifiable which are not the natural milk constituents and also not product of heading 0404. Therefore, classification of this product under residuary entry in Heading 1901 is not correct and proper. Being specific heading 0404 would have primacy over residuary Heading 1901. In holding so, we are supported by the Hon'ble CESTAT decision in case of Nestle India Limited v. CCE, Delhi - 2018 (8) G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives Private Limited v. CCE, Pune-I, 2006 (204) E.L.T. 279 (Tri.-Mumbai). Further, in case of Nestle India v. CCE, LTU (supra) the Tribunal held that miniscule proportion of additives in product, which is otherwise classifiable under a particular heading, would not make preparation fall under chapter Heading 1901. Therefore, we are of the view that the appellant contention regarding classification of items under Heading 1102 is more appropriate and needs to be affirmed in the appeal. 16. Regarding the classification bakers ware mix, biscuit improvers, biscuit mix. The product would be classified under chapter Heading 1108 of CETA, as per our observation in the earlier paragraph. In view of above, we find that the Department contention regarding the classification of this product under Chapter heading 1901 is not sustainable and require to be set aside. 17. The Department has raised demand invoking extended period of limitation, however, it is on record that the appellant had discussed entire facts about the products being manufactured by them vide their letter dated 16-11-2011. 18. After going through the letter, we are of the view that each and every informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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