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TMI Blog2020 (10) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... the essential character of the product i.e. among all the elements the one that provides the essential character to the said product. He has observed that in the present case, it is sucrose, which is present in the range of 80 to 90% provides the essential character to the imported product Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade). In arriving at the said conclusion the Ld. Commissioner (Appeals) referred to rule 3(b) of General Rules of Interpretation, applicable to classification of products in mixture. There are merit in the observation of the learned Commissioner (Appeals). The argument of the appellant that the product chemically pure sucrose specified under chapter heading 1701 if mixed with any other ingredients except with flavouring or colouring agent, it would fall outside the scope of the said heading - The contention of the appellant that chemically pure sucrose mixed with other items would fall outside the scope of the said heading as it is not designed to bring within its scope other than pure sugar except when added with colouring or flavouring agent therefore devoid of merit. The Ld. Commissioner (Appeals) in determining the classificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture, its usage etc. as and when called for by the department during assessment proceedings. In such circumstance, allegation of suppression of facts or mis-declaration solely on the basis that the correct classification which according to the Department would fall under different Tariff Heading i.e. 1701 attracting higher rate of duty during the period under dispute cannot be sustained - the demand confirmed in the impugned Order invoking extended period is set aside on the ground of limitation. Appeal disposed off. - Customs Appeal No. 89829 of 2018, Customs Appeal No. 85493 of 2019 - A/85786-85787/2020 - Dated:- 25-9-2020 - DR. D.M. MISRA, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri V. Sridharan, Sr. Advocate with Shri T. Viswanathan, Advocate for the Appellant Md. Shamshad Alam, ADC, Auth. Representative for the Respondent ORDER These two appeals are filed against respective orders; since the issue involved is common, hence are taken up together for disposal. 2. Appeal No. C/89829/2018 The facts of the case are that on the basis of Audit, it came to the notice of the Department that the appellants were importing Sucr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tset, learned Sr. Advocate Shri V. Sridharan for the appellants has submitted that the appellants are engaged in the trading of goods meant for pharmaceutical industry. The imported goods in question are: Sugar Sucrose or Neutral Pellets or Non-pareil seeds which are in the form of tiny spherical balls. These goods are made from maize starch (IP grade), water and sucrose. Explaining the process of manufacture by the overseas supplier, he has submitted that a tiny pearl of sugar crystal is taken as a base and these are continuously coated with a solution containing starch and water, through the panning process. The starch is added to act as a binder and also for the slow release of the API (Active Pharmaceutical Ingredient). Providing the composition of the product, the learned Advocate submitted that it consists of (i) Sucrose (80 91%) (ii) Maize starch (8.5% to 20% (iii) Water ( 1.5%) These goods are used in pharmaceutical industry. He has further submitted that similar sugar spheres not conforming to the pharmacopeias are used in confectionary industry and both the types of sugar spheres are manufactured by the supplier. In confectionary, these types of sph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to buttress the point that these are not treated as sugar in the international market is also based on the price at which these goods are imported into India. The international market price for sugar/sucrose, during the period of import, was Euro 0.33/Kg to Euro 0.27/Kg. whereas, the price at which the imported goods were bought is Euro 4.17 /kg to Euro 7.41 /kg. This shows that these goods are not treaded or marked as refined sugar or sucrose. The 20 times higher the price is attributable to the cost of manufacture in order to comply with the pharmacopeia. Even if the price of the price of sugar (of pharmacopeia grade), even then the price of sugar spheres are far higher than it. 4.2 He has further submitted that the reasoning advanced by the Commissioner in the impugned order dated 09.11.2018 is that the goods are not sugar confectionary; hence they do not fall under heading 17.04. There is no discussion as to how the goods fall under heading 1701 has been recorded. In the notice, it is alleged that the essential character is given by sucrose and it is predominant in the product. He has submitted that it cannot be a valid reason to classify the product under heading 1701 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued by supplier to other countries and opinion of Institute of Chemical Technology and Certificate from Protein Foods and Nutrition Development Association. 4.5 The learned Advocate has further submitted that the show-cause notice issued on 17.3.2007 relating Appeal No. C/85493/2019 demanding differential duty for goods imported during the period 19.3.2012 to 23.02.2015 is barred by limitation. He has submitted that the grounds stated in the notice for invoking the extended period stating that the goods have been mis-classified with intention to evade the higher rate duty is incorrect and baseless. The appellant imported the goods describing the description of the goods correctly in the respective Bill of Entry filed with the department. On many occasions, the goods have been examined and confirmed the description given in the Bill of Entry by the assessing officers. Further, the appellants were called upon by the Department to justify their claim under Heading 17.02. Such an exercise has been done by the officers under Section 17 of the Customs Act, 1962 as part of the assessment proceeding. Besides, the classification adopted by the appellant has been consistently under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash entry for single dash other of Heading 1701.It is his contention that the Heading 1701 also includes not only raw sugar but also sugar preparations. In support, they have referred to the Board s Circular No. 879/17/08-CX dated 5.9.2008 issued under section 37B of the Central Excise Act, 1944 which is based on the judgment of the Hon ble Supreme Court in the case of State of Gujrat Vs. Sakarwala Brothers. The said Circular has been extensively considered by the Tribunal in the case of Triveni Udyog Vs. CCE, Jaipur-I - 2017 (358) ELT 950 (Tri-Del.) in classifying the sugar preparations under Heading 1701 against the claim of Heading 1704 as confectionary. He has further submitted that the appellant himself accepted that the impugned goods are not other sugar classifiable under heading 1702 and as per HSN subheading note; cane and beet sugar in solid form can only be classified under 1701. The HSN Notes makes it clear that the sucrose obtained from cane or beet sugar falls under Heading 1701 even it if contains some other substances. In their case, the sugar spheres are found to contain not less than 62.5% and more than 91.5% of sucrose. Therefore, the impugned goods are correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 invoking extended period is justified in the sense that the appellant had suppressed the correct classification of the imported goods even though they are fully aware that the same could not be classified under CTH 1702 of CTA, 1975. They could not able to address anomaly of misclassification of the goods under CTH 1702 through cogent argument to justify that the declared classification was inadvertent error. They were fully aware of the fact that the goods were classifiable under CTH 17019990 with BCD @ 60% but classified the same under CTH1702 only with an intention to evade payment of duty. In support of his submission the Ld. AR for the revenue referred to the judgement of this tribunal in the case of M/s Xsis Vs. C.S.T S.T, Ahmedabad - 2019 (50)TMI590 and Bombay High Court in the case of Mckinsey Company Inc. Vs. CCE - 2019 (20) GSTL 198 (Bom.). 6. Heard both sides and perused the records. 7. The issue involved in the present appeals centres mainly around classification of Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade) which are also described as Sugar Spheres or Neutral Pellets or Non-pareil seeds . 8. In Appeal No. C/89829/2018, the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1701 14 90 --- Other kg. 100% - Other 1701 91 00 -- Refined sugar containing added flavouring or colouring matter kg. 100% 1701 99 -- Other 1701 99 10 --- Sugar cubes kg. 100% 1701 99 90 --- Other kg. 100% 1704 Sugar Confectionery (including white Chocolate), not containing Cocoa 1704 10 00 - Chewing gum, whether or not sugar coated kg. 45% 1704 90 - Other 1704 90 10 --- Jelly confectionary kg. 30% 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heading cannot be construed that it should consist of chemically pure sucrose only; but the chemically pure sucrose could also be in mixture with other materials like starch and water as in the present case. It is his reasoning that what is to be seen in classifying the mixture is the essential character of the product i.e. among all the elements the one that provides the essential character to the said product. He has observed that in the present case, it is sucrose, which is present in the range of 80 to 90% provides the essential character to the imported product Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade). In arriving at the said conclusion the Ld. Commissioner (Appeals) referred to rule 3(b) of General Rules of Interpretation, applicable to classification of products in mixture. 12. We find merit in the observation of the learned Commissioner (Appeals). The argument of the appellant that the product chemically pure sucrose specified under chapter heading 1701 if mixed with any other ingredients except with flavouring or colouring agent, it would fall outside the scope of the said heading. We doubt the correctness of the said argument in view of the Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ize of neutral spheres meant for confectionary being similar to the product in question, therefore, its classification cannot be ruled out under Chapter 1704 as confectionary, in our view cannot be acceptable. Further, they have laid emphasis on the fact that the overseas manufacturers export the said product in two other European countries classifying it as confectionary under Chapter heading 1704. This argument also would not be relevant to determine the classification under Customs Tariff Act, 1975 as the Revenue also placed reliance on the classification of such products adopted in USA, where similar products are classified under Heading 1701. 15. We find that the HSN Explanatory notes under sub-heading 1704 makes it further clear that the products to fall under this heading are generally used for immediate consumption. It reads as: this heading covers most of the sugar preparations which are marketed in a solid or semi solid form generally suitable for immediate consumption and collectively referred to as sweet meet confectionary or candies . 16. The products enumerated in the said Explanatory Notes clearly indicates that confectionary are mostly for immediate consum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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