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TMI Blog2024 (4) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill of Entry. Hence the matter is distinguished. Sine the correct classification of the goods is under CTH 2106 9060 the goods are not eligible for exemption under Sl. No. 499(I) of Notification No. 46/2011 and the impugned order is upheld in this regard. Invocation of the extended period - imposition of penalty - HELD THAT:- It is seen that the impugned goods were imported by filing 68 bills of entry, from 1-12-2017 to 29-10-2022 by declaring them as Ajitide I+G . It is the Revenues case that by making an incomplete declaration of the goods (suppression of facts) and mis-classifying them has lead to evasion of duty and hence the extended period of time as per section 28(4) of the Customs Act 1962 is rightly invokable and the goods are liable for confiscation under Section 111(m) (o) ibid and the importer is also liable for a penalty. The Hon'ble Supreme Court in NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE [ 1998 (7) TMI 91 - SUPREME COURT] has held that merely claiming the benefit of exemption or a particular classification under the bill of entry does not amount to mis-declaration or suppression of facts. Something more is required. Although the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the same are rightly classifiable under CTH 2106 9060 as food flavouring material. Show Cause Notice dated 29.11.2022 was issued to the Appellant. The SCN proposed to demand differential duty, on imports covered by 68 bills of entry, from 1-12-2017 to 29-10-2022. After due process of law, the adjudicating authority reclassified the goods under CTH 2106 9060 and ordered for reassessment of the same denying the benefit of Notification No. 46/2011 dated 1.6.2011. Differential duty amount of Rs.40,83,51,948/- was confirmed along with interest and redemption fine imposed. An equal penalty was also imposed under sec. 114A of the Customs Act, 1962. Aggrieved, the appellant is before this Tribunal. 3. Department has not filed any cross-objection. 4 Shri R. Parthasarathy, learned counsel appeared for the appellant and Shri M. Ambe, learned AR appeared for the Revenue. 4.1 The learned counsel submitted that Ajitide (Disodium ribonucleotide) is a Chemical mixture of just two chemicals and is not a food preparation. It is purely a mixture of chemicals and is not meant for human consumption directly or after processing such as cooking, dissolving, or boiling in water without adding any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption directly or after processing such as cooking, dissolving, or boiling in water without adding any other foodstuff. (iv) No other food stuff is added to it nor does it have other substances with nutritive value added to it, Chapter Note 1 (b) clearly points out that Classification under 2106 is automatically ruled out. (v) Chapter Note 1 (b) implies that the chemical mixture will fall under 3824. (vi) Ajitide is a chemical which is recognized as a food additive by FSSAI and Codex Alimentarius. (v) The Codex Alimentarius, uses the International Numbering System for Food Additives (INS) for harmonised naming system for food additives as an alternative to the use of the specific name, which may be lengthy. Di sodium Inosinate (INS 631), Di sodium Guanylate (INS 627) Disodium 5 Ribonucleotides (INS 635) have INS numbers allotted to them. Since INS numbers are allotted to them, the subject goods with INS 635 is a food additive and not a food flavouring material. Food flavouring materials are not given INS numbers. (vi) The appellant had referred to the case of Indo Nissin Foods Ltd vs CC, Chennai, the CESTAT vide 2001 [133] ELT 413, both for correct classification and also for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the imported item is a flavor enhancer it is silent about the inherent characteristics of the goods. 7. We find that both the parties do not dispute that the classification of the impugned goods are to be done primarily as per their identity in common or commercial parlance. However as per Revenue the imported goods are known to the public as flavoring material whereas as per the Appellant they are known in the trade and are also marketed as flavor enhancers. So the basic question arises as to whether flavoring material and flavor enhancers are one and the same thing or not. The learned Adjudicating Authority thinks so but the Appellant demurs. We would hence have to look into the distinction between food flavoring materials and flavour enhancers, if any. 7.1 One of the main purposes of eating is to enjoy the palatability of foods. We find that food flavoring materials and food enhancers enhance the overall taste intensity and increase flavor characteristics of food. While they have not been defined in the Customs Tariff or the HSN, as per open sources, they have the following main characteristics; I. Flavouring Materials: (i) Flavouring substances are products intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is particularly strong in aged or fermented products, like cheese and wine. Carla Ranicki As per the discussions of the rival parties it is understood that glutamate, inosinate, and guanylate are umami-related substances. However, the precise role of these substances has not been well elucidated. 7.3 The question arises as to under which group does Ajitide falls. The impugned order has at para 33 referred to the technical literature provided by the importer, extract of which is reproduced here under: AJITIDE I+G is a flavor enhancer composed by nucleoside inosinate and guanylate disodium, which confer Umami taste and enhance the flavor of food. In addition, it has strong synergy with AJI-NO-MOTO and when used together, enhances Umami taste and flavor of the food. AJITIDE I+G is a product of easy application, as it is highly soluble in water, has low hygroscopicity, offers excellent stability at high temperatures and in the presence of light and is not perishable. Benefits of AJITIDE I+G as per the technical literature: Confers the Umami taste and enhances the flavor. Acts synergistically with glutamates for enhanced flavor Promotes flavor improvement in a wide variety of foods P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it will not take food enhancers beyond the pale of food flavouring material. Codex Alimentarius Food Additives Definition Food additive means any substance not normally consumed as a food by itself and not normally used as a typical ingredient of the food, whether or not it has nutritive value, the intentional addition of which to food for a technological (including organoleptic) purpose in the manufacture, processing, preparation, treatment, packing, packaging, transport or holding of such food results, or may reasonably expected to result, (directly or indirectly) in it or its by-products becoming a component of or otherwise affecting the characteristics of such foods. (Codex Alimentarius Commission Procedural Manual, page 22, 21th Ed., 2013) [emphasis added] In India the Food Safety and Standards Act, 2006 ( FSSA) which is near identical states; (k) ― food additive means any substance not normally consumed as a food by itself or used as a typical ingredient of the food, whether or not it has nutritive value, the intentional addition of which to food for a technological (including organoleptic) purpose in the manufacture, processing, preparation, treatment, packing, packag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held in M/s Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, [1981 (2) SCC 528], that if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted . In Plasmac Machine Manufacturing Co. Pvt. Ltd. v. Collector of Central Excise, Bombay [1991 (51) E.L.T. 161 (SC) = 1991 Suppl (1) S.C.C. 57], it was held by the Apex Court : It is an accepted principle of classification that the goods should be classified according to their popular meaning or as they are understood in their commercial sense and not as per the scientific or technical meaning. Indo International Industries v. CST [1981 (2) SCC 528] and Dunlop India Ltd. v. Union of India [1976 (2) SCC 241] have settled this proposition. How is the product identified by the class or section of people dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable as was held in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparations not elsewhere specified or included 2106.10 - Protein concentrates and textured protein substances 2106.90 - Other Provided that they are not covered by any other heading of the nomenclature, this heading covers :- (A) Preparations for use, either directly or after processing (such as cooing, dissolving or boiling in water, milk etc.) for human consumption. (B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts etc.) with foodstuffs (flour, sugar, milk powder etc.) for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities etc.) (see the General Explanatory Note to Chapter 38). However, the heading does not cover enzymatic preparations containing foodstuffs (e.g. meattenderisers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such preparations fall in heading 35.07 provided that they are not covered by a more specific heading in the Nomenclature. (emphasis added) The Appellant on the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made enjoyable by the palatability of food. This is achieved by various techniques, that help achieve particular food characteristics, such as a particular flavour, texture or appearance. Foodstuff as per the Merriam-Webster Dictionary refers to a substance with food value. Specifically : the raw material of food before or after processing . Ajitide is edible and is used in adding flavour to human foodstuff either directly or after processing for human consumption. It must be used in conjunction with AJI-NO-MOTO as it has low efficiency when used separately. They increase the overall palatability and preferability by conferring umami taste and by enhancing the flavor of food. It does not loose its nutritive value just because the same is not being mentioned on the product label as the same is exempt by regulations. Flavourings are an essential component of foods, whether naturally present or added. The Appellant has referred to flavour enhancers as food additives. Food additives are generally known in the market to be stabilizers, emulsifiers, antioxidants, preservatives etc. however food flavouring material and food enhancers are not excluded. 10. Looking at the sum total of argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vegetable oils into capsule form does not make it a different product. The issue involved is different and is hence distinguished. In M/S. Symrise Private Ltd vs Commissioner Of Customs the appellant had imported 'tomato dry flavour' under the cover of Bills-of-Entry by classifying the same under CTH 3302 1010. The Department sought to classify the imported goods under Tariff Item 2106 9060. The Tribunal found that the imported good is of synthetic origin and consists of odoriferous substances, which is an industrial raw material for making food flavours and the same cannot be directly used in any food preparations for human consumption. The Tribunal held that Chapter Heading 3302 covers both natural and/or synthetic mixtures of odoriferous substances. In the present case we have seen that the goods fall under the category of the heading flavouring material which finds a specific mention in the Customs Tariff and does not relate to odiferous substance. The judgment is hence distinguished on facts. In Commissioner of Customs Chennai II Vs Versus M/s. International Flavours and Fragrances India [FINAL ORDER No. 40871 / 2023, dated 09.10.2023] the imports of various semi-fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanied by strong words such as collusion and, wilful mis-statement therefore it has to be construed strictly. Although intent to evade payment of duty is not of consequence as per the section, it has to be shown that there has been a positive, conscious, and deliberate action and not a mere omission on the part of the Appellant. The discussions at para 57 of the impugned order are too cryptic and do not address these concerns so as to sustain a penalty of Rs 40,83,51,948/-. 13.2 The Hon'ble Supreme Court in Northern Plastic Ltd. v. Collector of Customs Central Excise [1998 (101) E.L.T. 549 (S.C.)] has held that merely claiming the benefit of exemption or a particular classification under the bill of entry does not amount to mis-declaration or suppression of facts. Something more is required. Although the judgment was pronounced before the 'Self-Assessment' system has been introduced in respect of Customs clearance of imported goods under Section 17 of Customs Act,1962, with effect from 8-4-2O11, we find that earlier consignments bearing the same description, same classification were cleared by the department, vide 68 Bills of Entry, from 1-12-2017 to 29-10-2022. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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