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TMI Blog2024 (11) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has contented that the product emerging after the above processes is again dry dates and as such classifiable under Sub-heading 08041030 as dry dates while the Department has viewed that the end product is processed dry dates different from dry dates and is classifiable under Sub-heading 20089999 of the Central Excise Tariff as prepared fruit. The classification of an item in the Central Excise Tariff is regulated in accordance with the principles enunciated in General Rules for Interpretation (GIR). Rule 1 of GIR provides that classification shall be determined according to the terms of the headings and any relative Sections or Chapter Notes. If the goods to be classified are covered by the words in a heading and the Section and Chapter Notes do not exclude classification in that heading, the heading applies - As per GIR if goods are ambiguous and two or more headings appear to be applicable, then Rule 3 should be applied which provides that specific heading should be preferred to general heading. Rule 3 of GIR provides, when by application of sub-rule (b) of rule 2 or for any other reason, goods are, prima facie, classifiable under two or more headings, classification sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in Chapter 8 of the Central Excise Tariff, it would not be classifiable under SH 2008. When the item does not fall under Chapter 20, there is no applicability of Chapter Note-7 of Chapter 20. SSI exemption - HELD THAT:- SSI exemption has been denied to the Appellant on the ground that value of clearances of cut dry dates and chura dry dates is required to be included for determination of aggregate value of clearances as the said goods were dutiable excise goods. Since said goods namely cut dry dates and chura dry dates were fully exempted from excise duty as processes undertaken thereon were not amounting to manufacture, the value of clearances of such cut dry dates/chura dry dates would not be includible for determination of aggregate value. Thus, denial of exemption granted under SSI exemption Notification is improper and not sustainable. Imposition of penalty under Section 11AC of the Central Excise Act, 1944 - HELD THAT:- It is found that the same is leviable proportionate to duty amount confirmed. If no duty is confirmed, no penalty would be imposable under Section 11AC of the Central Excise Act, 1944. In this context reference made to the decision of the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.08/2003-CE dated 01.03.2023, value of trading items namely dry dates cut and dry dates chura was not included as the same was not chargeable to excise duty being trading goods. 2.3 Audit of the account books of the Appellant was conducted by the Departmental officers of the Central Excise Audit II Meerut on 04.07.2014 and it was viewed by the visiting officers that processes undertaken by the Appellant on bought out dry dates would amount to manufacture and therefore, the Appellant was required to pay excise duty on the end-product, i.e., cut dry date and chura dry dates appearing subsequent to said processes under Sub-heading No.20089999 of the Central Excise Tariff. Through Audit Note issued by the Department, the Appellant was informed that as per Chapter note 7 of Chapter 20 of the Central Excise Tariff, the processes undertaken by him amounted to manufacture as they enhanced the properties of end product and rendered the same marketable. The Appellant was directed to pay excise duty on the clearances of dry dates cut and dry dates chura and also differential duty on account of re-computation of aggregate value for availing SSI exemption by including value of dry dates cut/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified by the learned Commissioner (Appeals) under subheading 20089999 of the Central Excise Tariff. He further submits that Chapter 8 of the Central Excise Tariff covers edible fruit and nuts, peel of citrus fruit or melons and dry dates being edible fruit would fall under Chapter 8. He also submits that chapter heading 0804 covers all types of dates viz., fresh dates, soft dates, hard dates and others. He emphasizes that as dry dates cut or dry dates chura are de-seeded dates only, they would cover under chapter heading 08041090 chargeable to nil rate of duty. He also refers General Rules for Interpretation(GIR) and submits that as per the said rules, dry dates cut and dry dates chura would be correctly classifiable under chapter heading 08041090 of the Central Excise Tariff. 3.1 Learned Counsel for the Appellant further submits that General Notes of Chapter 8 of HSN prescribes that fruit, nuts and peel of citrus fruit or melons (including watermelons), generally intended for human consumption (whether as presented or after processing) would be classified under Chapter 8. They may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise [1986 (25) E.L.T. 473 (SC)]; viii. Indian Tool Manufacturers Vs. Assistant Collector of Central Excise, Nasik [1994 (74) E.L.T. 12 (SC)]; ix. Collector of Customs Vs. Kumudam Publications (P) Ltd. [1997 (96) E.L.T. 226 (SC)]. 3.2 Learned Counsel for the Appellant further submits that processes undertaken on dry dates did not amount to manufacture as no new commodity different from dry dates emerged subsequent to said process. Referring to the decision of the Hon ble Supreme Court in the case of UOI vs. Delhi Cloth and General Mills Co. Ltd. [1977 (1) E.L.T. (J 199) (SC)], he submitted that an activity or process amounts to manufacture, when new product, different from its raw material appears. He pointed out that the processes undertaken on dry dates did not lead to emergence of any new product different from raw material. He submitted that raw material was dry dates having seeds inside and end product is again dry date without seeds as characteristics, quality and name of the product remained same. He further submitted that usages of dry date and cut dry date is the same. He contended that in the market both dry dates with seeds and dry dates without seeds, cut into small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en for emergence of above items were not amounting to manufacture, the value of clearances of such cut dry dates/chura dry dates would not be includible for determination of aggregate value. Thus, denial of exemption granted under SSI exemption Notification is improper and not sustainable. 4. Learned Authorized Representative for the Department reiterated the reasoning given in the order of the Commissioner (Appeals) and pleaded that the processing undertaken by the Appellant on dry dates converted them in to a new commodity which was classifiable under HSN Chapter heading 2008. He further contended that as per Chapter Note 7 of Chapter 20 of the Central Excise Tariff, the processes carried out by the Appellant amounted to manufacture as they rendered dry dates marketable. He concluded that the Appellant was required to pay excise duty on processed dry dates and value of clearances of processed dry dates was required to be included for determination of aggregate value for SSI exemption. 4. Heard both the sides and perused the appeal records. 5. The issues that arise for consideration in this appeal are as under:- i. whether the end product emerging after certain processing undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al heading. Rule 3 of GIR provides, when by application of sub-rule (b) of rule 2 or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as given in rule 3(a), 3(b) or 3(c) . The heading which provides most specific description shall be preferred to heading providing a general description as held in CCE Vs. Maharshi Ayurveda Corp Ltd. [2006 (193) E.L.T. 10 (SC)], where it has been held that as per Rule 3(a) of GIR, the heading which provides specific description should be preferred to heading which provides general description. Only such goods as cannot be brought under the various specific entries in the tariff could be attempted to be brought in residual entry as observed in the case of State of Karnataka vs. Durga Projects Inc. (2018) 4 SCC 633. For ready reference, entries of Chapter 8 and its Notes are reproduced as under:- CHAPTER 8 Edible fruit and nuts; peel of citrus fruit or melons NOTES 1. This Chapter does not cover : (a) inedible nuts or fruits; or (b) betel nut product known as Supari of tariff item 2106 90 30. 2. Chilled fruits and nuts are to be classified in the same headings as the corresponding f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isture removal process involving methods such as dehydration, evaporation, etc and such process does not change essential character of the product. Now we examine entries of Chapter 20 and its Chapter notes which are reproduced as under:- CHAPTER 20 Preparations of vegetables, fruit, nuts or other parts of plants NOTES 1. This Chapter does not cover : (a) vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11; (b) food preparations containing more than 20% by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16); (c) bakers wares and other products of heading 1905; or (d) homogenised composite food preparations of heading 2104. 2. Headings 2007 and 2008 do not apply to fruit jellies, fruit pastes, sugar-coated almonds or the like in the form of sugar confectionery (heading 1704) or chocolate confectionery (heading 1806). 3. .Headings 2001, 2004 and 2005 cover, as the case may be, only those products of Chapter 7 or of heading 1105 or 1106 (other than flour, meal and powder of the products of Chapter 8) which have been prepared or preserved by proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dried in oven are again dates. So, it would be classifiable under SH 0804 of the Central Excise Tariff. 5.2 It is a settled legal position that for classification of an item in Central Excise Tariff, assistance may be taken from General Chapter Notes of HSN on the basis of which Central Excise Tariff is prepared. It is an established fact that in case of any doubt, the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs Central Excise vs. Phil Corporation Ltd. [2008 (223) E.L.T. 9 (SC)] is directly relevant and applicable in the instant case of the Appellant. In the judgement of the said case Hon ble Supreme Court has held a number of cases, this Court has clearly enunciated that HSN is a safe guide for the purpose of deciding issues of classification. So, we refer HSN General Note of Chapter -8 which provides as : This Chapter covers fruit, nuts and peel of citrus fruit or melons (including watermelons), generally intended for human consumption (whether as presented or after processing). They may be fresh (including chilled), frozen (whether or not previously cooked by steaming or boiling in water o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he product can rightly be classified as dry date. When the product is covered under Chapter -08, the need to go to the Chapter-20 which is residuary in nature does not arise. Therefore, we fully agree with the contention of the Appellant to classify the processed dry dates under Chapter-08 attracting nil rate of duty. 6. With regard to the second issue, we find that the Appellant carried out washing with water for dust removal from dry dates, breaking dry dates for removal of seeds, removing seeds from dry dates, cutting deseeded dry dates into small piece, such small pieces of deseeded dry dates are subjected to oven drying for removal of moisture which occurred during washing, for getting requisite size sieving of moisture free dates is undertaken and thereafter packing in 25 Kgs and 50 Kgs bags for sale. The observation of the Commissioner (Appeals) regarding the above is as under:- 3.3 the manufacture process adopted by the appellant confirms that treatment given to raw dates before selling them to consumer is manufacturing process in terms of section 2(f) of the Central Excise Act, 1944 and chapter Notes of chapter 20 of the Tariff Act, 1985 as it has definitely rendered dry d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with seeds and dry dates without seeds, cut in to small pieces, are sold as dry dates. Thus, no new product comes in to existence on account of the said processes on dry dates. Our above finding find support from the decision of the Supreme Court in the case of Deputy Commissioner Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. PIO Food Packers [(1980 (6) E.L.T. 343 (S.C.)]. In that case, the process undertaken by the assessee was to wash the pineapple, after purchase, and then remove inedible portion, the end crown as well as skin and inner core. After removing those inedible portions the pineapple fruit used to be sliced and the slices were filled in canes after adding sugar as preservative. Thereafter, canes would be sealed under temperature and then put in a boiled water for sterilization. Identical question was posed viz. whether this process amounted to `manufacture'. Giving the answer in the negative, the Court held that even when with each process suffered, the original commodity experienced a change, such a change would not amount to `manufacture' unless it seized to be the original commodity and a new and distinct article was produced therefrom. In the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of term manufacture under Section 2(f) of the Central Excise Act, 1944. Only those processes which pass litmus test of section 2(f) would be treated as amounts to manufacture. In the case of Swastic Rayon Process [2007 (209) E.L.T. 163 (SC)], it has been held by the Hon ble Supreme Court that merely because there is value addition, it does not mean that manufacture has taken place. Even if the processes as mentioned above had taken place, the end product remains the same. In the case of S.R. Tissues Pvt. Ltd. [2005 (186) E.L.T. 385 (SC)], the Hon ble Supreme Court has held that value addition, without any change in the name , character and use cannot be criteria to declare what is manufacture. 10. SSI exemption has been denied to the Appellant on the ground that value of clearances of cut dry dates and chura dry dates is required to be included for determination of aggregate value of clearances as the said goods were dutiable excise goods. Since said goods namely cut dry dates and chura dry dates were fully exempted from excise duty as processes undertaken thereon were not amounting to manufacture, the value of clearances of such cut dry dates/chura dry dates would not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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