TMI Blog2018 (10) TMI 1788X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that the same is used for decoration of bakers wares of Chapter Heading 1905 of CETA. There is nothing in the Tariff Heading 2106 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favor of appellant. - E/51237 & 51238/2017-EX(DB) - A/53607-53608/2018-EX(DB) - Dated:- 4-10-2018 - Shri Anil Choudhary, Member (J) and Bijay Kumar, Member (T) Shri B.L. Narsihman and Rahul Tangri, Advocates, for the Appellant. Shri H.C. Saini, Authorized Representative, for the Respondent. ORDER [Order per : Bijay Kumar, Member (T)]. - The present appeal arises out of Order dated 18-4-2017 passed by the Learned Commissioner by which the demand of ₹ 4,04,09,236/- along with penalty of ₹ 2,02,04,618/- has been confirmed on the appellant, M/s. Tropolite Food Private Limited, also with personal penalty of ₹ 2,00,000/-, under Rule 26 of Central Excise Rules, have been imposed on the other appellant, Shri Puneet Devar, Director of the Appellant Company. The demand has been confirmed on the appellant No. 1 under Section 11A(4) of Central Excise Act, 1944 (hereinafter referred to as Act ) and the penalty has been imposed under the provisions of Section 11AC of the Act. Along with the duty, interest has also been ordered to be paid under the provisions of Section 11AA of the Act. The issue involved relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,88,19,316/- 3. Ready to use mixes 2106 1902 20 00 ₹ 64,01,901/- 4. Bakery mixes, biscuit mixes, bread improvers etc. 1102/1108 1901 20 00 ₹ 3,57,601/- GRAND TOTAL ₹ 4,04,09,236/- 4. This Show Cause Notice was adjudicated by the impugned order which confirmed the demand and also imposed penalty on both the appellants. Being aggrieved by this order, the appellants have filed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the products suggested that the products had multipurpose uses and not merely confined to uses in baker wares. Hence these items/ products cannot be classified under Chapter Heading 1901 20 00. The Department has failed to discharge the reason of classification of the product under Chapter heading No. 1901 20 00. Ld. Advocate also submitted that even if is to be assumed that the Classification would fall under 1901 20 00 duty and demanded would be cum duty price and the benefit needs to be given to the appellant, which has not been done while raising the demand. (iv) The extended period of limitation is not applicable in the instant case as the appellant unit has been visited by the Departmental officer for conducting audit and also the entire process of manufacture 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. Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that this product is having milk protein to the extent of 48% to 50%, milk solids to the extent of 35% to 40%, sugar 5% and phosphate, edible starch and oil balance. This product is having varied application such as (a) replacers for vegetarian cakes, nutrition supplement, whole wheat flour to make high protein roties or Chapaties and protein batter by mixing of tea and coffee in other beverages to enrich with protein, and therefore, this product is not exclusively used as mix or dough for preparation of baker wares so as to fulfil the criteria of classification under Heading 1901. Based on the constitution the items are more appropriately classified under Tariff Heading 0404 as dairy products. The above contention also find its support from HSN Notes to Chapter 4 also. (viii) Ld. Advocate also placed reliance on the decision of Hon ble 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable. (xii) Ld. Advocate also placed reliance on the Circular No. 5/92, dated 13-10-92 of C.B.E. C. which states that in case of classification dispute no Show Cause Notice which should be issued invoking extended period, and therefore, present demand is partially time-barred. 6. Ld. Departmental Representative, however, defended the impugned order on the basis of findings contained therein. 7. We have considered the rival submissions and perused the appeal records. 8. The issue involved in this case is regarding the classification of the product manufactured by the appellant, as to whether under Chapter heading 2606, 0404, 2106 and 1102/1108 as claimed by the appellant or under Chapter Heading 1901 20 20 as claimed by the Department. The appellant manufactures goods of various descriptions such as; cake decor, cake concentrates, ready to use mixes, and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or oil or powder used in bakers wares and based on sugar containing fat or milk used for filling of chocolate cake etc. The cake is composed of sugar extracts, edible starches and colours and flavours. The sugar consists of 45% to 50% of the weight of product which also acts as carrier and sweetener. Edible starch which is to the extent of 40% to 50% is added as anti-cake agent and remaining 5% to 15% which is colour and flavours is impart specific flavour and colour the cakes, ice cream, milk shake, soft drinks, etc., and sprayed sprinkled on icing of cakes and pastries etc. The Adjudicating Authority has classified the said product under chapter Heading 1901 20 00 on the basis that use of products for determination of classification. The product brochure mentioned that this is non-dairy topping of cream, which have main applications in making of fine pastries to sophisticated decorated cakes and hence the cake decors are cake mixes of bakersware of 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 hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the contrary, each of the product group under the HSN Notes to Tariff Heading 2106 reflects those can be used in bakerswares as well. Further we also agree with the contention of Ld. Advocate that following US cross ruling also support the aforesaid submissions made by the appellant. The relevant ruling are as below; US Customs Ruling HQ 956246 in the matter of McKenna Cuneo US Customs Ruling NY 813028 Thus, cake decors are correctly classifiable under the Tariff Item 2106 only more appropriately. 12. Regarding cake concentrate, the product composition is as under; The cake concentrate comprises of 48.50% of milk protein along with mil solid to the extent of 35.50% of the product. The milk protein provides nutritional protein and milk solid imparts the character of milk. The remaining 5% is sugar which imparts sweetness of the cake concentrate reaming are phosphates, edible starches which acts as buffing agent, or emulsifiers or homogenize the product to be 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 Headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, namely, milk solids, sugar and flour, phosphate etc., The Adjudicating Authority has classified the product under chapter Heading 1901 20 00 as mix for preparation of bakers ware without considering the appropriate constitution of the product. The product does not fall under any of the category of the products covered by Chapter heading 1901 as discussed in preceding paragraph. Since, it is not a malt extract, preparation, milk preparation also the product is out of the purview of Chapter 4, as only half of the composition of the product is milk solids and contains impermissible ingredients like flour etc., and therefore, only heading left for deciding classification is Tariff Heading 2106, which is referred to other food products not elsewhere specified. 15. Regarding classification of bakers mix, bread improver and break mix, these are classifiable under chapter Heading 1102 of the not under 1901 as argued by the appellant on the basis of the precedent decision of this Tribunal in case of Helios Food Additives 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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