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2018 (3) TMI 489 - AT - Central ExciseClassification of goods - Tapioca Starches, ‘Native' as well as 'Modified' - N/N. 06/2002-CE, dated 01.03.2002 and N/N. 03/2006-CE, dated 01.03.2006 - whether classified under CETH under 11.08 or under CETH 3505? - the Revenue's case is that during the period 2003-04 to 2006-07, the appellant have cleared Modified Starch, under the guise of Native Starch. Held that: - the Native Starch and Modified Starch are two different products and conversion of one into another requires certain additional procedures to be adopted by the manufacturer. There is nothing on record, by way of documentary evidences that such processes were actually undertaken by the appellant during the period in question so as to convert the Native Starch to Modified Starch. The appellant have explained all the technical aspects and have contended that in the case of Modified Starch, dried starch had to be subjected to heating for several hours in a reactor vessel and the resultant product is "Pyrodextrin". The authorities have failed to appreciate the said fundamental distinction between the Native and Modified Starches. Similarly, the conclusion in respect of use of Sulphur di-oxide solution is erroneous, inasmuch as, the same is for usage and proper extraction of milk from the tuber and the ISI Standard allowed 100 PPM of Sulphur di-oxide in Native Starch. Similarly the Revenue's reference to viscosity of Native Spirit being around 44-55 seconds only is not appropriate. The adjudicating authority is primarily going by the statement of the buyers, in the absence of any other evidence to reflect that the appellant was actually manufacturing and clearing the Modified Starch. The fact that the adjudicating authority has extended the benefit to the assessee on the finding that they were clearing Native Starch in some cases lead to the inevitable conclusion that the appellant was manufacturing Native Starch also, which was being sold by them to his various customers, who needed the said Native Starch. In such a scenario, based upon the statement of some of the buyers, no conclusions can be made as to the clearances of the Modified Starch in the guise of Native Starch. The material relied upon by the Revenue for confirming the demand against them is not sufficient to come to an adverse finding, the test report would form valid and legal documents so as to adjudge the dispute in either way. It is not understood that when the samples were drawn by Revenue in the presence of the appellant and sent to the chemical examiner for testing, then why the results of the same were not provided to the assesse. There is virtually no evidence worth upholding, produced by the Revenue so as to conclude that what was cleared by the appellants during the period in question was not Native Starch but was Modified Starch. The Native Starches cleared by the appellants were in fact Native and not Modified Starch, their clearance value cannot be added in the clearance value of Modified Starch, in which case, the clearance value of Modified Starch would remain within the exemption limit of small-scale exemption notification - demand of duty set aside - penalty set aside. Appeal allowed - decided in favor of appellant.
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