TMI Blog2006 (3) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... ping the products stabilize during its storage and transport and its shelf life. The product stabilizers are emulsifier and maintains consistency of the products. They are not adding additional quality to the products. We find that this is squarely decided in case of Nestle India Limited v. CCE, [ 2001 (3) TMI 157 - CEGAT, COURT NO. IV, NEW DELHI] by this Tribunal. In the said decision, it is made clear that the milk product will go to the Heading 19.01 only if it contains other ingredients not permitted by Heading 04.01 to 04.04. We find that in the present case no other ingredients except permissible stabilizers have been added. Addition of stabilizers is essential to maintain the consistency and shelf life of the products. HSN Explanatory Note also qualifies the addition of stabilizers without changing its classification from Chapter 4 to 19. The ratio of the decisions relied upon by the Revenue has no relevance to the present dispute. We, therefore, classify the products SSM and MSM under sub-heading 0404.90 of the Central Excise Tariff. The other two products i.e. coffee creamer and cream packed are also classified under sub-heading 0404.904. There is no reason given in the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t classifiable under Chapter 4 as dairy products because of addition of stabilizers. Similar dispute was also raised on the classification of the products coffee creamer and cream packed. After detailed investigation show cause notice was issued to the appellants M/s. Amrit Foods alleging that they knew that their products contained the basic ingredients necessary for manufacture ice cream and they had undertaken some processes required for preparation of ice cream mix. They also knew that the ratio between ingredients, chosen by them was keeping in view the para meters of ice cream. These facts were not declared by the appellants to prevent the department from classifying their products under Chapter 21 or 19 where in ice-cream and preparation based on milk products are respectively classifiable. On the basis of information furnished by the appellants, it was found that they have evaded duty of Rs. 1,27,39,935/- and have contravened the provisions of Rule 9(1) by removal of excisable goods without payment of duty, Rule 52A by removal of dutiable goods without cover of invoices, Rule 53 by not accounting production and clearances of the excisable goods in the statutory record i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner in the adjudication order has classified these products under sub-heading 1901.19 on the ground that in terms of description of ice cream available in the technical literature MSM and SSM are mixes/bases/preparations intended to be used as Frozen Desserts i.e. ice cream. It was argued that the process of manufacturing of these products was explained to the department during investigation as given at page 42 of the original paper book. For milk shake mix (MSM) and soft serve mix (SSM) raw milk is standardized, sugar and stabilizer are added. UHT processing at 140 to 160 bar is done. Aseptic filing is done at 25 C and storage is done from 0 C to 4 C. It was pleaded that the Commissioner has mainly gone by use of stabilizer holding that the stabilizer is used to maintain a uniform emulsion of oil in water throughout the shelf life and to improve the body and texture and to impart smoothness to the product as stated by Mr. P. Sree Sree in his statement. This conclusion of the Commissioner is not correct. Our attention was drawn to the Chapter Note 4 of the Chapter 4 which reads as under:- Heading No. 04.04 applies, inter alia, to butter milk, curdled milk, cream, yogurt, whey, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct remains within Heading 04.04 as sweetening agent such as sugar and glucose and skimmed milk powder only was added to the milk. Therefore the additions of stabilizers cannot take away these products from the purview of the Chapter 4 to Chapter 19. For classifying the products under Chapter 19 to make a food preparation of products falling under Heading 04.01 to 04.04, something more which is not permitted by Chapter Note 4 has to be added to make it a food preparation. But in this case no preparation other than those as mentioned under Chapter Note 4 of Chapter 4 has been added except the stabilizers which are permitted to keep consistency of the products during storage and transport and shelf life. Therefore, addition of stabilizers cannot take away the product from the Heading 04.04 to Heading 19.01. It was therefore argued that both the products SSM and MSM are correctly classifiable under Heading 04.04 of the Central Excise Tariff and that the demand confirmed by the Commissioner or the classification ordered under sub-heading 1901.19 is not sustainable. 7. They relied on the decision of this Tribunal in the case of Nestle India Limited v. CCE, New Delhi [2001 (132) E.L.T. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eep pigments and other compounds in emulsion form, or prevent the particles in a colloidal suspension from precipitating. Whereas emulsion is stated to be A stable mixture of two or more immiscible liquids held in suspension by small percentages of substances called emulsifiers. These are of two types: (1) Proteins or carbohydrate polymers which act by coating the surfaces of the dispersed fat or oil particles thus preventing them from coalescing; these are sometime called protective colloids. (2) Long-chain alcohols and fatty acids which are able to reduce the surface tension at the interface of the suspended particles because of the solubility properties of their molecules... A wide variety of food and industrial products are emulsions of one kind or another...All emulsions are comprised of a continuous phase and a disperse phase; in an oil-in-water (o/w) emulsion, such as milk, water is the continuous phase and butterfat (oil) the disperse phase; in a water-in-oil (w/o) emulsion, such as butter, free fat (from crushed fat globules) is the continuous phase and unbroken fat globules plus water droplets are the disperse phase. It was stated that the addition of stabilizers changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on Para 4 wherein it was held that, we find that there is some force in the arguments advanced on behalf of the department in ruling out the item under Heading 21.05. But at the same time we find that the Commissioner has not classified the item under sub-heading 19. In the facts and circumstances, we are of the view that the jurisdictional Assistant Commissioner has to classify the item under the appropriate sub-heading. (3) Dalmia Dairy Industries Ltd. v. CCE, 1989 (44) E.L.T. 164 (T). Reliance was placed on paras 11 and 12 wherein it was held that The appellants claim that their product is a product consisting of natural milk constituents, whether or not containing sweetening matter or flavoured or containing added fruit or cocoa. If we look into the Harmonized Commodity Description Coding System [Explanatory Notes pertaining to Chapter 4], we find that this Chapter specifically excludes food preparations based on dairy products and in particular those falling under Heading 19.01... The main object in the preparation of malt extract from the malt is to obtain an easily digestive extract rich in maltose and dextrins and having a pleasant taste and flavour. Malt extract can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and dextrose which is also sugar. There are only addition of stabilizers. The dispute of the department is that stabilizers are emulsifiers and these are changing the characteristics of the products and its body and texture and gives smoothness to the products. This finding of the Commissioner is based on reply to question No. 9 of the statement dated 26-7-2000 of Shri Mr. P. Sree Sree. The Revenue has strongly relied upon this statement in support of their contention. In addition to that, the Revenue has argued that ageing process is also being done which is for packed ice cream mix. We find that the appellants claim is that the stabilizers are added for keeping the products stabilize during its storage and transport and its shelf life. The product stabilizers are emulsifier and maintains consistency of the products. They are not adding additional quality to the products. We find that this is squarely decided in case of Nestle India Limited v. CCE, New Delhi (supra) by this Tribunal. In the said decision, it is made clear that the milk product will go to the Heading 19.01 only if it contains other ingredients not permitted by Heading 04.01 to 04.04. We find that in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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