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M/s. Pepsico India Holdings Pvt Ltd. Dr. TSR Murli, Director (Technology) Pradip Jain, Chief Financial Manager, Deepak Mathur, Director (Legal) , Rajesh Sharma, Partha Gangopadhyay Versus Commissioner of Central Excise And Service Tax, Chandigarh-II

2015 (9) TMI 1207 - CESTAT NEW DELHI

Classification of mixtures of spices - whether under Chapter 9 of the Central Excise Tariff as claimed by the appellant or under Chapter 21 as stated by the Department - Held that:- The conclusion of the Original Authority is not substantiated to the effect that how such addition of certain chemicals or additives has taken away the essential character of the spice mix. The predominant and the critical character of the mix is derived from the spices only. The addition of additives and chemicals f .....

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n the field. The Spice Board clearly indicates the garlic and tamarind as Indian spices. Hence, the addition of these items if at all cannot be a consideration for excluding the classification for spice mixtures under Chapter 9. Having closely examined the scope of entry under Heading No.2103 and the scope of Chapter 9 of the Central Excise Tariff, we come to the conclusion that the spice mixtures produced by the appellants are to be classified under Chapter 9 and not under Heading No.21. - Deci .....

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India Holdings Pvt. Ltd. The other 5 appeals are by individuals and their appeals are against imposition of penalties. As the issue involved is same in all these appeals, the matter is taken-up together for decision. The issue involved, in brief, is as below: 2. The main appellant is engaged in the manufacture of various namkeens and potato chips with the different flavours. In order to give various flavours to these products, the appellant procures various spices from the market and make spice .....

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used in various types of namkeens and potato chips, etc. marketed by them. The short question involved is the classification of such mixtures of spices whether under Chapter 9 of the Central Excise Tariff as claimed by the appellant or under Chapter 21 as stated by the Department. 3. Heard both the sides and perused the appeal records and written submissions. 4. Ld. Counsel for the appellant, Shri B.L. Narsimhan pleaded that the spice mixtures they make out of the various ingredients of spices a .....

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above) provided the resulting mixtures retain the essential character of the goods of those headings. 5. Otherwise such mixtures are not classifiable under Chapter 9 and will be classifiable under Heading No.2103. He also drew our attention to the supplementary notes (2) and (3) of Chapter 9 to reinforce his point. The HSN Explanatory Notes also stipulate in similar lines for classification of mixed spices with added substances of other chapters. It is mentioned that they will be classified unde .....

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of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter 9." 6. Ld. Authorised Representative reiterating the findings in the order-in-original of the ld. Commissioner stated that the basic principles for determination of classification of the mixtures under Chapter 9 or under Heading No.2109 is that" the retention of their essential character even after the addition of materials of other Chapt .....

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did not agree with the said affidavits and concluded that spice mixtures have not retained their essential character as new spice mix with a definite taste totally different from original taste is manufactured for a specific use. On this finding of the Original Authority, the ld. Counsel for the appellant strongly pleaded that there is no two set of spice mixtures in the course of manufacture of namkeens. There is no clear finding by the Original Authority for discounting the affidavits filed b .....

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nces along with the spices and hence, the classification of the resultant mixture was sought to be excluded from Chapter 9. However, the findings are not clear as to the nature of such substances and how the essential character of the spice mix is lost on addition of the other substances. It is clear from the Chapter Note under Chapter 9 that mixtures of two or more of the spices (Heading No.0904 to 0910) ought to be classified under Heading No.0910 even if they contain other substances. The onl .....

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new spice mixture with a distinct flavour has emerged. It would appear that the conclusion of the ld. Commissioner is based on the wrong appreciation of facts. It is a fact that we are dealing with mixture of spices. Such mixtures will have an essential character not necessarily that of single ingredient spice but of combination of such spices as per their proportion. Even if the additional materials are added what is required is that these mixtures retain their essential character of the variou .....

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has taken away the essential character of the spice mix. The predominant and the critical character of the mix is derived from the spices only. The addition of additives and chemicals for whatever proportion has not taken away the essential character of the spice mix in its flavour, aroma, etc. There is no concrete evidence or discussion in the finding of the Original Authority to that effect. 9. Board's Circular No.205/39/96-CX dated 30.04.1996 also dealt with the issue. Relevant extracts .....

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