TMI Blog2015 (6) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... ugappan, Adv.(for Avitaa and Arumuga), Shri N. Venkataraman, Sr. Counsel.,(for Eastern Condiments), Shri Harish Bindhumadhavan, Shri N. Viswanathan, Adv., (for Aachi Masala and Nazareth), Shri M.S. Srinivasa, Adv., (for Maami Foods) And Ms. Sridevi, Adv. For the Respondent : Shri M. Rammohan Rao, DC (AR) Appeal Nos. E/337/2008, E/40288/2014, E/Misc./42302/2013 E/227/2008 E/336/2008, E/40297 to 40301/20014, E/353 354/2010 and E/40380 40381/2014, E/638/2009 and E/299 300/2011, E/42108/2013 E/40992/2104 ORDER PER R. PERIASAMI All the 20 appeals are taken up together as the issues involved are identical in nature relating to classification dispute of mixed spices (masala powder) under Chapter 9 or under Chapter 2103. 2. The brief facts of the case are that all the six appellants are manufacturers of various spice powders and mixed spices which are commonly called as masalas and they classified the goods as mixed spices under Chapter 0910 9100 of CETA whereas the Department proposed to classify them under Chapter Heading 2103 9040 as mixed condiments and mixed seasonings under Chapter 21 of CETA, 1985. The adjudicating authorities, after followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ambu masala, thandoori masala, pav bhajji masala, garam masala, channa masala, chat masala, and kabab masala etc. M/s. Maami Foods P. Ltd. Appeal No. Demand Penalty Imposed Personal Penalty E/353 354/2011 Rs.54,07,127/- + ₹ 14,08,599/- Rs.53,98,404/- Rs.5,00,000/- E/40380 40381/2014354/2011 Rs.20,49,657/- + ₹ 31,94,830/- Rs.10,00,000/- IV. M/s. Avitaa Food Products They are the manufacturers of Turmeric powder, chilly powder, coriander powder, pepper powder, jeera powder, sambar powder, rasam powder, idly chilly powder, garam masala, biryani masala, puliyodharai powder, pav bhaji masala, vathal kulambu powder, lemon rice powder etc., M/s. Avitaa Food Products Appeal No. Demand Penalty Imposed Personal Penalty E/683/2009 Rs.1,28,21,049/- Rs.1,28,21,049/- Rs.3,00,000/- ₹ 4,25,001/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 of the Order-in-Original wherein the adjudicating authority in contrary to their submissions concluded as preparations and held that they lost their essential character of spices within the meaning of Chapter 9. and this finding is without any evidence and without any test report. He submits that in their products 97% of contents are spices. As per Chapter 9, mere addition of other ingredient does not take away the essential character of spices. He further submits that Chapter 21 covers only miscellaneous edible preparations not elsewhere specified in the Tariff. He submits that Chapter Heading 2103 covers only such edible preparations which are ready to eat and do not require any preparations. He further submits that the above decisions of the jurisdictional Honble High Court of Madras have attained finality and it is binding on the authorities and Tribunal. He also produced a copy of RTI query received from jurisdictional Assistant Commissioner of Erode confirming in writing that the decision of the Honble High Court has been accepted. He also submitted a RTI reply from Mumbai Commissionerate wherein the jurisdictional Commissioner has confirmed in writing vide letter dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that the Department has drawn the samples and also prepared the test memo but same were not tested and relied (page 25). That Commissioner in his order at para 8.1.3 at page 47 held that since these are mixture of spices, testing is not required. He further submits that they got the samples tested at a laboratory accredited by NABL on their own and the test report confirms that the products contained significant amount of spices. He relied on 3 Board circular dated 15.4.1996, 30.4.1996 and 30.10.1998. He submits that the none of their products contain any seasoning materials. 8. Regarding chukkumalli powder, he submits that it is essentially a coriander powder which is used to make a drink for relief of cough etc. He also submits that even if chukku malli is admitted as a drink they are exempted under Notification No. 3/2006 dated 1.3.2006 (Sl. No. 29). He relied on the decisions relied by the learned senior counsel. He also relied on denovo Order-in-Original dated 08.08.2000 passed by the Commissioner of Central Excise, Bangalore and the Tribunal in the case of MTR Distributors Pvt. Ltd. Vs. CCE, Bangalore 1999 (113) ELT 708, wherein he classified the goods under Chapter 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment has classified under Chaper 21039040. He relied on Chapter Note 1 of Chapter 9 which are relevant for classification of spices. As per Note 1(b) of Chapter 9 even the product having the mixtures of a heading falling under other chapters are classified under Chapter 9 as long as it retains the essential characteristics. He further submitted that there are two criteria applicable for classifying under Chapter 21. Firstly, addition of seasoning material which does not fall under Chapter 9 and secondly, after such addition, the product should lose its essential characteristics. Whereas, in the present case, there is no addition of any other seasonings. The departments only finding is that these are mixed condiments. It is the obligation of the Department to prove with evidence that the goods are classifiable under 2103. Since the appellants were under the bonafide belief and the goods are covered under Chapter 9 chargeable to nil rate of duty, the onus is on the department to prove otherwise. 11. He relied on paras 8.2 and 8.3 of the show-cause notice which are only general statement. No specific allegation has been made. He also submits that the decision of the Honble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Honble Supreme Court in the case of Srikumar Agencies Vs. CCE reported in 2008 (232) ELT 577 (SC) wherein the Honble Supreme Court held that any circular or any decision should not be relied without discussing the similarity of facts. He further submits that there is no estoppel in physical matters and since the circular never conveyed any decision, it is left to Tribunal to decide the issue afresh on merits without referring to any circular. He relied on the decisions in the case of McGaw Ravindra laboratories (India) Ltd. Vs. Union of India 1992 (60) ELT 71 and Orissa Cement Ltd. Vs. Superintendent, Customs and Central Excise - 1992 (61) ELT 256 (Ori). The decision of the Honble High Court of Madras relied by the appellants are purely masalas and there is no dispute on that. The Honble High Court has decided the issue based on the circular. 14. On the classification issue LD. AR submits that there is a thin line on what is spices and what is condiments. Spices are classifiable under Chapter 9, whereas, condiments and seasonings under chapter 2103. He argued that the classification of goods under Chapter 9 the headings are in sequentially arranged from raw mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issues independently that essentiality of the character means, even after the mixing of all spices together, it remains only as spices, it has not lost the essential character and it is not other way what the Department is trying to interpret. It is only a predominance of spices and it does not affect the essential characteristics of the mixture as a spice, whereas the Department chooses to interpret that each spices loses its essential character. Relied on the Supplementary Note 3 of Chapter 9, which was specifically introduced only for this purpose where the word masala has been disputed. The Chapter Note also clearly says, a mixture of product of any other chapter. He submits that the essential quality for classifying under Chapter 2103 should have a mixed seasoning and mixed condiments whereas it is absent in their products. They also submitted uniformity in taxation and judicial discipline should be maintained where the High Court and other Benches of the Tribunal have already decided the issue. 17. We have carefully examined the submissions made by both the sides and also perused the records. The issue to be decided in this case is whether the products namely Sambar pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not arise and also the revenues view that the products are commonly understood by the trader/consumer, are identified in the market as sambar powder, curry powder, masala power etc. and not as spice. 19. As regards the processes of manufacture of various mixtures of spices and its contents both the sides have no dispute. Those products are commonly called as masala powders, curry powders etc., in bulk or in retail packs of various quantity. The appellants receive various spices viz., chilly, turmeric and other edible ingredients which are roasted, cooled, pulverized and blended and packed. These are marketed in different names either sambar powder, rasam powder, curry masala or rice bath powder etc. We also find that these masala powders do contain other edible items such as salt, rice powder, dal powder and preservatives etc. These are not ready to use item i.e. instant mix but it is to be added while preparing the food. The relevant chapter note 1 of chapter 9 of CET is reproduced is as under : 1. Mixtures of the products of headings Nos. 09.04 to 09.10 are to be classified as follows : (a) Mixtures of two or more of the products of the same heading are to be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usk, dextrose, etc) (b) Food colourings (e.g. xantholpyll) (c) Products added to intensify or enhance the flavor of the spices (synergetics), such as sodium glutamate (d) Substances such as salt or chemical antioxidants added, usually in small quantity, to preserve the products and prolong their flavouring powers. From the above chapter notes and HSN explanatory notes it is evident that mixtures of spices are classifiable under chapter either 0904 to 0910. The supplementary note to chapter 9 of CETA make it more clear that addition of other substances to the spices shall not affect the original characteristic of any spices. The HSN explanatory note to Chapter 9 clearly explains the classification of mixture or products of headings 0904 to 0910 and confirms that addition of other substances shall not affect their classification provided the resulting mixture retain the essential character of the goods falling in those headings. HSN explanatory note stipulates that the edible materials, dilutents, food colourings, salt or chemical antioxidants are only added in the mixtures as a base enhancing the colour or flavor or to preserve. 20. Further, we find the Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Jt. CDR is without any evidence. It is not brought on records that by addition of these ingredients the essential character of spices is not retained. It is seen that the revenue has relied upon the report of the Dy chief chemist, which is in itself not very clear. We find that the respondent during the hearing and the proceedings before the adjudicating authority, has always mentioned that the products in question had various different spices in powder form up to 96% of the total ingredients and other ingredients formed only 4% to 5% of the total ingredients. We find that the revenue has not disputed these contentions with any contrary evidence and hence the submissions of the learned Jt. CDR that the respondent has not submitted the percentages of the ingredients to arrive at the essential character of the products in question seems to be totally mis-placed. If the 96% of the total ingredients are spices then by mere addition of some quantity of other ingredients may not be sufficient to arrive at the conclusion, that by addition of these other ingredients the mixture of spices has not retained their essential character. We find that the reliance placed by the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituting mixed condiments of mixed seasonings are classified in heading No. 21.03. 2. This Chapter does not cover Cubed pepper (Piper cubeba) or other products of heading no. 12.11. It can be noticed that chapter note no. 3 of chapter 9 of CETA is almost same but for the inclusion of masala in the chapter heading no. 0903. This seems to be a marked deviation for the purposes of the classification in the Indian context. It is a common knowledge that the Indian cuisine includes mixtures of various spices that are commonly known as Masala The inclusive portion would cover in its ambit the products in question in this case as there is no contrary evidence led by revenue. 11. We further find that the Central Board of Excise and Customs vide Circular No. 205/39/96-CX, dt. 30-4-1996 were clearing doubts regarding the classification of Indian traditional convenience food mixes, masalas and condiments we may reproduced the same. Board has received representations from Indian Food Industries Association and others seeking clarification as regards the classification of various Indian traditional convenience food mixes, masalas, spices and condiments such as puliyougare p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onger the essential character of a spice within the meaning of Chapter-9 (Vol. 1 Page 158). 3.2 While the Explanatory Notes in HSN distinguish between spices on the one hand and mixed condiments and mixed seasonings on the other, the English Dictionary meanings and statutory, bodies dealing in quality specifications of spices, condiments and seasonings often use these words interchangeably. What is however emphasised in the literature on the subject is that the essential character of these substances is in their function, viz., to add flavour, aroma and pungency to various food preparations. 3.3 Chapter Notes 9(b) and 9(c) of Chapter 21 of CET no doubt give an indication of the type of preparations which are intended to be included in Heading 21.08 of CET. However, it must be remembered that Heading 21.08 is a residuary entry in Chapter 21 and the Rules for the interpretation of the Schedule require that the heading which provides the most specific description shall be preferred to headings providing a more general description. Further, Heading 21 in HSN excludes spices of Chapter 9. 4. Consequently, products which are predominantly mixtures of spices/condiments/seas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. Assessee cannot be asked to prove the negative. 12. We find that the Tribunal in the case of Commissioner of Central Excise Commissioner of Central Ex. Cus., Guntur v. Crane Betel Nut Powder Works, as reported at 2007 (208) E.L.T. 376 (Tri. Bang.) was seized with an identical issue of classification whether Mouth freshner will get covered under Chapter Heading No.09.03 of Central Excise Tariff or under Chapter 21 of the Central Excise Tariff Act. The Bench held as under :- We have carefully considered the submissions and have perused both the orders. The finding given by the Commissioner is very exhaustive. He has analyzed every aspect of the matter and also in the light of the HSN Explanatory notes. The Revenue wants the product to be classified under Chapter Heading 21.03, which description deals only with sauces and ketchups. The item does not fit into the said items described in Chapter Heading 21. The learned JDR relied on the judgment rendered in the case of MTR Food Products v. CCE, Bangalore - 2000 (118) E.L.T. 392 (T), which deals with Sambhar mix/Rasam mix, which has been held to be classifiable under Chapter Heading 21.04. These items are not consumed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such attempt was made. As stated, the evidence led in this case conclusively goes to show that Nylon Twine manufactured by the assessee has been treated as a kind of Nylon Yarn. Hence, it is to be classified under Item 18 of the Act. The Revenue has failed to establish the contrary. We would do well to remember the guidelines laid down by this Court in Dunlop India Ltd. v. Union of India [1983 (13) E.L.T. 1566 (S.C.) = (AIR 1977 SC 597 - at page 607], institution, wherein it was stated :- when an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. (Emphasis supplied) 14. It is also to be noted that the Revenues Endeavour in this case is to seek classification of the products in question under Chapter heading No. 21.03/21.08. The main plank of arguments of the Revenue is that these are all mixed condiments and mixed seasoning. In the matter of taxability of the product under the Central Excise Tariff Act, the act being same all over India, uniformity in classification is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of product Jiralu we remand the matter back to the adjudicating authority for limited purpose of considering the evidences and then arriving at a conclusion. Both the appeals are disposed off accordingly. The above Tribunal decision squarely applicable to the facts of the present case. We also find from the RTI Reply , the Mumbai Commissionerate had confirmed that the said Tribunal order has been accepted and no appeal has been filed by the Revenue. 21. Further, we find that the jurisdictional Honble High Court of Madras in the case P.C. Duraisamy Vs. CCE (supra) and the Division Bench decision of the Honble High Court of Madras in the case of Sakthi Masala Pvt. Ltd. (supra) squashed the SCN issued to the appellants on the identical issue of classification of various masala powder. The relevant portion of the judgment of the Honble High Court in the case of P.C. Duraisamy Vs. CCE (supra) is reproduced as under:- 5. In the counter affidavit, it is also further submitted that - in the meantime, the Ministry of Finance, Department of Revenue in their letter F. No. 16/4/95-CXI, dated 30-4-1996 (Circular No. 205/39/96-CX) have given certain instructions on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 0903.00 is quashed. It is however made clear that if there is any other item manufactured by the petitioner not coming within the aforesaid entry, it would be open to the opposite party to proceed in accordance with law. Subject to the aforesaid observation, the writ petition is disposed of without any order as to costs. The Division Bench of the Honble High Court of Madras in the case of Sakthi Masala Pvt. Ltd. (supra) upheld the judgment of the Single Member Bench rendered above in the case of P.C. Duraisamy Vs. CCE (supra), the relevant portion which is reproduced as under:- 18. Even with regard to the products in question, we are able to find that there is change in English as follows: a. Dhal Rice Powder Dhal Mix b. Chilli Chutney Powder Idly Dosa Powder c. Tamarind Rice Powder Tamarind Mix d. Garlic Rice Powder Garlic Mix e Lemon Rice Powder Lemon Mix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in all these appeals are identical in nature except for change in names. The Hon ble jurisdictional High Court of Madras decisions are binding on the Revenue and the Tribunal. The Revenue relying on the Hon ble High Court of AP Products and other decisions in the case of MTR Food products are distinguishable and not applicable to the facts of the present case in view of the jurisdictional High Court decision referred above. 22. By respectfully following the judgments of the Hon ble High Court of Madras above and the Tribunal s decision in the case of NarendraKumar Co., (supra), we hold the products of various masalas manufactured and cleared by the appellants as listed out in the respective OIO s are rightly classifiable under chapter heading 0904 to 0910 and not under chapter 2103.90 of CET. 23. In view of the foregoing discussions, we hold that all the goods i.e. mixtures of spices with other substances (masala powder) manufactured and cleared under various brand names by the appellants, i) M/s. Eastern Condiments Pvt. Ltd., Aachi Masala Foods Pvt. Ltd., M/s. S. Nazareth Foods Pvt. Ltd., M/s. Avitaa Foods Products, M/s. Arumuga Consumer Care are rightly classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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