TMI Blog2015 (2) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... . - Decided in favour of appellant with consequential relief - Appeal No. E/989/2005-Ex - INTERIM ORDER NO.182/2014 & FINAL ORDER NO.50425/2015 - Dated:- 18-2-2015 - MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) AND MR. MANMOHAN SINGH, MEMBER (TECHNICAL) For the Appellant: Shri K.K.Anand, Advocate, For the Respondent: Shri V.K.Srivastava, DR ORDER PER: ARCHANA WADHWA A short issue involved in the present appeal is as to whether the product i.e. Maize Starch Powder is classifiable under heading 11.03 as Maize Starch Powder, as contended by the assessee or the same is classifiable under heading 35.05, as held by the Revenge. 2. The Commissioner in his impugned order as also referred to the earlier order in original No.14/2004 dated 6.9.2004, wherein said product was held to be classifiable under 35.05. We find that the said order in original was appealed against, and their own appeal stands disposed of by the Tribunal as reported in 2011 (270) 291 (Tri.). Vide said decision, the Tribunal disposed of a number of appeals filed by the appellant wherein demand related to various periods were dropped. The period involved in the present appeal is falling in between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing process was duly available with the Chemical Examiner and the Adjudicating Authority. Therefore, while taking the decision he not only analyzed the product in detail and its manufacturing process but also referred the statements recorded, various technical literature made available to him. Based on description in HSN as well as its Notes he has gone on to support his findings. The opinion of Chemical Examiner who clearly had the benefit of manufacturing process and product description being made available to him was also available and which has been relied upon. Therefore, simply because the product could not be tested in the Chemical Lab cannot be a constraint in arriving at the correct conclusion regarding classification, when other relevant materials including statements of production manager, authorized signatory of the appellants and various buyers of the finished products whose classification is under consideration as evidence about the nature of the product are available on record and were duly considered in detail by the Ld. Commissioner. However to have clear idea, I feel it necessary to refer imported extracts of the statement of Shri B.V. Joshi production manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oiling. That with the process the gelatinizing capacity o MSP got reduced; that through the process the sizing of yarn would be smooth, as the viscosity was low. 9.2 In his further statement dated 21.05.2002 given before the Senior Intelligence Officer, DGCEI, Bangalore, in response to a question as to the different stages of manufacture and percentage of the ingredients used in the manufacture of different grades of Maize Starch Powder (MSP) he stated that Maize procured was cleaned and taken to steeping in the Vats; that the steeping was done at 50 deg. C with water having Sulphur Dioxide concentration of 0.2% in the water and for the period of 60 Hrs.; that the soluble protein and minerals in maize got absorbed in steeping water, which was further evaporated to get Corn Steep Liquor (CSL) and the CSL was sold to fermentation industries; that the steeped maize having moisture around 40% was wet milled/grinded in three stages; that in the first two stages Germ was separated and it was dried and packed and supplied to Oil Extraction Industries; that further the steeped maize was milled with third stage and further processed for fibre separation, by washing DSM screens, to sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ochlorite per 15 M3 of starch slurry, for 30 minutes, which yielded 5MTs of MSP; that for the manufacture of MSP Regular Textiles, to the Starch Slurry, they added 1Kg of Borex and 2Kgs. of sodium Metabisulphite per 15 M3 of starch slurry for 30 minutes which yielded 5MTs of MSP; that for the manufacture of MSP THIN BOILED STARCH (TBS) to 15 M3 of Starch Slurry they added 120 Litres of Hydrochloric Acid and retained for 60 Minutes and thereafter 60 Kgs. of Soda Ash was dissolved in water of 500 Litres and was added to neutralize the slurry; which yielded 5MT of MSP; that for manufacture of MSP VERY THIN BOILED STARCH (VTBS) to per 15 M3 of Starch Slurry they added 120 Litrs of Hydrochloric Acid and retained for 180 Minutes; that thereafter 60 Kgs. of Soda Ash was dissolved in the water of 500 Litre and was added to neutralize the Slurry, which yielded 5 MTs of MSP. Further he stated that y adding Hydrochloric Acid, they were reducing the viscosity of MSP (Special) as compared to that of Native Starch; that they used Tank No. 68C for manufacture of MSP viz. MSP REGULAR FOOD, MSP REGULAR PHARMA, MSP REGULAR TEXTILES, MSP THIN BOILED STARCH (TBS) AND MSP VERY THIN BOILED STARCH (VTBS) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated in their register were against the parameters mentioned in the said product specification sheet. 9.7 Extract of Statement of Shri Gururaj M. Ligade authorized signatory of M/s Ridhi Sidhi is given below which is self explanatory relating to manufacture of various grades of starch. To a specific query, as to whether they had brought to the notice of the Central Excise Department about the different grades of MSP and the manufacturing activity thereof, Shri Gururaj M. Ligade stated that even though the Maize Starch Powder manufactured by them were of different grades, for their purpose all of them were nothing but Maize Starch Powder only: that since they felt that all grades were Maize Starch Powder only, they had not made any declaration, separately in respect of each grade of MSP and accordingly, did not declare the manufacturing activity involved in the manufacture of different grades of MSP, nor the different varieties of MSP were declared to the Central Excise Department. Further, he stated that as per the provisions of Self Assessment Scheme, they had not filed copies of Invoices to the Central Excise Department, November, 1996 onwards. 7. It is, thus, clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 4) MSP TBS Hydrochloric Acid, Soda Ash 5) MSP Regular Textiles .Sodium Metabisulphate, Borax 34. I observe that the above grades of MSP are manufactured in separate batches according to the specific requirements of the various customers belonging to various industries like Food, Textile, Pharma, Paper etc. As per the version of the investigators, starch slurry is added with chemicals, Acids and oxidizing agents and further treated so as to obtain the desired grades of MSP which suits specific requirement of certain industry/use and that by this activity the starch is said to be converted into a modified starch and merits classification under Heading 35.02. As against this version of the investigators. Riddhi Siddhi contend that notwithstanding the addition of the chemicals and acids to the starch slurry, the items still remain as native starch and are not said to be modified so as to be classifiable under heading 35.02; that the items still merit classification under heading 112.03; that the adding of the chemicals is only to remove impurities and improve the quality of the product. The investigators are heavily relying on the chemical examiners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot suffice. Q:- Since there is no addition of acid in respect of MSP, regular pharma and MSP regular food, how do you call them as modified starch? A:- As oxidizing agents have been added and due to that procedure it is modified starch. Q- I suggest that Sodium rnetabisulphate, potassium permanganate and Sodium hypo chlorite are only for purification and not for modification of starch. Do you agree with this or not? A: I do not agree. Q:- I put it to you that all the 4 samples which are mentioned in the reply to letter dated 05- 06-2002 did not undergo any process of acid treatment or oxidization. Kindly clarify? A:- I do not agree. Q. Do you agree that the three items mentioned above are used as preservatives? A:- In this particular case along with potassium permanganate they are used as oxidising agents. From the above answers of the chemical examiner it is clear that the impugned items have undergone the acid/oxidizing treatment and the chemicals used therein are not merely preservatives as contended by Riddhi Siddhi. Further, the results as per the analytical reports of Riddhi Siddhi testify that the properties have changed after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhi Siddhi. I observe that the analytical reports, trade parlance, nomenclature used by the assessee, and the description given in HSN for modified starches supported by the opinion of the chemical examiner and certain authoritative text books referred to in the show cause notice are adequate to conclude that the starches in question are modified starches only. As regards the contention that MSP Paper grade is not included/discussed in the Show Cause Notice and that no information regarding this was furnished to the Chemical Examiner for his opinion on the same, the investigators have stated that MSP Paper grade stock was not available in stock on the day of the search and as such the same was not sent to the chemical examiner. Nevertheless, the test reports/analysis register shows the various parameters of the said variety, which indicates that the same was treated with potassium permanganate/Sodium Metabisulphate/Sodium Hipochlorite /Borax Hydrochloric acid depending upon the requirement of modification/customers and its physico chemical properties, had changed. Accordingly, I observe that on this basis, there is a proposal for the demand and consequently the said variety has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regular Food and MSP Regular Pharma, specifically either in the classification declaration or not maintaining separate folios in the RG-I daily stock account register or for that matter even preparing analysis reports and other documents for the parameters analyzed, cannot become the basis or the reason for alleging suppression or intention to evade payment of duty, particularly when there is no statutory requirement of disclosing such end use or for that matter maintaining separate folios for each variety or seven the alleged grade of the said product. 8. In this connection, I observe that the period covered in the notice is the period from 01-4-1998 to 31-12-2002. There is invocation of extended period of limitation. During this period, Riddhi Siddhi was required to file the classification declarations giving the correct classification of the goods manufactured by them and clear the goods accordingly. There was no requirement of a formal approval of the classification declaration by the concerned Central Excise authorities. It was, therefore, incumbent on the part of the assessee to make a complete and true disclosure of the facts relating to the goods manufactured by them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2011 (270) E.L.T. 291 (Tri-Bang.) as held by Member (Judicial) OR Whether modified Starch (claimed as Maize Starch Powder falling under chapter 11.03 by appellants) are to be classified under heading 3505.20 Member (Technical) after analysis of evidence on record after distinguishing the facts of Hon ble Tribunal s judgement as held by Member (Technical) and extended period is invokable. PER RAKESH KUMAR: 10. The appellant in their unit at Gokak Falls Road, Gokak, manufacture Maize Starch Powder and also other excisable products like liquid glucose, dextrose mono hydrate, Malto Dextrine, Hydrol, Corn Steep Liquid, etc., chargeable to central excise duty. The dispute in the present case is about classification of the Maize Starch Powder . While according to the department, this product is classifiable under sub-heading no.3505.20 as other modified starches , according to the appellant, this product is classifiable under sub-heading no.1103.00 as Maize Starch Powder . The period of dispute in the present case is from 1.1.2003 to 30.09.2003 and from 1.10.2003 to 31.03.2004. For this period, the Commissioner by the impugned order no.4/05-COMMR/311/05 adjudicated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the Bangalore Bench of the Tribunal and the Bangalore Bench vide Final Order dated 5.4.2011 reported in 2011 (270) ELT 291, after considering this issue in detail including the chemical examiner s opinion and HSN Explanatory Notes, had set aside the Commissioners order, that the order recorded by the Hon ble Member (Technical) is mainly based on the findings of the Commissioner in his order no.14/04 dated 6.9.2014, which has already been set aside, that from the perusal of the Tribunal s order dated 5.4.2011 and the Commissioner s order dated 6.9.2014, which had been set aside, it is clear that a sample of the goods, in question had been sent to the Chemical Examiner, CRCL for testing and the chemical examiner s opinion is not based on the actual testing of the sample as the laboratory did not have the equipment to test various properties of the modified starch, that taking this fact into consideration, the Tribunal in its judgment dated 5.4.2011 had set aside the Commissioner s order dated 6.9.2004, that when the present case is based on the same set of facts and the same opinion of the Chemical Examiner, it is the Tribunal s order dated 5.4.2011, which has to be fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch. However, in para-34 of this order, there is also clear finding that the Chemical Examiner in course of cross examination has stated that laboratory at Chennai, where the samples had been tested, did not have the facility to test whether it is modified starch and he has based his opinion on the technical literature of the product and by referring to some books on the subject. However, the Tribunal in its judgment dated 5.2.2005 has observed that as per the HSN Explanatory Notes of sub-heading no.3505, Modified Starch is distinguishable from unmodified starch of Chapter 11 on the basis of changes in their properties, for example, solution and gel clarity, tendency to cool or to crystallize, water binding capacity, freeze thaw, stability, gelatinization temperature, or peak viscosity and that it is the different physical and chemical property which distinguish the modified starch of heading no.3505 from the Native Starch of Chapter 11 and that unless these parameters are ascertained on testing, it cannot be concluded as to whether the impugned goods are Native Starch classifiable under Heading no.1103 or are Modified Starch classifiable under sub-heading no.3505.20. Since, admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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