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Aachi Masala Foods P. Ltd. [formerly known as 'Naveen Products] Versus Commissioner of Central Excise, Chennai-II

2016 (9) TMI 225 - CESTAT CHENNAI

Classification - mixed spices (masala powder) - whether to be classified under Chapter 9 or under Chapter 2103 of CETA'1985 - period involved is from 1.4.2010 to 30.9.2014 - Held that:- by following this Bench order in appellant's own case reported in [2015 (6) TMI 1014 - CESTAT CHENNAI] where the classification dispute was extensively for an earlier period and held that mixtures of spices with other substances (masala powder) manufactured and cleared under various brand names by the appellants .....

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For the Respondent ORDER All these batch of appeals filed by two appellants M/s. Aachi Masala Foods P. Ltd. and M/s. Nazareth Foods P. Ltd. arise out of common Order-in-Original No. 4 to 11/2015 dt. 31.3.2015 passed by Commissioner of Central Excise, Chennai-II. Since the issue is common in these appeals and lies in a narrow compass, with the consent of both sides, after dispensing with requirement of predeposit, the appeals are taken up for hearing and disposal. Stay applications are disposed. .....

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e is for the subsequent period i.e. 1.4.2010 to 30.9.2014. 4. Ld. A.R reiterates the impugned order. 5. We have carefully considered the submissions of both sides and perused the records. 6. We find that 1st appellant M/s.Aachi Foods (P) Ltd.[formerly known as Naveen Products] is engaged in trading of various food/edible preparations manufactured and supplied to them by two manufacturing units namely M/s.Nazareth Foods Pvt. Ltd. (2nd appellant) and another firm M/s.Benny Products. The second app .....

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ground that the said goods were not 'spices or mixtures' thereof falling under CET Chapter 9 but were classifiable only under Chapter 21. The proceedings initiated by issuance of various SCNs for the period April 2010 to September 2010 culminated in passing of adjudication order dt. 31.3.2015 impugned in these appeals. 7. We find that this Bench vide Final Order No.41820-41839/2015 dt. 11.6.2015 in appellants' own case has dealt with the classification dispute extensively for an earl .....

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cided in this case is whether the products namely Sambar powder, rasam powder, garam masala, chana masala and various other curry powders manufactured by the appellants are classifiable under chapter heading 0904 to 0910 as spices or under chapter heading 2103.9040. All the appellants are manufacturers of various masala powders only they have given in different names. (i) The first appellant Eastern Condiments Pvt. Ltd. in appeal No. E/709/2009 are manufacturer of 13 itemsviz., Meat masala, samb .....

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22 itemsthe items under dispute are viz., Meat masala, sambar masala, Biriyani masala, rasam powder, pickle masala, vegetable masalaetc, and the period involved is January 2004 to July 2008. They are not contestingthe classification of Bajjibondaand payasam mix (at sl.No. 24 & 27). (iv) The appellant M/s. Avitaa Food Products in appeals E/638, E/299 & 300/2011 are the manufacturers of 36 items by and large same as the above appellants. M/s. Arumuga Consumer Care are manufacturer of 14 it .....

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tes and various citations of High Courts and Tribunal s decisions etc. On the other hand, the Revenue contended that these products are rightly classifiable under chapter 2103as mixed condiments and mixed seasonings and heavily placed their submissions that classification should be based on the usage of the product and contended that once the spices are mixed, they loose their identity and the question of predominance of the processing of spices does not arise and also the revenues view that the .....

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oasted, 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 hea .....

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sential character of the goods of those headings. Otherwise such mixtures are not classified in this Chapter; those constituting mixed condiments of mixed seasonings are classified in heading No. 21.03. Supplementary Note (3) reads as under. 3. The addition of other substances to spices shall not affect their inclusion in spices provided the resulting mixtures retain the essential character of spices and spices also include products commonly known as masalas . HSN Explanatory note for chapter 9 .....

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heir classification provided the resulting mixtures retain the essential character of the goods of those headings. Otherwise such mixtures are not classified in this Chapter; those constituting mixed condiments of mixed seasonings are classified in heading No. 21.03. These products may be whole or in crushed or powdered form General. As regards the classification of mixtures of products of headings 09.04 to 09.10 see Note 1 to this Chapter. Under the provisions of this Note, the addition of othe .....

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tc) (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 mo .....

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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 theChapter 21of CET covers miscellaneous edible preparations and the chapter note one to chapter 21 excludes spices and other products of heading 0904 to 0910. Heading 2103 covers sauces and preparations therefor, mixed condiments and mixed seasonings etc.,and chapter heading 2106 covers food preparations not elsewhere specified. 20. Further, it i .....

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e and supplementary note 3 read with HSN explanatory note it is evident that mixtures of various spices with or without addition of other items are classifiable under chapter 0904 to 0910 as it retains its essential character. On perusal of the ingredients and the test reports of various masalas, we find that the percentage of spices content is 95% to 96%and the remaining are other materials. Further, we find that Board s Circular dated 15.04.1996 and 30.04.96 also clarified on the issue of clas .....

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sion is reproduced as under:- 9. On careful perusal of the cartons of the products in question we find that these products are mixtures of spices along with other ingredients. The ingredients in the products in question are combination of the spices and some more ingredients. It is seen that in addition to spices, the ingredients include mainly asafoedita , rock salt , dry mango etc. It is the submission of the learned Jt. CDR that by addition of these ingredients the essential character of the .....

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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 mer .....

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um, despite this, it was directed that compounded asafoedita will be asafoedita, as the essential character is of asafoedita and not wheat flour or edible gum. The analogy would apply in this case also as it is undisputed that 95% to 96% of the ingredients of the products in question are spices. Learned Jt. CDR placed heavy reliance on the decision of the Honble Supreme Court in the case of A.P. Products (supra) to submit that grinding and mixing of various spices and condiments in certain prop .....

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t was deciding the issue specifically as regards the inclusion in the schedule to the AP sales tax act. In our considered view the ratio laid down by the Honble Supreme Court was in respect of the facts and circumstances, of the case before them and may not be applicable in this case. 10. It is a settled law that in cases of classification chapter notes of HSN can be considered as guide for arriving at a correct classification. The chapter notes of chapter 9 of HSN read as under : 1. Mixtures o .....

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ixtures retain the essential character of the goods of those headings. Otherwise such mixtures are not classified in this Chapter; those constituting 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 deviati .....

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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 powder, vangibath mix, instant sarnbar mix, vangibath powder, sambar powder, instant bisibelebath, rasam powder, bisibelebath masala, mix spiced chutney powder, curry powder, pickle .....

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assifying these products under the subheading 2108.90. Trade interests have, however, argued that these products are merely additives for different food items and not readily consumable products through the simple processes of cooking, frying, boiling or adding with water, oil or milk. Hence it is claimed that the products in question cannot be classified under sub-heading 2108.90 of CET. 3. The matter has been examined. Spices are specifically covered under Chapter 9 of Central Excise Tariff an .....

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rich in essential oils and aromatic principles and which because of their characteristic taste are mainly used as condiments. Spices (including mixed spices) containing added substances of other Chapters, but themselves having flavouring or seasoning properties, remain in this Chapter provided the added quantity does not affect the essential character of the mixture as a spice, (Vol.1 Page 61). Condiments /Seasonings Mixed condiments and mixed seasonings containing spices differ from spices and .....

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fications 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 Head .....

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ing properties would merit classification under the specific entry of spices in Chapter 9 or Heading 21.03 of CET. However, products which in addition to spices, flavouring and seasoning substances also contain, other foodstuffs in such quantity that the products as such or after processing are capable of being used as food preparations for human consumption in their own right will go out of Chapter 9 or Heading 21.03 of CET and merit classification in the residuary Heading 21.08 provided they a .....

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r instant Kharabhath mix consisting of dal or rice flakes or sooji along with spices and other substances and which can be made up into food preparations by simply mixing and boiling/cooking in water would merit classification as miscellaneous edible preparations of Heading 2108 of Central Excise Tariff. 5. In view of the above, Board desires that classification of each product be decided on merit having regard to discussions hereinabove. It can be noticed from the above reproduced Circular of C .....

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n the case before us, the products in question there is no evidence that, these products are capable of being used as food preparation for human consumption in their own right. It is well settled law that if Revenue wants to reclassify the products, then it has to lead evidence. 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 20 .....

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venue 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 directly. They are required to be u .....

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law that the classification of a product is decided on the question of market understanding of the product. The respondents herein had lead evidences before the lower authorities as regards the market understanding of the product. The respondent had produced before the lower authority, certificates given by reputed consumers of that products and of Institute of Hotel Management, Catering Technology & Applied Nutrition, so as to indicate that the masalas manufactured by the respondents, are o .....

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ed by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidenc .....

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e 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 w .....

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he act being same all over India, uniformity in classification is a must. The departments understanding of the product in question is clearly borne out from Circular dt. 30-4-1996 (as reproduced at Paragraph 11 hereinabove) the understanding of the department in the current case also seems to be an identical as of the Board. Our attention was drawn by the ld. Counsel, to the classification of the product in question in various Commissionerates. The respondents under the RTI Act, sought informati .....

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tured by other assessee situated in different Commissionerates. The question of uniformity taxation is of prime importance. We find that the Hon ble Supreme Court in the case of Damodar J. Malpani v. Collector of Central Excise as reported at [2002 (146) E.L.T. 483 (S.C.)] 16. As regards the other products like Rasam Powder, Chaat Masala, Tea Masala, we find that the reasoning given by us in respect of all other products in question as indicated in the above paragraphs would apply squarely. Ld. .....

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idered view that the decision of the Tribunal in the case of MTR Products (supra) may not apply to the facts and circumstances of the case before us. Accordingly, we are of the considered opinion that the impugned order of the adjudicating authority is correct and does not suffer from any infirmity in respect of the classification of the products, except for jiralu . 17. The impugned order is upheld to the extent of all other products and as regards classification of product Jiralu we remand the .....

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the case P.C. Duraisamy Vs. CCE (supra)and the Division Bench decision of the Hon ble 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 Hon ble 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 Financ .....

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tracting NIL rate of duty. On the other hand, products like instant Sambar Mix, Instant Rasam Mix, Instant spiced bhath Mix, (Bisibelebath) or Instant Kharabhath Mix consisting of Dal or Rice flakes or Sooji along with spices and other substances and which can be made up into preparations by simply mixing and boiling/cooking in water would merit classification as miscellaneous edible preparations under sub-heading No. 2108.90 of Central Excise Tariff attracting 20% duty. I submit that regarding .....

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ded that the writ petition is pre-mature and should be dismissed. It is further contended that the petitioner instead of availing alternative remedies should not have approach this court. 7. It is true that where alternative remedies available, ordinarily the High Court should not entertain the matter under Article 226. Similarly even if the High Court has entertained the writ petition seeking to quash the show cause notice, it is open to the person concerned to file show cause so that the matte .....

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it relates to articles included 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 Hon ble High Court of Madras in the case of Sakthi Masala Pvt. Ltd. (supra) upheld the judgment of the Single Member .....

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n the issue. 21. Therefore, viewing from any angle, we do not find any legality or justification in the show - cause notices issued by the Revenue to the appellant - petitioner. In fact, such show - cause notices are nothing but an attempt made on the part of the Revenue, to nullify an order of this Court and giving different interpretation to the sa19. In view of our above categorical finding that the decision of this Court in W. P. No. 7029 to 1996 , which reached its finality , is binding on .....

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pellant - petitioner to reply to the same does not at all arise. When the products have undergone only a change in the English name , the Revenue, only to give a different interpretation to the order of this court in W. P. No. 7029 of 1996, wherein the Revenue has been given liberty to proceed against the appellant - petitioner it there is any other item manufactured by the petitioner, not coming within the aforesaid entry …. 20 . With regard to the other three products namely (1) Garlic .....

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h is highly condemnable. The ratios of the above both judgments of jurisdictional Hon ble High Court of Madras are squarely applicable to the present case. The products covered in the above High Court Order and the various items manufactured by the appellants 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 .....

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