2013 (11) TMI 779 - AT - Central Excise

Product classification under Central Excise Tariff Act upheld by Tribunal, Revenue appeal rejected

The Tribunal concluded that the product should be classified under Chapter 11 of the Central Excise Tariff Act, 1985, following the precedent set in a ... Classification of Goods - Chapter 11 OR Chapter 35 - Assessee manufactured various kinds starch – Cleared the goods at Nil rate of Duty - Held that:- Following RIDDHI SIDDHI GLUCO BIOLS LTD. Versus COMMR. OF C. EX., BELGAUM [2011 (4) TMI 970 - CESTAT, BANGALORE] - the product i.e. Maize Starch would merit classification under Chapter 11 - Modified starches may be distinguished from unmodified starches of Chapter 11 on the basis of changes in their properties - different physical and chemical properties distinguish modified starches of Chapter Heading 3505 from native starches of Chapter 11 - unless these parameters are ascertained on test, it cannot be conclusively found as to whether the impugned goods are correctly classifiable under Chapter 11 of the Tariff or Chapter Heading 3505 of the Tariff. Commercially an item is considered as modified starch only if the parameters such as matching with the IS specifications for modified starches - The use depends on the type and extent of modification - Most of the starch derivatives (modified starches) can be distinguished by physical and chemical methods and with instrumental analytical techniques – Decided Against Revenue. Issues Involved:1. Classification of the product manufactured by the respondent.2. Determination of whether the product should be classified under Chapter 11 or Chapter 35 of the Central Excise Tariff Act, 1985.3. Examination of the use of chemicals in the product and its impact on classification.4. Consideration of previous tribunal decisions and expert opinions on similar issues.Detailed Analysis:1. Classification of the Product:The primary issue in this case is the classification of the product manufactured by the respondent. The respondent classified the product under Chapter 11 of the Central Excise Tariff Act, 1985, which pertains to starches and attracts a Nil rate of duty. The Revenue, however, contends that the product should be classified under Chapter 35, which covers modified starches, due to the use of certain chemicals in the manufacturing process.2. Determination of Appropriate Chapter:The Revenue argued that the use of chemicals like Potassium Permanganate, Sulphur, Borax, Sodium Metabisulphate, and Soda Ash in the manufacturing process results in the production of modified starch, which should be classified under Chapter 35. The respondent, however, maintained that their product is correctly classified under Chapter 11. The Tribunal had to decide which chapter the product falls under based on its properties and the manufacturing process.3. Use of Chemicals and Impact on Classification:The Revenue's submission emphasized that the use of chemicals imparts bleaching, sterilization, and brightening effects, differentiating the product from native starch. The Tribunal noted that the adjudicating authority did not consider the actual user of the product or the parameters and use of chemicals in arriving at the classification. The Tribunal also referred to the McGraw-Hill Encyclopedia of Science & Technology and HSN explanatory notes, which distinguish modified starches from native starches based on physical and chemical changes.4. Previous Tribunal Decisions and Expert Opinions:The Tribunal considered the decision in the case of Riddhi Siddhi Gluco Biols Ltd, which involved a similar issue and concluded that maize starch should be classified under Chapter 11. The Tribunal also reviewed the decision in the case of Anil Products Ltd, which supported classification under Chapter 35. However, the Tribunal found that the decision in Riddhi Siddhi Gluco Biols Ltd was more recent and provided a detailed analysis of the properties and classification of starches.The Tribunal noted that the Commissioner had not critically examined the expert opinions furnished by the respondent or conducted empirical tests to determine the properties of the product. The Tribunal emphasized the need for proper testing and examination of the product's properties to arrive at a conclusive classification.Conclusion:The Tribunal concluded that the product manufactured by the respondent should be classified under Chapter 11, following the decision in the case of Riddhi Siddhi Gluco Biols Ltd. The Tribunal found that the adjudicating authority's order was correct, legal, and did not suffer from any infirmity. The appeal by the Revenue was rejected, and the classification under Chapter 11 was upheld.Operative Portion:The appeal is rejected, and the classification of the product under Chapter 11 is confirmed. The order pronounced in Court.