2013 (11) TMI 783 - AT - Central Excise

Classification of Maize Starch Powder Upheld as Non-Modified Starch

The court upheld the classification of Maize Starch Powder (MSP) under Chapter heading 1103.00 as non-modified starch, rejecting the Revenue's claim for ... Classification of modified starch of Chapter 3505 and native starch as of Chapter 11 can only be made after proper chemical testing - Indian Standard of modified starches and native starch are available – Held that:- When the sample of the MSP manufactured by the assesse was not tested properly by keeping the Indian standards in mind, then there does not seem to be any irregularity on the part of adjudicating authority to get samples drawn and tested as per parameters given in Indian Standard, when such an exercise was done in the presence of officers of Central Excise - During subsequent testing of starch samples manufactured by the respondent and the cross examination of Dr. G.P. Sharma, the Chemical Examiner, it has clearly come out that the MSP starches manufactured by the assessee belong to category of native starches of CETH 1103.00 and not modified starches of 3505.90. Time-barred appeal - The adjudicatory authority has also dropped proceedings on the ground that extended period cannot be invoked in the case - Proceedings regarding demand of duty being time-barred, has not be questioned by the Revenue – Decided against Revenue. Issues:Classification of Maize Starch Powder (MSP) - Chapter heading 1103.00 vs. CETH 3505.90 as Modified StarchIssue 1: Classification of Maize Starch Powder (MSP)The appeals were filed by the Revenue challenging the classification of Maize Starch Powder (MSP) manufactured by the respondent under Chapter heading 1103.00 as non-modified Starch, while the show cause notice claimed classification under CETH 3505.90 as Modified Starch. The Revenue contended that the manufacturing process, end use, and chemical analysis indicated that the product should be classified as modified starch. Statements from company officials and chemical reports were presented to support this argument.Issue 2: Reliance on Test ReportsThe Revenue argued that the classification should be based on the test report dated 03.11.2003 by the Chemical Examiner, which concluded that the MSP could be considered as processed/modified starch. They emphasized that test reports from samples drawn during adjudication should be relied upon, not those from later stages. However, the respondent highlighted cross-examinations and chemical tests that revealed the MSP as native starch, not modified starch.Issue 3: Legal Standards for ClassificationThe judgment referred to the distinction between modified starches and unmodified starches based on specific properties such as solution clarity, gel stability, and water binding capacity. Proper chemical testing, as per Indian standards, is crucial for accurate classification. It was noted that the MSP samples manufactured by the respondent were found to belong to the category of native starches under Chapter heading 1103.00, not modified starches under 3505.90.Issue 4: Time-Barred DemandThe adjudicating authority dropped proceedings citing that the extended period could not be invoked in this case. The advocate for the respondent argued that the demand of duty being time-barred was not questioned by the Revenue in the appeal. The judgment upheld the decision of the adjudicating authority, stating that the order was legal, correct, and justified, leading to the rejection of the Revenue's appeal.This detailed analysis of the judgment addresses the classification of Maize Starch Powder, reliance on test reports, legal standards for classification, and the time-barred nature of the demand, providing a comprehensive overview of the issues involved in the case.