Chocolate-covered Biscuits: Classification under Heading 1905.90 upheld

The Tribunal determined that the product "Chocolate clubs" should be classified under heading 1905.90 as a preparation of biscuits covered in chocolate. Relying on precedent decisions, the Tribunal concluded that the treatment of biscuits with chocolate did not amount to manufacturing chocolate, thus falling under chapter heading 1905. The appeal was allowed in favor of the appellants, setting aside the lower authorities' classification under heading 1803.00.

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Issues:
Correct classification of the product "Chocolate clubs" under heading 1905.90 or 1803.00.

Analysis:
The appeal was filed against the order passed by the Commissioner (Appeals) in de novo proceedings after being remanded by the Tribunal. The dispute revolved around the classification of the product "Chocolate clubs" by the appellants under heading 1905.90, while the lower authorities classified it under heading 1803.00. The appellants argued that they were not manufacturing chocolate or biscuits but creating a composite product of "Chocolate covered biscuits," which should be classified under CETH No. 1905.90 as a preparation from biscuits. They contended that the treatment given to the purchased biscuits with chocolate did not amount to manufacturing. The lower authorities, however, held that the product fell under heading 1803.00 as it involved the use of cocoa and chocolate preparations, which are classified under Chapter 18 of the Central Excise Tariff.

The conflicting entries for classification were under heading 1905 and 1803. The Revenue argued that since the biscuits were covered with chocolate, they could not be considered biscuits falling under heading 1905, and instead, the product should be classified as chocolate under heading 1803. The Tribunal analyzed the entries and noted that the product in question was essentially biscuits covered by chocolate, making it a preparation of biscuits. As it did not fit under any specific subheading of chapter heading 1905, it was properly classified under heading 1905.90. The Tribunal cited precedent decisions, such as Nestle (India) Ltd. vs. CCE Mumbai and Little Star Foods Pvt Ltd. vs. CCE, Hyderabad, where similar products were classified under chapter 1905 regardless of the weight or value of chocolate preparation.

Based on the precedent decisions and the analysis of the conflicting entries, the Tribunal concluded that the product "Chocolate clubs" should be classified under heading 1905.90. Consequently, the impugned orders were set aside, and the appeal was allowed in favor of the appellants.

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