2014 (10) TMI 269 - AT - Customs

Court upholds Bakery Shortening classification under CTH 1517 over 1516, denies duty exemption claim

Shree Gopal Vanaspati Ltd. Versus CC. (ICD) New Delhi

The court upheld the decision of the Commissioner (Appeals) in classifying Bakery Shortening under Chapter heading 1517 instead of 1516, as per the HSN ... Classification - import of Bakery Shortening - reclassification of the goods from CTH 1516 to CTH 1517 - Held that:- As shortenings are specifically mentioned in explanatory notes to T.H.15.17 and these are in the nature of mixtures and preparations of animal or vegetable fats or oils, these are covered under 15.17 and hence not eligible for exemption under Notification No.4/2005-CE dated 1.2.2004 - Shortenings have a tenderizing effect in the finished product and often aid in the manipulation of doughs. In addition to modifying the mouth feel or texture, they often add flavour of their own and tend to round off harsh notes in some of the spice flavours - it is evident that shortenings are rightly classifiable under heading 15.17. From the detailed material, it also comes out that fats and oils are further worked up by way of emulsification texturation to cause changes in the basic nature to make a product which is tender in nature. Fats and oils are essential ingredients in nearly all bakery products. Actually common fats used in bakery product are lard, beef fats and hydrogenated vegetable oils - No valid ground to intenfere in the findings recorded by Commissioner (Appeals) - Decided against assessee. Issues:Classification of imported goods under Customs Tariff, Burden of proof in reclassification, Applicability of notifications for duty exemption, Interpretation of HSN explanatory notes, Technical classification of bakery shortening.Classification of Imported Goods under Customs Tariff:The appellant imported Bakery Shortening and classified it under Chapter heading 15162091, seeking exemption from Additional duty under Notification No. 4/2005. However, the classification was disputed by the department, which claimed the goods should be classified under CTH 15179010. The Commissioner (Appeals) upheld the reclassification, stating that Bakery Shortening falls under CTH 1517, specifically mentioned in the HSN explanatory notes.Burden of Proof in Reclassification:The appellant argued that the department failed to provide evidence justifying the reclassification from CTH 1516 to CTH 1517. They contended that the goods did not fall under CTH 1517 as they were not further prepared and did not match the description of Margarine or edible mixtures mentioned under CTH 1517.Applicability of Notifications for Duty Exemption:The appellant claimed exemption from Customs duty under various notifications, including one dated 1.3.2006 and another dated 12.5.2000 under the Free Trade Agreement with Sri Lanka. The department argued that the goods were not eligible for exemption as they fell under CTH 1517, as per the HSN explanatory notes.Interpretation of HSN Explanatory Notes:The department referred to the HSN explanatory notes to support the classification of Bakery Shortening under CTH 1517. The notes clarified that products falling under CTH 1517 are mixtures or preparations of fats or oils and are not further prepared, which aligns with the nature of Bakery Shortening.Technical Classification of Bakery Shortening:The technical nature of Bakery Shortening was discussed, highlighting its composition and characteristics. Bakery Shortening is used to impart texture and plasticity to baked products, with specific requirements for flavour, colour, and consistency. The process of texturization and hydrogenation was explained, emphasizing the preparation of Bakery Shortening from fats and oils.The judgment concluded that Bakery Shortening, being a mixture of fats and oils, was rightly classified under CTH 1517 as per the technical material presented. The findings of the Commissioner (Appeals) were upheld, noting that the imported goods matched the description of shortenings under CTH 1517. The judgment rejected the appeal, emphasizing the correct classification of Bakery Shortening under the Customs Tariff.