2014 (12) TMI 33 - AT - Central Excise

Tribunal rules in favor of appellant on product classification under CETH 2106 90 99, emphasizing scientific evidence

The Tribunal ruled in favor of the appellant, classifying the products under CETH 2106 90 99 as 'food preparations not elsewhere specified or included,' ... Classification of goods - protein concentrates and textured protein substances - food preparations not elsewhere specified or included - essential character - predominant composition test - role of expert evidence - burden of proof in classification matters - HSN Explanatory Notes - benefit of concessional notification as ready to eat packaged food - interpretation of tariff headingsClassification of goods - protein concentrates and textured protein substances - food preparations not elsewhere specified or included - predominant composition test - HSN Explanatory Notes - role of expert evidence - burden of proof in classification matters - essential character - Whether the products 'Threptin' and 'Prorich' diskettes are classifiable as protein concentrates or textured protein substances under CETH 2106 10 00 or as food preparations under CETH 2106 90 99, and consequently entitled to concessional duty as ready to eat packaged food. - HELD THAT: - The Tribunal examined composition, manufacturing process, expert opinions and technical literature. The product labels show protein content of about 30% by weight while carbohydrates constitute the bulk (approximately 48-58%), so protein does not predominate by weight. Technical literature and the expert reports produced by the appellant indicate that products described as protein concentrates normally contain a substantially higher protein content (around 65-70% or more), and textured proteins require specialised processes such as spinning or extrusion to develop meat-like texture; those processes are not employed here. The HSN Explanatory Notes distinguish protein concentrates/textured proteins (products obtained by elimination or by texturing processes) from mixed ready-to-eat preparations. The Revenue did not produce contrary expert evidence or otherwise discharge the burden of proof in classification matters to show that these products are understood in common parlance as protein concentrates or textured proteins. The products are consumed as ready-to-eat nutritional supplements and their essential character and predominant usage align with classification as 'food preparations not elsewhere specified or included' under CETH 2106 90 99. Applying settled principles that (i) the burden of proof in classification rests on the Revenue, and (ii) essential character and common understanding are relevant, the Tribunal concluded the impugned classification under CETH 2106 10 00 was unsustainable.The products are classifiable under CETH 2106 90 99 and not under CETH 2106 10 00; the appellant is entitled to the benefit of Notification No. 3/2006 as ready-to-eat packaged food.Final Conclusion: Appeals allowed; impugned orders reclassifying the products as protein concentrates/textured protein substances set aside and classification under CETH 2106 90 99 affirmed, with consequential relief in accordance with law. Issues: Classification of products under Central Excise Tariff Heading (CETH) 2106 10 00 as 'protein concentrates and textured protein substances' or under CETH 2106 90 99 as 'food preparations not elsewhere specified or included' for excise duty purposes.Analysis:1. Common Issue in Appeals: The judgment involves seven appeals arising from Orders-in-Original passed by the Commissioner of Central Excise, Customs & Service Tax, Raigad Commissionerate, all concerning the classification of products manufactured by M/s. Raptakos Brett & Co. Ltd. as either 'protein concentrates and textured protein substances' under CETH 2106 10 00 or as 'food preparations not elsewhere specified or included' under CETH 2106 90 99 for excise duty purposes.2. Appellant's Position: The appellant argued that their products, 'Threptin' and 'Prorich' diskettes, do not qualify as protein concentrates as the protein content is only 30% by weight, with carbohydrates being predominant. Expert opinions from Professor S.S. Lele and Professor Dr. Jagadish Sarvotham Pai supported this view, emphasizing that protein concentrates typically contain over 70% protein. Technical literature also indicated that products with less than 70% protein do not meet the criteria for protein concentrates.3. Appellant's Submissions: The appellant highlighted that their manufacturing process does not involve the elimination of constituents of defatted soyabean flour, a requirement for protein concentrates as per HSN Explanatory Notes. They argued that the products are consumed directly and not used in food preparation, further supporting classification as 'food preparations not elsewhere specified or included.'4. Revenue's Argument: The Revenue contended that the products were marketed as protein supplements and should be classified as protein concentrates based on their high protein content, despite the appellant's claims of low protein percentage. They emphasized the essential character of the products as protein supplements.5. Judgment and Analysis: The Tribunal analyzed the expert opinions, technical literature, and the manufacturing process to determine the appropriate classification. It noted that for a product to be considered a protein concentrate, a minimum of 50% protein content by weight is required, which was not met in this case. The absence of spinning and extruding processes also indicated that the products did not qualify as textured protein substances.6. Legal Principles: Citing the burden of proof on the Revenue in classification matters, the Tribunal referenced previous court decisions emphasizing functional utility and predominant usage for classification. Applying these principles, the Tribunal ruled in favor of the appellant, classifying the products under CETH 2106 90 99 as 'food preparations not elsewhere specified or included,' entitling them to the benefit of a concessional excise duty notification.7. Conclusion: The Tribunal allowed the appeals, providing consequential relief to the appellant in accordance with the law. The judgment highlighted the importance of scientific and technical evidence in classification disputes and upheld the appellant's classification arguments based on expert opinions, technical literature, and the functional utility of the products.