Guar gum classification under Chapter 11 as milling industry product brought nil duty and cancelled the demand and penalties.

Guar gum manufactured on a job-work basis was analysed for tariff classification, with the key issue being whether it fell under Chapter 11 as a product of the milling industry or under Chapter 13. Later Tribunal decisions examining the scope of Chapter 13 and the earlier contrary view treated guar gum powder as classifiable under Chapter 11, attracting nil rate of duty. On that basis, the duty demand and penalties did not survive and were set aside in favour of the assessee.

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Issues: Whether guar gum manufactured by the assessee was classifiable under Chapter 11 of the Central Excise Tariff as a product of the milling industry attracting nil rate of duty, and whether the duty demand and penalties could survive on that basis.

Analysis: The activity of manufacturing guar gum on job-work basis was not in dispute, but the crucial question was classification. Earlier reliance on a decision placing guar gum under Chapter 13 was displaced by later Tribunal decisions which considered that ruling, examined the scope of Chapter 13, and held that guar gum powder falls under Chapter 11 as a product of the milling industry. Those later decisions treated the earlier view as not binding and followed the Chapter 11 classification with nil duty consequence.

Conclusion: Guar gum was held classifiable under Chapter 11 with nil rate of duty, and the confirmed duty demand and penalties were set aside in favour of the assessee.

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