Tribunal Confirms Wafer Biscuits Classification, Dismisses Revenue's Appeal on Chocolate Wafer Products Reclassification.

The Tribunal upheld the classification of the products as wafer biscuits under Chapter 1905.90, rejecting the Revenue's appeal to classify them as chocolate wafer products. The Tribunal found that the chocolate cream did not meet the criteria for "Chocolate in any form" under Chapter 1803.00, aligning with the Appellate Authority's decision. The reliance on trade parlance and consumer perception further supported this classification. The Tribunal dismissed the Revenue's arguments regarding the applicability of HSN guidelines over ISI specifications, emphasizing that the substantial cocoa content and labeling did not warrant reclassification. The appeal was consequently rejected.

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Issues Involved:
1. Classification of products containing chocolate cream.
2. Applicability of HSN guidelines versus ISI specifications.
3. Relevance of chemical composition in classification.
4. Impact of product labeling and trade parlance on classification.

Summary:

1. Classification of Products Containing Chocolate Cream:
The primary issue was whether the products (Chekkers Choco 40 P, Chekkers Fly Choco, Chekkers Choco 640 P, and Chekkers Choco ATC) should be classified as wafer biscuits or chocolate wafer products. The Revenue argued that since the wafers contained chocolate cream, they should be classified u/s Chapter 1905.31. However, the Appellate Authority held that the chocolate cream did not qualify as "Chocolate in any form" u/s Chapter 1803.00 but was covered as other food preparation containing cocoa u/s Chapter 1804.00, thus classifying the wafers u/s Chapter 1905.90.

2. Applicability of HSN Guidelines versus ISI Specifications:
The Revenue contended that the Central Excise Tariff Act, 1985, harmonized on the lines of HSN, should be followed for classification disputes, as confirmed by the Supreme Court in CCE, Shillong v. Wood Craft Product Ltd. The Appellate Authority's reliance on ISI specifications and the Prevention of Food Adulteration Act was deemed misplaced since these guidelines were not aligned with the HSN.

3. Relevance of Chemical Composition in Classification:
The Appellate Authority relied on a Chemical Examiner Test Report, which described the chocolate cream as a brown pasty mass containing 7.9% cocoa by weight. The Authority concluded that this did not qualify as chocolate. However, the Tribunal found this view erroneous, noting that the HSN definition of chocolate does not prescribe a fixed percentage of cocoa. The presence of substantial cocoa content and other ingredients typical of chocolate preparation supported the classification of the cream as chocolate.

4. Impact of Product Labeling and Trade Parlance on Classification:
The Appellate Authority argued that labeling the product as "Chocolate Cream" did not automatically classify it as a chocolate wafer. The Tribunal, however, noted that the presence of chocolate in the cream and its labeling were consistent with the product's nature. The Supreme Court's trade parlance test, as applied in CCE v. Fusebase Eltoto Ltd., supported this view, indicating that consumer perception and product utility play a role in classification.

Conclusion:
The Tribunal found no valid grounds in the Revenue's appeal to reclassify the wafer biscuits as chocolate products. The classification of the biscuits wafer u/s Chapter 1905.90 was upheld, and the appeal was consequently rejected.

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