Tribunal rules Bourbon Cream not chocolate due to vegetable fat; reclassified under residuary CET item

The Tribunal ruled that Bourbon Cream, containing vegetable fat not permitted in ISI specifications for chocolates, did not qualify as chocolate. It classified Bourbon Cream under the residuary item 68 CET, overturning the previous classification as chocolates under Tariff Item No. 1A(4) of the Central Excise Tariff.

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Issues: Classification of Bourbon Cream under Central Excise Tariff Item No. 1A(4) as chocolates, Appeal against Collector (Appeals) order, Interpretation of ISI specifications for chocolates, Presence of cocoa powder in Bourbon Cream, Use of vegetable fat in Bourbon Cream, Classification of Bourbon Cream under Central Excise Tariff Item No. 68, Compliance with Indian Standard specification for chocolates.

Classification of Bourbon Cream under Central Excise Tariff Item No. 1A(4) as chocolates:
The appeal challenged the classification of Bourbon Cream under Tariff Item No. 1A(4) of the Central Excise Tariff as chocolates by the Assistant Collector of Central Excise. The appellants argued that Bourbon Cream should not be considered chocolate as the cream was not a fully manufactured product like chocolates. They contended that the cream was merely a mix of ingredients and did not undergo a transformative process to become chocolate. The Collector (Appeals) upheld the classification based on the presence of cocoa powder in Bourbon Cream, giving it a chocolate taste, and the market recognition of the product as 'Chocolate Cream Biscuits.' The appellants further argued that Bourbon Cream did not meet the ISI specifications for chocolates as it contained fat, which was not listed as an essential ingredient in the specifications.

Interpretation of ISI specifications for chocolates:
The appellants relied on the ISI specifications for chocolates to support their argument that Bourbon Cream should not be classified as chocolates. They highlighted that the essential ingredients specified in the ISI specifications did not include fat, which was present in the cream they manufactured. By referencing the definition of chocolate from the ISI Glossary of Terms Relating to Confectionery Industry, they emphasized the use of pure cocoa nib, cocoa butter, and sugar as key components of chocolate, none of which were exclusively found in their cream. This interpretation of the ISI specifications played a crucial role in the classification dispute.

Presence of cocoa powder in Bourbon Cream and use of vegetable fat:
The Department contended that Bourbon Cream contained cocoa powder and was used in Biscuits known as Chocolate Cream Biscuits in the market. However, the appellants presented evidence that the cream contained vegetable fat, not cocoa butter, which raised doubts about its classification as chocolate. The appellants' letter to the Superintendent of Central Excise stated that the product did not contain milk fat or cocoa butter but vanaspati, i.e., vegetable fat. This discrepancy in ingredients led to a closer examination of whether Bourbon Cream met the criteria set by the ISI specifications for chocolate.

Classification of Bourbon Cream under Central Excise Tariff Item No. 68:
After considering the arguments and evidence presented, the Tribunal ruled that Bourbon Cream, containing vegetable fat not permitted in the ISI specifications for chocolates, did not qualify as chocolate. The Tribunal referred to the McGraw-Hill Encyclopaedia of Science & Technology, noting that some confectioners and biscuit manufacturers used chocolate substitutes made with fats other than cocoa butter for economic reasons and product enhancement. Consequently, the Tribunal classified Bourbon Cream under the residuary item 68 CET, providing relief to the appellants and overturning the previous classification as chocolates under Tariff Item No. 1A(4) of the Central Excise Tariff.

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