Commercial identity controls classification of milk masala as an edible preparation, not edible nuts, after processing

A processed mixture sold as milk masala was classified by its commercial identity, composition and market use rather than by the fact that nuts formed the major ingredient. Because grinding and mixing with other ingredients gave it a distinct name, character and use, it no longer retained the identity of edible nuts and could not be classified under Chapter 8. The product fell within the description of an edible preparation under Chapter 21, sub-heading 2107.91. The contention that no manufacture occurred also failed, as the process created a new commodity with a different commercial identity; the exemption claim under Notification No. 29/86-C.E. therefore did not survive.

---

---

Issues: Classification of Everest brand Milk Masala under sub-heading 0801.10 as edible fruit and nuts, or under sub-heading 2107.91 as edible preparations.

Analysis: The product was examined on its commercial identity, composition, and manner of sale. Though nuts formed the major component, the product was ground with other ingredients and was known in the market as milk masala. On that basis, it had acquired a distinct name, character, and use, and had ceased to retain the identity of edible nuts. Rule 2(b) did not assist the claim for Chapter 8 classification because the product was not marketed or known as edible nuts. The product also answered the description of an edible preparation under Chapter 21 and fell in the residuary sub-heading 2107.91. The plea based on absence of manufacture under Section 2(f) failed because mixing and grinding brought into existence a new commodity with a different commercial identity.

Conclusion: The correct classification was held to be sub-heading 2107.91, and the claim for classification under sub-heading 0801.10 with exemption under Notification No. 29/86-C.E. failed.

Final Conclusion: The product was held to be classifiable as an edible preparation under Chapter 21, and the appeal was rejected.

Ratio Decidendi: Where a processed mixture is commercially known by a distinct name and has lost the identity of its constituent materials, classification must follow its market identity and the appropriate residuary or specific heading applicable to the new commodity.

---