TaxTMI 
TaxTMI 
2009 (2) TMI 693
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the period from April 2005 to December, 2005) were issued to them, proposing to classify the said product (Tea Time Puff) under CETH 1905.11 (1st SCN) and 1905.90.20 (2nd SCN), and demanding the resultant duty alleged to have been evaded. Interest and penalty provisions were also invoked. 2. Both the SCNs were decided by the Assistant Commissioner of Central Excise (ACCE), Tollygunj Division vide his Order-in-Original No. AC/Tolly/ Kol-V/No. 3/2007 dated 30-3-2007. His discussions and findings in the said order are as under : The allegation is mainly based on statement dated 31-3-2005 of Sri Sikharesh Saha, Manager Operations under Section 14 of Central Excise Act, 1944. Being the key person in operations, his statement holds great significance in the matter of production. In that statement dated 31-3-2005 while replying to a specific question on the manufacturing process of "Tea Time Puff" and the raw material used in such production, he narrated that :- "Basic raw materials - Flour, Margarine, Water, Salt & Sugar. The dough is first made putting flour, water and salt. Then that was chilled. After 45 minutes rest the same laminated with margarine using sheeter machine.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....no formal order on the issue of classification (in the Order portion), though in both the SCNs, the first formal proposal/charge was to classify the product under CETH 1905.12 (1st SCN)/1905.90.20 (2nd SCN). 5. Being aggrieved, the said assessee preferred an appeal (along with Stay Petition) on 9-7-2007 on the following grounds of appeal. I. The dispute is with regard to classification of tea time puff, which according to the appellants cannot be categorized as "biscuits". The item has got a number of layers baked and joined together. It is actually an indigenous product, which has a long history and is locally known as "khari" or "khasta" and is available and produced all over the country. It is an original native Indian product and is consumed widely by the poor and middle class as a substitute to biscuits. The production process and ingredients used in the manufacture of "Tea Time Puff" is exactly similar to that used in the manufacture of patties, except for the filling used in patties as stated above. It has got nexus with patties but not with biscuits. Hence, they are correctly classifiable as patties and not biscuits. II. The Ld. AC failed to appreciate that the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Tea Time Puff is almost same of manufacturing 'biscuit' having basic ingredients of flour, water, salt, margarine, lemon juice etc. The dough is made, cooled and the baking is done twice for 15 minutes duration and at the temperature of 230° C (degree centigrade) as mentioned in the book "Modern Cookery" (Vol-2, 3rd Edition written by Thungam E. Phillip) widely followed by the trade. Part-Ill: The Appellant has shown the 'Tea Time Puff' as "Other Bakers' Ware" under S.H. No. 1905.90.90, knowingly to evade the duty of excise while there is scope of showing the same as there is no separate Sub Heading of "Other Bakers' Ware" Biscuit is also bakers' ware. So, proper classification shall be under the head of 'biscuit'. The appellant themselves in their ground of Appeal mentioned that "Tea Time Puff" is nothing but Khari or Khasta. In the market parlance also, Khari and Khasta are termed and consumed as 'biscuit'. Mere giving a sophisticated name viz. 'tea time puff' can in no way be termed as patties. 8. Next hearing was held on 12-12-2007 before my predecessor. Shri N.N. Ghosh Supdt. and Shri B. Hembram Inspector appeared for the Department and stated that the process of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts agreed that the ingredients of the impugned product are essentially the same as those for biscuits and cookies, except that biscuits/cookies have more calorific value (more butter/dry fruit e.g. raisin etc.). Samples of biscuits and cookies were submitted. The appellants also said that though they were initially calling it "Puff" but later on they have checked up the practice in other parts of the country and have accordingly renamed it as "Khari" which is in common use. They gave a printout. They also submitted copies of some invoices from other Commissionerates where similar goods are being classified under Heading 190590 at NIL rate. Both sides agreed that the impugned product is similar to patties in that both are layered and ingredients are similar, except that the major dissimilarity is that there is no filling. The deptt. officers gave written submissions including extract from the "Modern Cookery" book and said the production process of "Khara Biscuits" as given at Sl. No. 139 therein is similar to impugned goods and hence they should be classified as biscuits. They were asked to give one copy to the party for their comments. They were also asked to give the clearance d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....omponents used in the manufacture of biscuits are same as is used in 'Tea Time Puff'. In the both cases dough is made, cooled and baking is done for 15 minutes at the temperature of 230-240 degree centigrade. The process of cooling and baking is repeated in both the cases. When process of manufacture of the impugned product is similar to that of biscuits, it is nothing but a kind of biscuit irrespective of it being made of layered puff and as such, it is classifiable against the heading Biscuit under earlier Sub heading 1905.11 and under New Sub-heading as 1905.90.20. 13. The relevant extract from the book "Modern Cookery" by Thangam Philip, as produced by the Department, is as under :- 14. The printout of "khari" given by the appellants during the said PH is as under : 15. In addition, they had given some invoices on perusal of which it is seen that vide invoice no. 25203 dated 1-8-2008 and 25148 dated 1-8-2008 (read with the annexures thereto) M/s. Monginis Foods Mumbai have cleared goods described as "Khari" under the category of "Other bakery" which has been classified u/h 1905.90.90 and no excise duty has been paid on the same. 16. As mentioned above, a cop....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able on such Tea Time Puff manufactured by the appellants. The classification of the product may kindly be considered accordingly. Khari * Khari is an indigenous Bakery Product unlike Biscuit or Cookies, which is of foreign origin. * Under Trade Usage, Khari is distinctly identified as a separate category from Biscuits. * Khari tastes distinctly different from Biscuits and has a totally different mouth feel. * Customers and general public identify Khari as a distinct product category. * Traditionally and by trade usage, Khari has been identified as an extension of Puff or Bread (like bread sticks) used by common or low-income group people as a snack. * Khari has never been identified as a biscuit although the consumption pattern of biscuit is same like Khari. * It is largely manufactured by cottage and micro industry in the unorganised sector. * The raw materials used for the manufacture of Khari are like any other Bakery product with Wheat Flour and Shortening (Vegetable Fat) being the major ingredients. * The manufacturing process is different compared to Biscuits inasmuch as Khari is a puff product without any filling while b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alt. Same 2. Add water and lemon juice and knead to a smooth dough. Form dough by adding ice and iced water only. Lemon juice is not used 3. Keep dough covered with wet cloth for 20-25 minutes Dough is sheeted, laminated with shortening and kept in Cooler at temperature less than or equal to 5 degrees for 30 minutes. Dough is not covered with wet cloth. Instead kept in Cooler after lamination. 4. Roll the dough as thin as possible into a rectangular shape. Dough is sheeted again and folded and again kept in Cooler for another 30 minutes. Dough is not rolled thin but sheeted again and kept in Cooler. 5. Cream and fat is evenly spread over the dough. Dough is sheeted to final thickness and cut into rectangular sizes. Cream and fats are not applied at this stage of processing. 6. Cut into 3 pieces lengthwise. The centre piece should be broader than the side pieces. Not done. This process is not followed in Switz 7. Pull and roll the side pieces into a pencil shape, rolling one inside the other. Not done. This process is not followed in Switz 8. Place on the centre portion and roll again Not done Thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itable for pharmaceutical use, sealing wafers, rice paper and similar products - Biscuits : 1905.11 -- In or in relation to the manufacture of which any process is ordinarily carried on with the aid of power 16% 1905.19 -- Other Nil 1905.20 - Cakes and pastry 16% - Waffles and wafers : 1905.31 -- Coated with chocolate or containing chocolate 16% 1905.39 -- Other 16% 1905.90 - Other Nil In the above structure, the appellants are contending for 1905.90 as "other bakers' ware" and the department wants to classify under 1905.11 as "biscuits". 19.2 On adoption of the 8-digit tariff w.e.f. 28-2-2005, the said heading became as under (which is relevant to a part of the period covered by the first SCN; and the entire period covered by the second which was from April, 2005 to December, 2005) : Tariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 1905 Bread, pastry, cakes, biscuits and other bakers, wares, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lling under chapter sub-heading 1905.90. There is no such sub-heading in Central Excise Tariff Act, 1985 under the description of "other bakers ware". Biscuit is also a "bakers ware". For biscuit, there is only two subheading prescribed in the said Tariff Act, 1985. One is for the kind of biscuit which is ordinarily carried on with the aid of power (1905.11) and the other is for the biscuit manufactured without the aid of power (1905.19). Undoubtedly, the said assessee manufactured the "Tea Time Puff" with the aid of power. And sub-heading 1905.90 is for waffles and wafers, the process of manufacturing of which is quite different from that of biscuit. 20.2 On a very careful consideration, I find myself totally unable to agree with the adjudicating authority's above interpretation of the tariff (as marked above in bold) that there is no such sub-heading i.e. 1905.90 under the description of "other bakers wares" or that 1905.90 is for waffles and wafers. As the tariff structure of that time shown in para 19.1 of this order makes clear, the correct understanding of the tariff (and this is regardless of where the impugned product may go) is as has rightly been explained by the party....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid note was modified as under : Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "- -", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-". Where the description of an article or group of articles is preceded by "---" or "----", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or "- -". A careful reading and application of the above notes makes it clear that the tabular arrangement shown in para 20.4 is the correct interpretation. The interpretation of the Heading 1905 in the new tariff will be similar. 20.6 It is, therefore, clear (with reference to earlier tariff) that out of the various products mentioned in the main Heading 19.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sustainable since the term "other bakers wares" does appear in the main heading and the only place it can fall is 1905.90 ! 20.8 Therefore, it is clear that if the impugned product (tea time puff) is not a biscuit, then it can only go under 1905.90 [since it is obviously not "cakes and pastry" or "waffles and wafers"]. 20.9 The new tariff is to be understood in a similar manner with the only difference being that instead of two levels of categorisation i.e single and double dash, the new tariff has a categorisation at 4 levels. 21. The next question therefore is : is the impugned product "biscuit" for the purpose of the said tariff entries ? 22. I find that as per the rules for the interpretation of the tariff, classification has to be determined according to the terms of the headings and any relevant section or chapter notes and if 'such headings' or notes do not otherwise require then according to the provisions contained in the further rules from Rule 2 onwards. In this case, I find that no section or chapter notes are relevant, nor have any been pressed in service by either side. Insofar as the headings themselves are concerned, there is a specific heading only for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in Collector of Central Excise v. Fusebase Eltoto Ltd. - 1993 (67) E.L.T. 30 (S.C.), the Hon'ble Supreme Court held as under (emphasis respectfully added by me) : 7. The Collector (Appeals) upheld the above quoted findings of the Assistant Collector. The Tribunal did not touch the question as to how the product called "broadcast television receiver set" is identified by the class or section of people dealing with or using the product. That is the test to be followed when the relevant notifications do not contain any definition of the products. The identity of an article is associated with its primary function and utility. The names of certain products have functional association in the mind of the consumers. There is a mental association in the mind of the consumer in respect of certain products keeping in view the utility of the product and also the reputation the name of the product has acquired in the market and among the consumers. "Broadcast television receiver sets" and the "projection television sets" are two entirely different products and the consumers in this country, as at present, do not identify these two as one and the same product. When you go to the market to b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mercial sense. Biscuit as is commonly understood in trade is certainly the kind of product(s) shown at image DDD. When someone says "biscuit", the mental picture that forms is like the image DDD and not like the image BBB. 28. The appellants have produced an internet printout (page 7) [page 824] wherein similar layered products are referred to as puff or khari. It is significant that the top left side there lists out some categories where biscuits and khari are separately listed. On the other hand, the Department has produced no evidence (in fact it is not even an argument in the impugned order) that the impugned product is understood in the popular or commercial sense as "biscuit". 29. I also note that the department has nowhere commented upon or responded to the appellants, emphasis on the fact that what makes their product different from biscuits, and similar to patties, is that their product is a layered product. On a careful consideration, I find this to be a relevant and valid argument. 30. The department has relied heavily upon the argument that the ingredients of biscuits on the one hand and that of tea time puff on the other, are the same as also is the manufactur....