TaxTMI 
TaxTMI 
2010 (8) TMI 348
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....med the demand of duty to a reduced extent against the assessee and imposed on them equal amount of penalty. The demand of duty as raised in the show-cause notice and confirmed in the impugned order is consequential to classification of the said goods under SH 2108.99 of the CETA schedule coupled with its valuation under Section 4A of the Act. The assessee had classified the goods under SH 1905.90 of the said schedule attracting 'nil' rate of duty, which was rejected by the adjudicating authority, which classified the goods as noted above. 2. Before us, the whole case centers around the classification dispute. According to the assessee, the goods are not liable to be classified under a residuary entry like 21.08 of the CETA schedule unless classification under pre-existing specific entries of the Tariff is ruled out. In the present case, it is contended that, both in the show-cause notice and in the order-in-original, there was no attempt to examine classifiability of the goods under Chapters covering edible preparations. What was done was the exercise of classifying the goods straightaway under the residuary entry, 21.08, and, that too, by heavily relying on Explanatory No....
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....aded time-bar against a major part of the demand of duty. 4. It is further pointed out that the appellant has, by way of alternative classification, contended that the 'Bakery Improvers' based on vegetable oils (mentioned in Annexure 'A' to the show-cause notice) may be classified under Heading 1508.90 and other 'Bakery Improvers' based on wheat/Soya flour (mentioned in Annexure 'B' to the show-cause notice) may be classified under Heading 11.01. This alternative claim is based on a judgment of this Tribunal vide Helios Food Additives (P) Ltd. v. CCE, Pune-II - 2006 (204) E.L.T. 279 (Tri. - Mumbai) wherein certain vegetable oil/fat-based cake improvers were held to be 'bakery shortenings' classifiable under Heading 15.08 and certain flour-based bread 'improvers were held to be 'products of milling industry' classifiable under Heading 11.01. Learned counsel submits that the Tribunal's decision in Helios Food Additives case (supra) was accepted by the department and that, the goods considered for classification in that case being admittedly similar exactly to the goods in question in the instant case, the said decision of the Tribunal is liable to be followed as a binding pre....
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....tainable. 8. We have given careful consideration to the submissions. Case law cited by the learned counsel and the learned consultant will be discussed as and when the context demands. We would like to proceed issue-wise. (a) Whether the HSN Explanatory Notes are reliable in the facts of this case and, if not, whether there is still a case surviving for the Revenue? The rival entries considered by the lower authority are Heading 1905.90 and Heading 2108.99. The learned counsel for the appellant has argued that Heading 19.05 of the CETA schedule was not aligned with the corresponding HSN Heading during the period of dispute. He has similarly argued that Heading 21.08 of the CETA schedule was not aligned with Heading 21.06 of the HSN as claimed by the Revenue. Tariff Heading 19.05 as it stood during the period of dispute reads as under : "19.05 Bread, pastry, cakes, biscuits and other backers' wares, whether or not containing cocoa, communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products 'Biscuits : . ' 1905.11 -- In or ....
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....astry falling under Tariff sub-heading 1905.20 might get covered under the residuary sub-heading 1905.90 of HSN Heading 19.05. In other words, the classification under Tariff heading 19.05 cannot be said to be aligned with the classification under HSN heading 19.05. According to the Revenue, Tariff Heading 21.08 is aligned with HSN Heading 21.06 inasmuch as the general description of goods against these headings reads in comparable terms, one reading "edible preparations, not elsewhere specified or included" and the other reading "food preparations not elsewhere specified or included". Here, again, we reproduce the two headings: "21.08 Edible preparations, not elsewhere specified or included 2108.10 - Preparations for Lemonades or other Beverages intended for use in the manufacture of Aerated water 16% 2108.20 - Sharbat 16% 2108.30 - Prasad or Prasadam Nil 2108.40 - Sterilised or Pasteurised Miltone - Other : Nil 2108.91 -- Not bearing a brand name Nil 2108.99 -- Other 16%" HSN Heading : "21.06 Food preparations not elsewhere specified or inclu....
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.... ingredients of bakers' wares, were not to be classified as any bakers' wares under Heading 19.05. In order to fix a place for bakery improvers under Heading 21.08, the Revenue, in the show-cause notice, relied on certain Explanatory Notes to HSN Heading 21.06. As per such Explanatory Notes, Heading 21.06 covered preparations consisting wholly or partly of food stuff, used in the making of beverages or food preparations for human consumption and the heading also included preparations consisting of mixtures of chemicals with food stuffs for incorporation in food preparation either as ingredients or to improve some of their characteristics. Relying on these Explanatory Notes, the show-cause notice alleged that the bakery improvers were essentially food stuffs mixed or blended with chemicals so that the resulting products could be incorporated in bakers' wares so as to improve the various characteristics of these final products of bakers. Thus, by and large, the show-cause notice relied on HSN Explanatory Notes not only to rule out the applicability of Heading 19.05 but also to classify the subject-goods under Heading 21.08 (SH 2108.99). The reliance placed on HSN Explanatory Notes to....
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....cation cannot bind this Tribunal. The issue is accordingly held against the appellant. (c) Whether the appellant is entitled to claim classification of the goods under a third entry at this stage? This issue is also squarely covered by a decision of the Hon'ble Supreme Court vide Warner Hindustan Ltd. v Collector, 1999 (113) E.L.T. 24 (S.C.). In the said case, the assessee wanted to classify their products as ayurvedic medicines under SH 3003.30, the original authority classified them as 'P or P' medicines under SH 3003.19, the first appellate authority classified the goods under SH 3003.30 as claimed by the assessee and, on an appeal filed by the department, this Tribunal classified the goods as confectionary under Heading 17.04. The civil appeal filed by the assessee was allowed by the apex court holding that it was not permissible for the Tribunal to consider a case laid for the first time in appeal and that the only course open to the department was to issue a fresh show-cause notice if otherwise permissible in law proposing classification of the goods under heading 17.04. It appears, the case law cited by the learned consultant is apposite to the ....
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....ld be the correct classification of the goods? We have already stated adequate reasons as to why the decision of the Commissioner is not sustainable in law. The reasons stated by us hereinbefore would call for a remand of the classification dispute to the Commissioner who must duly decide the classification of the goods on the basis of the records without reference to anything contained in the HSN. Needless to say that the assessee should be given a reasonable opportunity of being heard. (e) Are the goods liable to be assessed under Section 4 or under Section 4A? It needs to be mentioned that this issue will be relevant only in the event of classification of the goods under SH 2108.99. Hence this issue will also have to be addressed by the Commissioner. Both sides have relied on case law in this context also. The learned consultant for the Revenue has claimed support from Jayanti Foods Processing (P) Ltd. v. Commissioner - 2007 (215) E.L.T. 327 (S.C). Interestingly, certain observations contained in this judgment of the apex court have been relied on by the learned counsel also. The learned consultant has relied on this judgment in support of his....