TaxTMI 
TaxTMI 
2011 (4) TMI 970
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....2008 dt. 6-5-2008 2,51,69,286 30,00,000 (u/r 25) 5. E/1106/2009 1-6-08 to 1-2-09 No. 11/2009 dt. 16-9-2009 1,49,80,450 15,00,000 (u/r 25) 2. The appellant-assessee M/s. Riddhi Siddhi Gluco Biols Ltd., Gokak (Riddhi Siddhi for short) are engaged in the manufacture of Maize Starch Powder (MSP) and other excisable products such as Liquid Glucose, Dextrose Monohydrate, Malto Dextrine, Hydrol, Maize Germ, Corn Steep Liquid, Maize and Gluten. Following searches conducted at the premises of manufacturers of starch across the country by the Directorate General Central Excise Intelligence, notices came to be issued, inter alia, to the assessee. The assessee had classified the different varieties of MSP under Chapter Sub-Heading (CSH) 11.03.11 of the Central Excise Tariff (Tariff, henceforth) and availed exemption applicable to such goods. Searches were conducted on intelligence that assessee manufactured modified starches and cleared them in the guise of native starch. After studying analytical reports maintained by the assessee in respect of different forms of starch it manufactured, detailed investigation involving the buyers of the assessee and as....
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....rches. 3. The Order-in-Original No. 35/2005, No. 5/2007, No. 3/2008 and No. 11/2009 disposed periodical show cause notices for the subsequent periods and followed the reasoning contained in Order-in-Original No. 14/2004. 4. Impugned orders are assailed before the Tribunal on various grounds. The department had been kept informed of all the relevant facts such as usage of raw materials, flow charts relating to manufacture and therefore, the charge of suppression of facts could not be validly raised and the demands were therefore barred by limitation. Similar demands raised in respect of M/s. Maize products, M/s. Gujarat Ambuja Exports Ltd. and M/s. Rajaram and Bros., had been dropped by the respective Commissioners and the Revenue had filed appeals before the Tribunal. It is submitted that the products in question were classifiable under Chapter Heading 11.03 (later 11.08 and 12.00 from 28-2-05). There was a specific entry which covered the MSP in question. Chapter Heading 35.05 covered Dextrines and other modified starches. As per the Explanatory Notes to the HSN, these were obtained by the transformation of starches through the action of heat and chemicals by oxida....
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....i Siddhi to be respectively 0.07% and 99.72%. These satisfied the parameters for classifying maize starch under Chapter 11 in terms of its Note 2. The Ahmedabad Textile Industry Association, Ahmedabad had clarified that unmodified starch was used in the textile industry as per IS : 1184-1977. MSP and modified starch had different chemical or physical properties, generally characterized based on IS specifications. As per the opinion of Central Pulp and Paper Research Institute, Saharanpur, MSP was used in paper industry; there were different chemical and physical characteristics of viscosity, etc., for modified and unmodified starches. As per the expert opinion of Reader in Food Technology, University of Mumbai, both native and modified starches were used in food industry and BIS standards existed for native starches. Native and modified starches had different physical and chemical properties. Professor and Head of Biotechnology, RV College of Engineering, Bangalore, had opined that manufacturing process of MSP adopted by the appellant could not be considered as for modified starch. The treatment of starch slurry undertaken was basically to meet the quality of starch. Its structure ....
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.... classification of a product has to be done in accordance with HSN. In the instant case, explanatory notes were very clear and in favour of classifying the subject goods under Chapter Heading 3505. The appellant had relied on opinions of different experts/institutions; these could not be relied on as none of them was based on results of chemical test of the samples. It is submitted that similar investigation conducted at Ahmedabad and Indore resulted in the respective Commissioners dropping the demands in the case of M/s. Gujarat Ambuja Exports Ltd., M/s. Rajaram Industries and M/s. Maize Corn Products Ltd. However, these orders were challenged before the Tribunal. In the case of CCE v. Anil Products Ltd. - 2009 (241) E.L.T. 584 (Tri.-Ahmed.), the Ahmedabad Bench had remanded the matter for fresh adjudication after properly testing the sample. It is submitted that since the assessee had never intimated the fact of producing different varieties of starches and results of laboratory tests conducted by it on them and usage of various acids and chemicals, which were unearthed by investigation conducted by the DGCEI, the impugned demands and penalties were sustainable in law. In the cas....
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.... Starch Slurry : The basic raw material i.e., Maize is cleaned and taken for steeping in the vats. Steeping is done at 50 degree C. with water having Sulphur Dioxide concentration of 0.2% in the water and for a period of 60 hours. The soluble protein minerals in maize get absorbed in steeping water, which is further evaporated to get Corn Steep Liquor (CSL) and the CSL is sold to fermentation industries. The steeped maize having moisture around 40% is wet milled/grinded in three stages. In the first two stages, Germ is separated and it is dried and packed and supplied to Oil Extraction industries. Further the steeped maize is milled in third stage and further processed for fibre separation by washing DSM screens, to separate fibre. The resultant slurry contains Gluten and Starch, which is fed to Merco Centrifuge, called Primary Separator. The overflow of the primary separator contains Gluten of 7 to 8 Gms. per litre which is further processed in Merco Centrifuge called Gluten Thickener to get Gluten concentration of order of 100 to 120 Gms. per litre, which is further filtered to get Gluten Cake and the cake is dried and packed and supplied to poultry and cattle feed industries.....
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....r deciding the classification did not undergo any changes). These entries read as follows : Heading No. Sub-Heading No. Description of goods Rate of duty (1) (2) (3) (4) 11.03 1103.00 Starches CSH 35.05 under which Sub-Heading 3505.20 held to be the relevant entry by the Commissioner reads as follows : Heading Sub Description of goods Rate of No. Heading duty No. (1) (2) (3) (4) 35.05 Dextrins and other modified starches (for example, pregelatinised or esterified starches); glues based on starches, or on dextrins or other modified starches. 3505.10 - Esterified starches 3505.20 - Dextrins and other modified starches 3505.90 - Other There is no dispute that the content of starch and ash in the impugned goods is in excess of 45% and less than 2% by weight on dry basis respectively, prescribed for classifying the impugned goods as starches of Chapter Heading 11.03 as stipulated ....
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....ion)." The pertinent HSN explanatory notes on the entry CSH 3505.20 in the Tariff reads as follows : 35.05 : DEXTRINS AND OTHER MODIFIED STRACHES (FOR EXAMPLE., PREGELATINISED OR ESTERIFIED STARCHES); GLUES BASED ON STARCHES, OR ON DEXTRINS OR OTHER MODIFIED STARCHES. 3505.10 : Dextrins and other modified starches 3505.20 : Glues This heading covers : (A) Dextrins and other modified starches, i.e., products obtained by the transformation of starches through the action of heat, chemicals (e.g., acids, alkalis) or diastase, and starch modified, e.g., by oxidation, esterification or etherification. (1) Dextrins, obtained either by the degradation of starch by hydrolysis with acids or enzymes, the resulting product being termed maltodextrin. However, products of this kind are classified here as dextrins only if their reducing sugar content, expressed as dextrose on the dry substance, does not exceed 10%; or by roasting starch, with or without small quantities of chemical reagents. If no reagents are used, the resulting product is known as roasted st....
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.... these in his order. The test report of South India Textile Research Association submitted by the appellant extracted below gives the parameters of MSP sold for use in textile industry by the assessee. Sl. No. Characteristics Actual test results Standard as per IS 1184-1977 1 Moisture content 11.58% Max 13.00% 2 Ash content 0.07% Max 0.25% 3 PH 5.35 Min 4.50 4 Free Acidity 21.30 ml Max 40.0 ml 5 Cold Water Soluble 0.21% Max 0.40% 6 Petroleum Hydro Carbon Extractable Matters 0.25% Max 0.25% 7 Viscosity at 75°C (2% Solution) 35 Secs Min 30 Secs 8 Starch Content 99.72% Min 98.00% In the opinion furnished by the Ahmedabad Textile Industry Association, Ahmedabad, the following opinion is given on the properties of modified starch distinguishing it from MSP. "Commercially an item is considered as modified starch only if the parameters such as matching with the IS specifications for modified starches. The use depends on the type and extent of modification. Most of the starch derivatives (modified starches) can be distinguished by physical and chemical methods and with inst....