TaxTMI 
TaxTMI 
2013 (8) TMI 681
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....assia meal) are disposed off, in gunny bags to manufacturers of cattle feed. The meal is added to cattle feed in negligible quantities, for imparting colour to the cattle feed. The endosperm is further milled, and purified to make cassia gum powder, by various processes. The cassia gum is exported. Its main use is as a gelling agent and stabilizer for use in food products, for animal and human consumption A notice dated February 5, 2010 was issued to the appellant, demanding duty on clearances of cassia meal during the period January 2005 and December, 2009 invoking the extended period of limitation. The notice also proposed penalty on the appellant. The notice was contested on various grounds including the following: a. Cassia meal is not excisable b. Cassia meal is fully exempted from payment of duty under Notification 23/2OO3-CE, as it is a waste of the food industry. c. Demand is barred by limitation, as there was complete disclosure of facts, during the relevant period. d. The value should be treated as a Cum Duty Price. On February 11, 2011 the Commissioner confirmed the demand of duty, holding the cassia meal to be excisable, and denying the benefit of Notific....
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....e issuance of show cause notice the appellants also obtained legal opinion from advocates Lakshmi Kumaran & Sridharan and Shri L.P. Asthana. Both the advocates have given the opinion that goods can be considered as waste from food industries and would be covered under Sl.No.21 of exemption Notification No.23/2003-CE dated 31.03.2003. The classification of the product was also held to be under the heading 2302 by both the advocates. The advocates opinion obtained by the appellants also would show that goods are excisable. Therefore whether cassia meal is a by-product or waste, the fact that it is excisable has to be upheld. 5. Next point to be decided is whether cassia meal can be considered as a waste at all. As already observed earlier, appellants themselves sold it as cattle feed supplement/cattle feed. 6.1. The appellants relied upon the technical opinions obtained by them vehemently to submit that cassia meal is a waste. Some of the technical opinions obtained are discussed below: Dr. K. Janardhanan, Coimbatore has given the opinion that cassia meal is a waste generated during the manufacture of cassia gum powder. He has observed cassia meal is bitter in taste and alt....
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....nation of the technical opinions submitted by the appellants before us, unlike Development Commissioner we are not pleased to hold cassia meal as waste material on the basis on these opinions and the clarification given by the appellants which is contrary to their own stand and their own invoice. 8. Another submission made was that cassia meal has to be considered as a waste since it is of negligible value as compared to the value of cassia gum powder. It is an unintended item arising in the process and has no utility or application for them and it has been sold in the market to manufacturers of cattle field principally as a colouring agent for want of any other use. The average realisation of cassia meal as compared to cassia gum powder is less than 6%. The ld. Commissioner observed that the value is never less than 10%. He has also relied upon the opinion of chemical examiner who opined that cassia meal is a by-product and not a waste. For this purpose the chemical examiner has compared the product with guar meal for which ISI specification is also available. The Commissioner also observed that for separating and collecting cassia meal they have installed specially designed me....
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....ustries. The appellants have relied upon the definition of food under Section 3(i) of the Food Safety Standards Act, 2006 which defines food as under: (j) food means any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food, to the extent defined in clause (ZK) genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or processed for placing on the market for human consumption, plants prior to harvesting, drugs and medicinal products, cosmetics, narcotic or psychotropic substances: Provided that the Central Government may declare, by notification in the Official Gazette, any other article as food for the purposes of this Act having regards to its use, nature, substance or quality. 13. According to the appellants, the definition includes any substance used into the food during its manufacture, preparation or treatment and would hence ....
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.... product cannot be considered as one of food industry unless it is shown that it is food. 13.3. In fact the Commissioner has gone further and examined the meaning of food additive and has also examined how the produce manufactured by the appellant is used. He has shown that the product cassia gum manufactured by the appellants only gives the following benefits namely:- Improve texture and mouth feel; improve end product appearance; provide stabilisation during the production process and of the end product; improve flavour release; allow low fat formulation; serve as the effective gelling agent; improve cost effectiveness. 13.4. The information available on the website of the appellant shows that appellants are manufacturers of hydrocolloids of different verities either to be used in pet food or human food which extend the benefits listed by Commissioner. 13.5. We find that Commissioner has rightly observed that from the definition of hydrocolloids and use of their product, cassia gum product is basically used as a texturising agent, gelling agent to provide suspension and stabilisation of the end product and to improve end product appearance. Therefore it only improves ....
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....ommodities on the ground that it is eaten by the poultry and not by Homo Sapiens. The Hon'ble Court concluded on the basis of the dictionary meaning of the word 'food' which they interpreted as 'what one takes into the system to maintain life and growth or what is taken into the body of an organism in order to sustain growth is 'food'. This view of the Court supports the departmental stand that the product 'Cassia Gum Powder' is not food. The Hon'ble Supreme Court has categorically held that 'food is something which should be taken into the system by living organisms to maintain life and growth, but in the present case the product 'Cassia Gum Powder' as per the admission of the assessee itself and as discussed in para 7.4.7.6 to para 7.4.7.8 above is only used to enhance the texture or other qualities of the food and is not something which is taken either by animals or humans, for maintaining life and growth and hence cannot be considered as food. 13.6. Similarly the Commissioner has also considered the decision of the Hon'ble Supreme Court in the case of Corn Products Co. India Ltd. reported in 1996 (85) ELT A126(S.C.). This was a decision in which Hon'ble Supreme Court conside....
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.... held Baking Powder to be a 'Food Preparation' in view of it being prepared from various edible ingredients, which is not applicable in the present case as 'Cassia Gum Powder' is prepared from poisonous 'Cassia Seeds'. Further, the Court observed that use of baking powder improves the taste of the product, this aspect is also not true in the present case as 'Cassia Gum Powder' is used mainly to provide consistency to the canned food. The Court has also observed that such issue must be solved in a commonsense way and the Court should ascertain as to how the expression 'baking powder' is understood in common parlance and observed that any housewife would treat baking powder as a food preparation and in trade parlance baking powder is sold and known as a food preparation, this aspect is also not true in the present case as the assessee itself does not sells its product as food but they have marketed their product as an hydrocolloid to be used by canned food industry as an effective gelling agent (in combination with carrageenan or xanthan), for improving suspension and stabilization of the end product, to improve end product appearance and to improve cost-effectiveness. It is seen tha....
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....ore exemption under notification No.23/03 is not available is not correct and cannot be sustained. 15. The next claim is alternative claim for exemption under notification No.23/03 as waste of oil seeds. This also has been considered in great detail in the impugned order. Ongoing through the technical opinions submitted by the appellants, nowhere we find that cassia seeds have been found to be oil seeds. Moreover assessees own production literature and the details available on their website show that they have described cassia as a new hydrocolloids supplying to the group of galacto mannans like guar, thara and locoest bee gum (LBG) and they have never described it as an oil seed. Further, the chemical examiner also has given a clear opinion that cassia meal is other than waste of oil seeds and during the cross examination of chemical examiner no question was raised on this issue with the chemical examiner. Therefore we do not find any merit in the alternative claim made by the appellants. 16. The next issue to be considered is whether extended period has been rightly invoked in this case. 16.1. The appellants in their letter dated 03.02.03 had made the following submissio....
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....ise duty. A perusal of the three letters would clearly show that appellants believed that the cassia meal was a by-product and was exempt. Subsequently they also claimed exemption under oil seeds. However, in earlier two letters there was no claim of exemption as oil seed waste. Basically the extended period has been invoked on the ground that in the returns the exempted goods details were not mentioned; the appellants claimed it as a waste whereas but they were selling it as by-product; they have claimed it as oil seed waste whereas cassia was not an oil seed. Even though there was confusion as mentioned by the Commissioner after the audit of 2006 and further investigation, it has to be noted that appellants had kept the department informed even before 2006 about the manufacture of these goods and their belief that the same was exempt. Further the appellants had given the details of the goods manufactured including cassia meal in their annual performance report a copy of which is given to the department. Therefore merely because this particular item was not mentioned in the ER-1, it cannot be said that appellant had suppressed the fact of manufacture and clearance of cassia meals.....