TaxTMI 
TaxTMI 
2006 (10) TMI 51
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.... A. J. Tharakan, Chairman and Director of the appellant unit under Rule 26 of the Central Excise Rules 2002. The appellants strongly challenge the impugned order. 3.Shri A. K. Jain, learned advocate appeared on behalf of the appellants and Shri K. Sambi Reddy, learned JDR appeared for the Revenue. 4.The learned advocate urged the following points. (i) The appellant unit is engaged in the processing of fish, shrimps, prawns, etc., which are purchased from others. The Revenue conducted investigations and came to the conclusion that the impugned items are chargeable to duty under Chapter 16 (S. H. No. 1601.10) of CETA 1985. (ii) The case of the Revenue is based on the following facts. (a) Usage of Sodium Tri Poly Phosphate (STPP) (b) Usage of Sodium chloride (c) Usage of natural paprika (d) Blanching (iii) The Commissioner did not take into account the four certificates given by MPEDA, CIFT and Kerala Fisheries College on the ground that the same had not been relied on in the Show Cause ....
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....ns and have been signed by various persons in the capacity of the Office Bearers/Executives of these organizations. (ix) The two officials of EIA, Chennai during their cross-examination did not dispute the clarification given in these certificates. (x) The Commissioner's finding that only those crustaceans (which include prawns and shrimps) fall in Chapter 3 which are in shells and boiled in water (and not which are deveined and deshelled or which have been prepared or preserved and put up in unit containers), is beyond the Show Cause Notice. The Commissioner's finding would imply that the deveined/deshelled crustaceans received in the appellant's unit from the Peeling-Sheds would themselves fall in Chapter 16, being not in shells and that being so the same would not attract any further levy even otherwise. This negates the HSN Explanatory Notes as per which crustaceans whether in shell or not or whether in parts chilled, frozen, dried and salted are covered by Chapter 3. (xi) Placement of crustaceans in unit containers is not excluded from the purview of Chapter 3. (xii) The Commissioner has not disclosed in his ord....
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....e crustaceans) and which have been preserved by use of sodium chloride or STTP cannot fall under Chapter 16. Otherwise Chapter 16 shall also cover 'preserved crustaceans' as well as 'preserved fish'. In the absence of the expression 'preserved crustaceans' appearing under Chapter 16, the 'preserved crustaceans' would fall in Chapter 3. (xviii) Denial of retest by the Commissioner and that too only in his Order-in-Original, despite the same having been applied within 13 days, much before the time limit prescribed along with requisite fee of Rs. 8,000/- is violative of the Principles of Natural Justice as well as contrary to the departmental supplementary instructions. The following three decisions were relied on : (a) 1988 (33) E.L.T.137 (T) - Kiran Spinning Mills v. CCE, Bombay. (b) 2001 (129) E.L.T. 701 (T) - Rathi Ispat Ltd. v. CCE, Meerut. (c) 2004 (169) E.L.T. 175 (T) - Yorks Exports v. CC (Exports), Mumbai. (xix) The Commissioner's finding that CRCL, New Delhi is beyond his jurisdiction is not correct in view of Board's instructions dated 3-5-1956 appearing in Customs Appra....
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....p; 2005 (185) E.L.T. 291 (T) - Indocom Projects Equipments Ltd. v. CCE, New Delhi. (f) 2005 (187) E.L.T. 119 (T) - Anand Metal Industries v. CCE, Ghaziabad. (xxiv) With regard to penalty on Appellant No. (i) under CER 26 there is absolutely no discussion on his role, hence penalty is not sustainable. The following case laws are relied on : (a) 1995 (79) E.L.T. 485 (T-LB) - Walchand Nagar Inds. v. CCE, Pune. (b) 2000 (116) E.L.T. 608 (T-LB) - Garware Synthetics v. CCE. (c) 2002 (147) E.L.T. 1213 (T) - Harish Mehra v. CCE, Chandigarh. 5.The learned JDR stated that the Order-in-Original has dealt with all the points raised by the appellant and a very detailed finding is given justifying the classification of the impugned items under Chapter 16. He requested the Bench to uphold the Order-in-Original. 6.We have gone through the records of the case very carefully. The main issue is the correct classification of the impugned products. According to the appellants, the impugned products merit classi....
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....and caviar and caviar substitutes". 6.2Having gained a broad understanding of Chapter 3 and Chapter 16, let us try to understand the process carried out by the appellants in respect of the impugned products. In the brief facts of the case in Annexure-A to the Show Cause Notice dated 9-7-2004, Para 3 describes the process. Shri Cherian Xavier, General Manager of the appellant company explained that in the case of preserved prawns, different sizes of prawns are peeled and beheaded according to specifications. Thereafter the product is block frozen and then thawed to melt the ice coverings. This product is then treated with Sodium Tri Polyphosphate (STPP) and Sodium Chloride. The product from this stage then passes through a conveyor belt for the purpose of blanching (spraying steam). It is then individually quick frozen and then packed in polythene pouches. The above process uses a word blanching. What is blanching? The normal dictionary meaning of the verb blanch is 'to prepare food, especially vegetables by putting it into boiling water for a short time'. The blanching process is not confined only to the impugned products under consideration in this appeal. In Wikipedia (online ....
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....of crustaceans and molluscs is to reduce surface bacteria and enhance colour. He has categorically stated that 'a blanched product cannot be treated as ready to eat and the product needs to be cooked again before consumption'. The Director of Central Institute of Fisheries Technology (CIFT) in his letter dated 20-7-2004 has stated that blanching is a term that describes a method of processing used during slating, chilling and freezing of marine products. He has also stated that a blanched product cannot be termed as partially cooked, prepared and ready to eat. The Dean of College of Fisheries, Kerala Agricultural University in his letter dated 7-2-2005 has stated that a blanched product is not a partially cooked product that is ready to eat. It only gives a sterilizing effect reducing the bacterial load at surface levels. The product has to be cooked before consumption. Thus, the experts who are dealing with crustaceans and other aquatic invertebrates have all categorically stated that a blanched product cannot be considered as a cooked product. It is also pertinent to note that blanching is carried out before freezing which is a process covered by Note 2 of Chapter 3. In the light....
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.... most cases, however, products put up in these packings have been prepared or preserved otherwise than as provided for in the headings of this Chapter, and accordingly fall to be classified in Chapter 16. The above explanation makes it clear that only when the crustaceans have been cooked or otherwise prepared or preserved by processes not provided in Chapter 3, they will come under Chapter 16. 6.5The Commissioner in the impugned order states that blanching or cooking of deshelled and deveined prawns and shrimps is not a process provided for in Chapter 3 nor is the process of adding additives like Sodium Tri Poly Phosphate, Vitamin C or natural extract of paprika is provided for the products under Chapter 3. Quoting Chapter Note 2 under Chapter 3 of CETA 1985 he has observed that the note makes explicit reference to the fat that prawns (crustaceans) in their shell simply boiled in water could be classified under Chapter Heading 3. Hence the processed, prepared and preserved fish and prawns manufactured and cleared in unit containers and bearing a brand name viz., 'SUMERU' are to be rightly classified under Chapter 16 under CETA 1601.00. The Commissioner has not considered the....
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....TPP does not contribute to cooking the meat or preparation into ready to eat foodstuff. For proper appreciation of the entire issue, we are reproducing below the opinions given by Dean, College of Fisheries, Kerala Agricultural University and the Director, CIFT. TO WHOMSOEVER IT MAY CONCERN In the processing of fish, crustaceans, molluscs and other invertebrates, they are subjected to salting (also known as brining), chilling and freezing. Brining is done for firming, improving the texture, reducing moisture levels in the products and improving appearance. Usage of STTP is necessary in the process of salting, so as to reduce water loss from the product and to improve appearance and it is one of the commercial methods of fish processing. The usage of salt and STTP does not contribute to cooking the meat or preparation into ready to eat foodstuff. In the processing of shellfish natural paprika is used. Usage of natural paprika has also nothing to do with any kind of preparation of cooking or preservation of meat since it is solely used commercially for colouring shrimps so as to obtain uniformity in their appearance. Blanching is done before chilling being essential pre-r....
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....aside. 6.7Before concluding, we want to make certain observations. The learned advocate cited a large number of cases to hold that the affidavits and certificates from experts, professionals and persons in the trade presented could not have been ignored by the Adjudicating Authority. Expert opinion given by a competent person cannot be dismissed as erroneous in the absence of a contra expert opinion on record. The appellants have actually produced the certificate from three apex organizations. The MPEDA, CIFT are central government organizations, totally dedicated to the seafood industry. The Commissioner has not at all discussed the contents of certificates produced by the appellants. These certificates have also referred to a parameter known as total plate counts (at 37° C) it is seen that cooked prawns and shrimps, the total plate counts do not exceed 10000, whereas these are 1,00,000 for peeled, deveined and frozen or raw shrimps/prawns. He has also ignored the fact that the usage of sodium chloride and STPP is one of the methods used in salting, chilling and freezing, which processes are covered under Chapter 3 of CETA and such usage does not contribute to cooking. Further....