TaxTMI 
TaxTMI 
2015 (2) TMI 1170
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....in demand related to various periods were dropped. The period involved in the present appeal is falling in between period of dispute which was the subject matter of the Tribunal's decision. It stands held that the appellants product is properly classifiable under chapter 11. 3. Ld.DR fairly agrees that the issue stands decided by the Tribunals decision though the said decision stand appealed against by the Revenue but there is no stay of operation of the same. 4. In view of the above, following the decision of the Tribunal in their own case of the appellant referred supra, we set aside the impugned order and allow the appeal with consequential relief to the appellant. (Pronounced in the open court) 5. I have gone through the order of my Ld. Sister, in which she has proposed to give benefit to the appellant on the issue of classification of Maize Starch Powder under Central Excise Tariff Act, 1985, Tariff Head No. 1103.00 as other starches as against TH 3505.20 as claimed by the Department, treating the product as Modified Starch. While arriving at the conclusion, she has been persuaded to follow earlier decision of the same appellant as reported in 2011 (270) E. L. T. 291....
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.... idea, I feel it necessary to refer imported extracts of the statement of Shri B.V. Joshi production manager and Shri Gururaj M. Ligade authorized signatory. Statement of Shri V. B. Joshi, the Production Manager of M/s Riddhi Siddhi vide his statement dated 27.11.2001, explained the manufacturing process as under: "Mize is cleaned and steeped in in Sulphur Dioxide water for about 60 hours at 50 degree Celsius. The steeped maize is ground by wet milling and byproducts are separated at different stages of processing. At this stage Starch slurry is produced. This slurry is centrifuged to remove water, dried and packed. This is MSP Regular grade. For MSP Regular Food, before centrifuging, the slurry is treated with potassium permanganate, sodium meta bisulphite for 30 Min. and then it is dried and packed. The MSP Regular Pharm before centrifuging, the slurry is treated with Potassium permanganate, Sodium Meta Bisulphite and Sodium Hypochlorite for 30 min and then it is dried and packed. For MSP Regular Textiles, before centrifuging, the slurry is treated with Sodium Meta Bisulphate and Borax for 30 Minutes and then it is dried and packed. For MSP TBS, before centrifuging, Hydrochlo....
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....illed with third stage and further processed for fibre separation, by washing DSM screens, to separate fibre; that the resultant slurry contained Gluten and starch which was fed to Mero Centrifuge, called Primary Separator; that the overflow of the primary separator contained Gluten of 7 to 8 Grams per litre which was further processed in Merco Centrifuging called Gluten Thickner to get Gluten concentration of order of 100 to 120 Gms per Litre, which was further filtered to get Gluten Cake and the Cake was dried and packed and supplied to poultry and cattle feed industries; that from the Primary Merco Centrifuge, they got Starch slurry, which still contain some percentage of Gluten; that it was again processed in Hydrocyclone Wash System 9 stages to remove the remaining Gluten; that the product obtained was called Starch Slurry; that it was stored in Tank No. 68A, 68B and 68C; that the Starch Slurry Stored in Tank No. 68A and 68B was used for manufacture off derivative produces namely Dextrose Monohydrate (DMH), Malto Dextine (MD) and Liquid Glucose (LG) and manufacture of Regular Maize Starch Powder; that the Regular MSP was manufactured by way of centrifuging the Starch Slurry to....
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.... REGULAR PHARMA, MSP REGULAR TEXTILES, MSP THIN BOILED STARCH (TBS) AND MSP VERY THIN BOILED STARCH (VTBS). Further to a specific question as to why they were adding other ingredients such as Potassium Potassium Permanganate, Sodium Metabisulphite, Sodium Hypochlorite, Borax, Hydrochloric Acid he stated that the Chemicals, viz. Potassium Permanganate, Sodium Metabisulphite, Sodium Hypochlorite, Borax was added to reduce the viscosity of the MSP slightly to suit the viscosity requirements of the particular customer; that Soda Ash was added to neutralize the acid content in the starch slurry. He further stated that as per the technical specifications of their company, different grades of MSP would have different fixed parameters ; that the above tests conducted to monitor and achieve the required specifications; that they had an equipped quality control laboratory where these parameters were tested; that their lab had maintained a register showing similar details in respect of the products tested (seized by the DGCEI officers vide Sl. No. 1 of Annexure to the Mahazar dated 27.11.2001 at their factory); that the results of the tests were tabulated in the said register; that they hav....
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.... of Invoices to the Central Excise Department, November, 1996 onwards. 7. It is, thus, clear that in the instant case, since the findings have been arrived at after due consideration of manufacturing process, therefore, the deficiency pointed out in the previous case of the same appellant has been sufficiently made up. Therefore, it can easily be concluded that product of the appellant is nothing but Modified Starch. In arriving at this finding, I am fortified in my view by the following detailed findings given while dealing with the issue by the Ld. Commissioner. "33. In deciding this case, firstly, I have studied the manufacturing process of the different grades of MSP as narrated in the show cause notice and also as explained by Shri V.V. Joshi, Production Manager of Riddhi Siddhi in his written statement dt. 27.11.2001 given before Sr. Intelligence Officer of DGCEI. I observe that the basic raw material for all the varieties/grades is Maize, which is cleaned and/steeped in Sulphur Dioxide water for about 60 hours at 50 degree Celsius. The steeped maize is ground wet milling and by products are separated. At this stage Starch Slurry is produced. This slurry is centri....
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....t the adding of the chemicals is only to remove impurities and improve the quality of the product. The investigators are heavily relying on the chemical examiners opinion in contending that the impugned items are modified starches. Reliance is also seen to be placed by the investigators on the texts of certain books and the end use of the items. Riddhi Siddhi on their part argue that the Chemical Examiners opinion is only a provisional opinion and not final as he has merely stated in his letter dt. 3O.04.2002 that the samples of all the 5 items sent to him answer the test of starch. They have also referred to the answers given by the Chemical Examiner during the cross examination wherein he has stated that; the laboratory at Chennai did not have facility to test whether the samples under reference were modified starches; that he has based his opinion on technical literature of the products sent to him and by referring to some books of the subject. In this aspect I have referred to the records of cross examination of the chemical examiner and I find that the chemical examiner had given a categorical opinion stating that the samples of the impugned items sent to him are all modifie....
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....i. Further, the results as per the analytical reports of Riddhi Siddhi testify that the properties have changed after treatment. It is based on these factors, the chemical examiner has given his opinion. The Chemical Examiners report as well as reliance placed on certain text books are corroborative in nature and would support the contention that the starches in question were, if fact, modified. Hence, I am inclined to accept the opinion of the Chemical Examiner in this regard. Though I am in agreement with contention of Riddhi Siddhi that end use of the items alone cannot be considered for deciding the classification of the products, in the instant case I observe that end use of the impugned items is only one of the factor that is taken into consideration as can be seen from the answer to the following question given by Shri S. A. Hariprakash, Senior intelligence Officer during his cross examination. Q:- Have you come to the conclusion of the proposal of the classification of the products as modified starch only on the basis of the technical parameters or end use? A:- Both. 35. As regards the claim of Riddhi Siddhi that their case is supported by opinion of various persons ....
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....t on this basis, there is a proposal for the demand and consequently the said variety has been included in the quantification proposed and I find no infirmity in this regard. 37. As regards the contention of Riddhi Siddhi that the process of manufacture was well within the knowledge of the department; that the same was furnished to the department at the time of filing the relevant classification list/ declarations that they cannot be accused of suppressing the facts, I observe that the crucial facts relevant to the classification, of the products in question were the test reports found in the factory and the different varieties of Starch which the assessee had manufactured keeping in mind the requirements of the different customers by suitably modifying the starch. Firstly, the assessee had misled the Department by classifying all grades of starch under one heading without disclosing the different varieties manufactured by them. Secondly, the crucial parameters which decide the issue whether starch is modified or not was totally kept out of the reach of the Department. It is only as a result of the search conducted by the D.G.C.E.I. officers, the test reports indicating the said....
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....omplete and true disclosure of the facts relating to the goods manufactured by them. If there is omission on the part of the assessee to declare certain facts, which are material to decide the classification of a given product, obviously, the same has to be viewed as suppression of facts with intent to mislead the department. In the instant case, the declarations made were only with reference to Starch MSP- Regular grade and these was no declaration at all with reference to the other grades, which are impugned in the show cause notice. This being the case, Riddhi Siddhis contention that there is no suppression of facts does not stand the test of law. Riddhi Siddhi have referred to certain case laws and Boards Circulars to support their claim that there was no suppression of facts in the case on hand. Most of the judgments place reliance on the fact that the extended period of limitation cannot be invoked for a change of opinion when the department was aware of the factual position. In the instant case, there is a clear distinction from all the case laws cited by the assessee. The factual position relating to the impugned grades of Starch were never disclosed by the assessee to t....
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....ssioner by the impugned order no.4/05-COMMR/311/05 adjudicated the two show cause notices and had confirmed the total differential duty demand of Rs. 1,47,64,798/- (Rs.74,67,356/-+ Rs. 72,97,442/-) along with interest thereon under Section 11 AB by classifying the product, in question, as 'modified starch' under sub-heading no.3505.20 and besides this, had imposed penalty of Rs. 15 lakh on them under Section 11 AC. The Commissioner in the impugned order relied upon the opinion of the Chemical Examiner ,CRCL opining that the goods in question are modified starches. The appeal against this order was heard by the Division Bench on 3.9.2013. While the Hon'ble Member (J) following the judgement of the Tribunal in the appellants own case for the previous period reported in 2011(270) ELT 291 (Tribunal-Bang.) set aside the impugned order and allowed the appeal, Hon'ble Member (Technical) by a separate order dated 25.03.2014 held that the order of the Commissioner is to be upheld in it entirety and accordingly rejected the appeal. On account of difference of opinion between the Hon'ble Member (J) and Hon'ble Member (T), the following points of difference has been referred to be the undersi....
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.... dated 5.4.2011, which has to be followed, that the order recorded by the Hon'ble Member (T) is mainly based on the findings of the Commissioner in his order dated 6.9.2004, which has already been set aside, that in this case, neither longer limitation period under provisions of Section 11A(1) is invokable nor penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944 would be attracted and that in view of the above submissions, it is the order recorded by the Hon'ble Member (Judicial) which is correct. 14. Shri Govind Dixit, ld. Departmental Representative, supported the order recorded by the Hon'ble Member (Technical) and pleaded that it is not disputed that the starch being manufactured by the appellant is treated with Sodium Meta bisulphite and Sodium Hypochlorite, that these chemicals are oxidizing agents, which change the character and the properties of the starch and the resultant product becomes modified starch, that even if the samples of the goods were not tested by the Chemical Examiner, the opinion of the Chemical Examiner that the goods, in question, are Modified Starch is correct, and that since the appellant had s....