TaxTMI 
TaxTMI 
2017 (3) TMI 1409
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....05,945/- Further a penalty of Rs. 50,000/- was also imposed on the appellant under Rule 25 of the Central Excise Rules, 2002. Aggrieved by the impugned order, the present appeal has been filed. 3. With the above background, we heard Shri B.L. Narsimhan, ld. Advocate for the appellant and Shri Yogesh Agarwal, ld. DR appearing for the Revenue. 4. The product under dispute is described as 'NIDO Nutritious milk for growing kids' contains the ingredients - Milk Solids, Maltodextrine, Sugar, Soya Lecithin, Vitamins, Minerals and Artificial flavouring substance. The appellant classified the product under Tariff heading 0404 90 90 attracting 'nil' rate of duty as "product is consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter". Revenue issued show cause notices proposing to shift the classification to Tariff Item 1901 90 90, attracting 16% rate of duty. The main grounds taken by Revenue were that the appellants were adding the item Maltodextrine to milk powder besides adding artificial flavouring substance. With the addition of the above ingredients, Revenue was of the view that the item manufactured would go out of the purview of....
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....Del.) (b) Nestle India Limited vs. CCE, New Delhi - 2001 (132) ELT 134 (Tri. Del.) 6. Ld. Counsel appearing for the appellant explained the various grounds of appeal. He took us through the competing tariff headings as well as relevant HSN Notes of Chapter 4 as well as Chapter 19. He explained that what is envisaged under Chapter 19 is substantial change in the product falling under Chapter 4, wherein it no longer remains milk powder. He submitted that in addition to Maltodextrine, which is in the nature of sweetening matter, the appellant is merely adding a very miniscule percentage of total composition of flavouring substance. Hence, it cannot be said that the milk powder ceased to be milk powder for any substantial change in the product to justify to shift the classification from Chapter 4 to Chapter 19. In the Amrit Foods case (supra), the Tribunal decided the classification of milk shake mixes under item 0404. In the appellant's own case (supra), the dispute was pertaining to classification of Nestle Milkmaid Kesar Kulfi Mix, Nestle Milkmaid Shahi Rabri Mix, Nestle Milkmaid Kalakand Mix and the Tribunal held the products to be classifiable under tariff heading 0404....
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....ontaining cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included 1901 10 - Preparations for infant use, put up for retain sale 1901 10 10 --- --- 1901 10 90 --- --- 1901 20 00 --- --- 1901 90 --- --- 1901 90 10 --- --- 1901 90 90 --- Other The disputed product, 'NIDO Nutritious milk for growing kids' is made up of milk predominantly but is added with a few additional ingredients. The show cause notice cited the ingredients of Maltodextrine and artificial flavouring substance. With the addition of these items, the view taken by Revenue is that the item will no longer remain classifiable under CETH 0404 but classified under Chapter 19. In the impugned order, ld. Commissioner has taken the view that addition of Maltodextrine is permissible since it is in the nature of sweetening agent. But he held that additi....
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....g 19.01 includes, for example: (1) Preparations in powder or liquid form used as infant food or for dietetic purposes and consisting of milk to which secondary ingredients (e.g. cereal groats, yeast) have been added. (2) Milk preparations obtained by replacing one or more constituents of milk (e.g. butyric fats) by another substance (e.g. oleic fats)." By referring to the HSN Notes to tariff heading 0404 and 1901, it is evident that milk powder would fall under heading 1901 only if the same is excluded from Chapter 4. That brings us to the question whether adding artificial flavouring substance will jettison the product from Chapter 4 to Chapter 19. The reference to HSN Notes to Chapter 4 and 19 clearly indicates that there is no reference to flavouring substance being one of the prohibited ingredients for the product in Chapter 4. HSN Notes also make it clear that product would fall under Chapter 1901 only when natural milk constituents are added with other items such as cereal, groats, yeast etc. or the milk constituent is replaced by an other substance such as oleic fats. From what is stated before us, we are convinced that this is not the case. Addition of ....