2017 (5) TMI 452

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....luding NIDO Nutritious Milk for growing kids. They cleared the goods without payment of duty classifying the same under the Tariff Item 0404 90 00 of the Central Excise Tariff Act, 1985 under intimation to the Department. However, the Department contended that the product merits classification under the Tariff Item 1901 90 90 of the Central Excise Tariff Act, 1985 on the ground that addition of flavour is not permitted in the products of Tariff Heading 0404. Accordingly, the Department sought to demand duty on the NIDO Nutritious Milk for growing kids treating the same to be classifiable under the Tariff Heading 1901 by issuance of the Show Cause Notice dated 15.03.2001. The assessee-Appellants submitted reply to the Show Cause Notice rebut....

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....d 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 small quantity of artifi....

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....tariff heading 0404. However, the Tribunal ruled in the favour of the assessee relying on the decision of Nestle India Limited (supra). It is pertinent to note that the aforesaid decision has been affirmed by the Hon'ble Supreme Court, as reported 2015 (324) ELT 418 (SC). Thus, even when the stabilizers were not specifically mentioned in the Chapter Note 4 of the Central Excise Tariff Act, still the milk shake mixes containing the same were held classifiable under the tariff heading 0404 by CESTAT as well as the Hon'ble Supreme Court on the ground that stabilizers do not interfere with basic characteristics of the milk products and are added merely to impart stability to the product. The same analogy can be drawn in the present case....