TaxTMI 
TaxTMI 
2019 (8) TMI 1804
X X X X Extracts X X X X
X X X X Extracts X X X X
....al for use in truffles, soups, sauces, gravies and all types of cuisines. 2.1 The impugned good comprises of 26 per cent edible oil (hydrogenated palm kernel oil) to which other ingredients such as milk solids, sugar and premixes are added, thus, forming a mixture/preparation of vegetable oil. The composition of the product is tabulated as under: Name of Ingredient/additive Ratio Water 63.50% Edible Vegetable fat 26% Milk Solids 4% Sugar 1% Premix(emulsifiers, stabilizers, acidity regulators and preservatives) 5.5% 2.2 The process employed for manufacture of the Product is as under: Step 1 Sugar and water are mixed in a container (container 1) to form a sugar syrup. Milk creme/ vanilla flavour are added to the syrup so formed. Step 2 Hydrogenated vegetable palm kernel oil is mixed with emulsifier and stabilizers in another container (container 2). Step 3 The mixture in container 1 and 2 are mixed at a high speed and then heated at a temperature of 75 degree Centigrade to 80 degree Centigrade. Step 4 The resultant material is subject to pasteurization at a temperature of 75 degree centigrade to 50 degree centigrade. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tariff Act, 1975. Rather the same is classifiable under chapter heading 2106 of the Schedule to the Customs Tariff Act, 1975 and chargeable to IGST @ 18%, CGST @9% and SGST @9%, as specified under S. NO. 23 of Schedule-III of Notification No. 1/2017-Integrataaed Tax (Rate) dated June 28, 2017. Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and of Notification No. 35/ST-2 under State Tax. Submissions made in the Appeal, by the Appellant: 7. The Authority in its Impugned Ruling has failed to take note of the additional submissions furnished and the factum of personal hearing on August 14, 2018. It apparently seems that the Authority did not bother to take into consideration the submissions advanced vide additional submissions and during the course of hearing. 7.1 In the case of Dharampal Satyapal Limited vs. DCCE, 2015 (320) ELT 3 (SC), the Apex Court explaining the concept and contours of principles of natural justice, observed that principles of natural justice include the following: (i) rule against bias, i.e. nemo judex in cause sua; (ii) opportunity of being heard, i.e. audi alteram partem-, (iii) passing of a reasoned order. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....30 --- Betel nut product known as "Supari" 2106 90 40 --- Sugar syrups containing added flavouring or colouring matter, not elsewhere specified or included; lactose syrup; glucose syrup and malto dextrin syrup 2106 90 50 --- Compound preparations for making non-alcoholic beverages 2106 90 60 --- Food flavouring material 2106 90 70 --- Churna for pan 2106 90 80 --- Custard powder --- Other: 2106 90 91 ---- Diabetic foods 2106 90 92 ---- Sterilized or pasteurized millstone 2106 90 99 ---- Other 8.2 The Appellant contends that impugned good merits classification under Tariff Item 1517 90 90 bearing description 'Other'. It is a residuary entry which is provided under Heading 1517. Therefore, in order to classify under the aforesaid Tariff Item, the product must qualify under Heading 1517. 8.3 The Authority in the Impugned Ruling has held that impugned good is classifiable under Heading 2106. It is submitted that the relevant Tariff item under heading 2106 is 2106 90 99 bearing description 'Other' which is a four-dash entry covered under triple-dash entry 'Other'. The triple-dash entry is furth....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case, the Product had undergone several processes beyond the scope of Heading 1516 and hence, fall outside the purview thereof. 9.6 The above view of the Appellant is supported by the Explanatory Notes appended to the HSN. Before discussing the same, it is essential to discuss the relevance of the HSN. 9.7 In the case of CCE v. Wood Craft Products Limited, 1995 (77) ELT 23 (SC), the Apex Court observed that the HSN Explanatory Notes serve as a safe guide for ascertainment of meaning of a term used in the Tariff Schedule in case of doubt. The relevant extract has been reproduced as under: "We are of the view that the Tribunal as well as the High Court fell into the error of overlooking the fact that the structure of the Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself " 9.8 In the case of Reckitt Benckiser (India) Limited, v. Commissioner, Commercial Taxes, 2015 (7) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t resembles a regular cream which, like butter, is a dairy product. Similar to margarine which imitated butter by using vegetable fat instead of dairy fat, the impugned product imitates cream by using vegetable fat instead of dairy fat. 10.2 The Appellant further placed reliance upon the case of Alva Sugar Agency v. State of Kerela, 2011 (272) ELT 649 (SC) in which the following characteristics of margarine were discussed:- • Margarine is used as substitute for butter (dairy product) specially in bakery products. In the instant case, impugned good is used as a substitute for dairy cream (dairy product) for use in soups, gravies etc. • Margarine is prepared from refined and/or hydrogenated oils of sunflower, soyabean, cotton seed, palmoline, palm, sesame oils, vegetable oils, salt, permitted emulsifiers and stabilizers. In other words, the vegetable oil is present in maximum percentage. Thus, it is regarded as a preparation of vegetable oil and fractions thereof • Margarine is not consumed directly i.e. in the form in which it is available in the market or used for normal cooking as other oils like coconut, sunflower, etc., rather it is used....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s evident that Heading 1517 covers substitutes of dairy products that are made by emulsifying vegetable fat in water within its ambit. In other words, 'Dairy Analogues' made from vegetable/animal fats are covered under Heading 1517. 11.1 Appellant submitted that a diary product is a preparation of or derived from nothing but milk. Hence, impugned good cannot be called a cream under the FSS Act. However, a non-dairy substitute for a dairy cream prepared by imitating the constitution thereof by using vegetable oil, vegetable fat, skimmed milk powder etc. can be called a cream analogue, connoting that it is similar to cream. As submitted above, Heading 1517 covers preparation of vegetable fats or oils such as margarine etc., that are substitute of various dairy products. Impugned good being a non-dairy product is prepared using the same ingredients and qualifies as a cream analogue. 12. In the case of Shree Gopal Vanaspati Limited v. CC, 2014 (310) ELT 308 (Tri-Del), the classification of bakery shortening was under dispute. The assessee proposed the correct classification of the product under Heading 1516, however, the revenue classified the product under Heading 1517. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unctive in nature. 13.3 From the above, it follows that where species are not specifically mentioned but are covered under the genus inscribed under some other Heading, the species will not merit classification under Heading 2106. Therefore, goods which are neither specifically nor impliedly covered under any other Heading alone are to be covered under Heading 2106. 13.4 In the case of CCE v. Maharshi Ayurveda Corporation Limited, 2006 (193) ELT 10 (SC), the product under consideration was herbonic tonic, a mixture of assorted vegetarian and dry fruits and seeds which could be consumed as such. The assessee sought to classify the products under Heading 2008 whereas the revenue sought to classify the product under Heading 2106. The Apex Court observed that product was included under Heading 2008, hence Heading 2106 automatically became inapplicable. 13.5 In the case of CC v. Abott Healthcare Private Limited, 2015 (328) ELT 129 (Tri-Mum.), the product under consideration was 'Mama's Best Premium Chocolate', a nutritional powder. The importer classified under tariff item 1901 90 90 bearing description 'Other' as against revenue's classification under t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for 30.05.2019. The case could not be taken up for hearing on given date due to DETCs meeting and thus the same was adjourned to 25.07.2019. Due to GST Council meeting at New Delhi, the case could not be taken up and adjourned to 07.08.2019. Finally, personal hearing was held on 07.08.2019. Advocates Shri Puneet Bansal, Miss. Anshika Agarwal, Sh. Rakesh Gupta and ETO, Panipat Shri Ajay Kumar, attended the hearing on the fixed date and time. 16.1 During the hearing the appellant while reiterating the submissions made in their appeal papers put forth that the basic emphasis of their submissions was that impugned goods are correctly classifiable under Heading No. 1517. 16.2 Shri Puneet Bansal, Advocate emphasized that as per HSN Explanatory Notes, the product "Cooking Delite" is classifiable under Heading 1517 of Customs Tariff Act. He submitted that HSN Explanatory Notes for Heading 1516, inter alia, provides that "The heading includes the products as described above, even if they have a waxy character and even if they have been subsequently deodorized or subjected to similar refining processes, and whether or not they can be used directly as food. But it excludes hydrogenate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....grounds of appeal, written as well as oral submissions, statutory provisions etc. In terms of Section 101(1) of the Act, this Appellate Authority is mandated to pass such order as it thinks fit, confirming or modifying the ruling appealed against. 18. We now proceed to record our discussions and findings. 18.1 The appellant contented that the product "cooking cream" is primarily based on vegetable fat as its main ingredient to which other ingredients are added, forming a mixtures/preparation of vegetable fat. Hence, it is classifiable under Heading 1517 which covers "Edible mixtures or preparation of vegetable fats or vegetable oil or of fractions of different vegetable fats or vegetable oil of this Chapter, other than edible fats or oils or their fractions of heading 1516" and chargeable to 5% IGST as specified under S. No. 89 of Schedule-I of Notification No. 1/2017-Integrated Tax. 18.2 The question for determination in this appeal is whether the product "cooking cream" manufactured/ supplied by the appellant merit classification under Heading 1517 as claimed by the appellant or classifiable under Heading 2106 as determined by the Authority for Advance Ruling, Haryana. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r oils of which may previously have been hydrogenated, may be worked by emulsification (e.g., with skimmed milk), churning, texturation (modification of the texture or crystalline structure), etc., and may contain small quantities of added lecithin, starch, colouring, flavouring, vitamins, butter or other milk fats (subject to the restrictions in Note 1 (c) of this Chapter). The heading also covers edible preparations made from a single fat or oil (or fractions thereof), whether or not hydrogenated, which have been worked by emulsification, churning, texturation, etc. The heading includes hydrogenated, inter-esterified, re-esterified or elaidinized fats and oils or their fractions, where modification involves more than one fat or oil. The principal products of this heading are:- (A) Margarine (other than liquid margarine, which is a plastic mass, generally yellowish, obtained from fats or oils of animal or vegetable origin or from a mixture of these fats or oils. It is an emulsion of the water-in oil type, generally made to resemble butter in appearance, consistency, colour, etc. (B) Edible mixture or preparations of animal or vegetable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n-oil, though it may resemble like a regular cream. 19.2 We found that in the case of Aluva Sugar Agency case cited supra, Hon'ble Supreme Court of India has held that "Margarine - Made only from vegetable oils - Used exclusively as raw-material by bakeries and confectionaries makers - Though margarine was not consumed directly and not used for normal cooking as other oils like coconut, sunflower, etc., fact that it was used for preparing bakery items consumed by human beings made it edible - Having around 80% fat, and being in nature of oil, it has to be considered as edible oil. Margarine is a generic term and it is used as a substitute for butter. It is used in preparation of food articles and specially used for preparing bakery products. For the purpose of manufacturing margarine, refined and/or hydrogenated oils of sun-flower, soyabean, cotton seed, palmoline, palm and sesame oils are used. Moreover, vegetable oils, salt, permitted emulsifiers and stabilizers are also used for manufacturing margarine. So far as the margarine manufactured by the appellant is concerned, it is made only from vegetable oils as stated by the appellant and as borne out from the record. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der agitation for 45 minutes to get a homogenous mass. The vanaspati was passed through Rotators and Crystallizers which churned the product from 45°C to 20°C; and the chilled mixture of vanaspati so formed was called Bakery Shortening which was then packed in 15 Kg packs and kept for tempering in air-conditioned room for a day. We found that the additives in the said case were only those specified in HSN Explanatory notes. No other additives or ingredients outside the scope of HSN Explanatory Note of Heading 1517 were available, However, in the case before us we found that appellant is using Sugar as an ingredient which does not found place in the list of ingredients described in HSN Explanatory Notes of Heading 1517. Thus, the aforesaid case law of Parisons Foods Pvt Ltd is not applicable to the instant case. Moreover, the case of Parisons Foods Pvt Ltd relied upon by the appellant has not attained the finality and pending with the Apex Court. 21. Thus, we are of the considered view that the product 'Cooking Delite' is not classifiable under Heading 1517 of Customs Tariff Act. 22. Now the question before us is that if the impugned goods do not qualify to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s it does not remain fraction of palm oil. Here it is important to take note of the General Rules for the interpretation of tariff Rule 2 (b) provides that classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. 23.3 Rule 3 (a) provides that when by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be made under the heading which provides the most specific description compared to headings providing a more general description. 23.4 In the instant case, the impugned item is mixture of vegetable oil and other food stuffs. After the manufacturing process, as detailed in the appeal, it is observed that individual identity of all the mixtures is lost and what, emerges is totally a different item, a new product having different name, character and use. Thus, cooking cream cannot be said to be merely a mixture of vegetable oil with other ingredient, but a totally new product having different name character and use. Under such circumstances, it does not merit classification under chapter heading 1517, rather merits classification under....