TaxTMI 
TaxTMI 
2019 (8) TMI 1805
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.... a topping of cheese as it provides smooth lasting taste and stringiness to pizza. 2.1 The impugned good comprises of 14.5 percent mozzarella cheese to which other milk products such as skimmed milk powder and rennet casein are added. The milk ingredients constitute another 15 percent. The composition of impugned good is tabulated as under; Name of Ingredient/additive Ratio Water 44 kg Vegetable Fat 22kg Mozzarella Cheese 14.5 kg Rennet Casein (milk solid) 11 kg Skimmed milk powder 4 kg Premix (emulsifier, stabilizer, acidity regulator and preservative) 4.5 kg Total 100 kg 2.2 Manufacturing process:- 1) The ingredients above are poured and mixed together in a Stephens cooker 2) The above mixture is heated at 75-80degre C.for about.5- 10 minute 3) After heating, the materiel is transferred to a mould of requisite capacity for packing the product into pouches containing smaller quantities (1 kg and 200 grm). These pouches are sealed and packed in an outer carton. 4) The pizza topping comprises of 14.5 percent 'Mozzarella cheese to which other milk products such as skilled milk powder and rennet ....
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....it cannot be concluded that pizza topping falls under this head. There must be some different procedure adopted while preparation of cheese and pizza topping Heading 0406 clearly mentions cheese which is taxable @ 12%. Pizza Topping is not specified under chapter 4 and hence requires to be subjected to 18% being unclassified in any schedule. Decision of Authority for Advance Ruling Haryana: 5. Advance Ruling under Section 98 of the CGST/ HGST Act, 2017 was pronounced as under: The impugned item, i.e., "pizza topping" being manufactured by the applicant cannot be classified as "process cheese" under chapter heading 0406, rather it merits classification under chapter heading 2106 of the schedule to the Customs Tariff Act, 1975, as "Food Preparations not elsewhere specified or included" and chargeable to IGST @ 18%, CGST @ 9% and SGST @ 9%, as specified under S.No.23 of Schedule-Ill of Notification No. 1/2017. Integrated Tax (Rate) dated June 28, 2017, Notification No.01/2017-Central Tax (Rate) dated 28.06.17 and of Notification No.35/ST-2 Submissions made in the Appeal, by the Appellant: 6. The Appellant made the following written submissions in the Appeal: 6.1 At t....
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....Act') for the purpose of determining classification under Notifications. Similarly, Explanation (iv) adopts the general rules for interpretation, Section Notes and Chapter Notes as provided in Customs Tariff Act for interpreting the Notifications. 7.2 The First Schedule to the Customs Tariff Act is divided into XXI Sections which are in turn divided into 98 Chapters. The dominant constituent in impugned good is cheese topping. Hence, Chapter 4 and Chapter 21 covering 'Dairy produce; birds eggs; natural honey; edible products of animal' arise for consideration in the present instance. 7.3 In the present case, the Appellant seeks to classify impugned good under Heading 0406 whereas the Authority vide its Impugned Ruling has classified the same under Heading 2106. It is pertinent to extract each of the above headings for ascertaining their scope and determining the classification of impugned good. Chapter 4 Dairy produce, birds' eggs, natural honey, edible products of animal 0406 Cheese and Curd 040610 00 Fresh (unripened or uncured) cheese, including whey cheese and curd 0406 00 20 Grated or powdered cheese, of all kinds 0406 00 30 Processed cheese....
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....12th edition (2011), Oxford University Press, refer at page 217], defines the term 'cheese' as 'A food made from the pressed curds of milk, firm and elastic or soft and semi-liquid in texture'; The Collins English Dictionary Complete and Unabridged, [12th edition, (2014)] provides following definitions for the term:- • Cheese is a solid food made from milk. It is usually white or yellow; • Food made from milk, that can be either firm or soft; and • Food consisting of the coagulated, compressed, and usually ripened curd of milk separated from the whey. 8.2 A perusal of the above definitions reveals that the term 'cheese' refers to a product made from the milk, by application of the process of coagulation 8.3 The Appellant submitted that the Product contains mozzarella cheese constituting almost 15 percent of the total product. It forms the main ingredient to which other ingredients are added in small quantities. The product contains 15 percent of other milk products such as milk solids and skimmed milk powder. Thus, almost 30 percent {14.5% (mozzarella cheese) + 15% (milk solids and skimmed milk powder)} of product is comprised of chee....
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...., blue-veined cheese, soft cheese, medium-hard cheese and hard cheese. Relevant part of HSN Explanatory Notes is extracted below: "This heading covers all kinds of cheese, viz.:- (1) Fresh cheese (including cheese made form whey or buttermilk.) (e.g., Ricotta, Broccio; cottage cheese, cream cheese, Mozzarella); (2) Grated or powdered cheese; (3) Processed cheese, also known as process cheese. It is manufactured by comminuting, mixing, melting, emulsifying, with the aid of heat and emulsifying or acidifying agents (including melting salts), one or more varieties of cheese and one or more of the following: cream or other dairy products, salt, spices, flavouring, colouring and water. (4) Blue-veined cheese and other cheese containing veins produced by Penicillium roqueforti; (5) Soft cheese (e.g. Camembert, Brie); (6) Medium-hard cheese and hard cheese (e.g. Cheddar, Gouda, Gruyere, Parmesan). The presence of meat, fish, crustaceans, herbs, spices, vegetables, fruits, nuts, vitamins, skimmed milk powder etc. does not affect classification provided that goods retain the character of cheese. Cheeses which h....
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....r: "The presence of meat, fish, crustaceans, herbs, spices, vegetables, fruits, nuts, vitamins, skimmed milk powder etc. does not affect classification provided that goods retain the character of cheese." 8.16 Further, it even permits coating of cheese with an entirely different product like bread/batter, the only requirement is that the product should retain the character of cheese despite the addition of other ingredients. 8.17 In the present instance, the Product primarily comprises of mozzarella cheese and other ingredients such as skimmed milk powder, rennet casein, water, stabilizers, emulsifiers, etc. which are specifically permitted under the HSN Explanatory Notes. In addition to this, impugned .good also contains vegetable fat which is added to reduce the cost of the product. Even after addition of the above ingredients, impugned good does not lose its character of cheese and maintains the same taste, flavour, appearance and consistency. It is used for the purpose same as mozzarella cheese. 8.18 In view of the above, the appellant submitted that since the Product has the character of cheese and satisfies all the criteria laid down under the HSN Explanator....
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....n the Customs Tariff Act, 1975. Accordingly, it is pertinent to refer to the use of the term in common parlance, the primary function of the product and its utility. 9.8 In the light of the above, it is submitted that impugned good is a type of cheese. Accordingly, impugned good is classifiable under Heading 0406. 10. The Appellant places reliance upon US Customs Cross Ruling NYK85532 which dealt with classification of battered/ breaded mozzarella cheese sticks. The composition of the product is as under: Ingredient Percentage Cheese 17% to 23% Breading 44% to 53% Others 24% to 39% It was held that even though the percentage of bread was 44 to 53 percent, i.e. almost twice the amount of cheese, yet the product was classifiable as 'Cheese and Curd' as the essential character of the product is cheese and the same was retained even after addition of breading. Hence, the product was classifiable under HTS 0406. 10.1 In the US Customs Cross Ruling HQ 9631.75, the classification of battered cheddar cheese balls was under consideration. The composition of the product was as under: Ingredient Percentage Batter 55.6% Cheedar Cheese 44.4%....
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....t 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. 11.4 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. 11.5 In the case of CC v. Abott Healthcare Private Limited, 2015 (328) ELT 129 (Tr-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 tariff item 2106 90 00 bearing description 'Other'. The Tribunal after considering the nature of goods and HSN Explanatory Notes, noted that the imported goods were classifiable under Heading 1901. It further held tha....
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.... and emulsifying or acidifying agents (including melting, salts), one or more varieties of cheese and one or more of the following: cream or other dairy products, salt, spices, flavouring, colouring and water. 12.2 It is noteworthy that the aforesaid explanation / meaning of processed cheese is restricted only to provide a broad scope to the types of cheese that can be covered under Heading 0406. The aforesaid entry facilitates classification of any type of cheese which has been further processed by mixing, melting, emulsification etc. to be classified under Heading 0406. Moreover, the definition of processed cheese does not disallow addition of vegetable oil. 12.3 In addition to above, the Authority has failed to appreciate the Explanatory Notes as appended to Heading 0406 in its entirety. The Explanatory Notes read as under: The presence of meat, fish, crustaceans, herbs, spices, vegetables, fruits, nuts, vitamins, skimmed milk powder etc. does not affect classification provided that goods retain the character of cheese. Cheeses which have been coated with batter, or bread crumbs remain classified in this heading whether or not they have been pre-cooked, p....
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....ut forth that the basic emphasis of their submissions was that impugned goods are correctly classifiable under Heading No. 0406. 14.2 Shri Puneet Bansal, Advocate submitted that the Heading No. 0406 covers all kind of cheese including processed cheese, also known as process cheese. It is manufactured by comminuting, mixing, melting, emulsifying, with the aid of heat and emulsifying or acidifying agents (including melting, salts), one or more varieties of cheese and one or more of the following: cream or other dairy products, salt, spices, flavouring, colouring and water. 14.3 He emphasized that Hon'ble Supreme Court of India in the case of Commissioner of Central Excise , New Delhi vs Connaught Plaza Restaurant (P) Ltd reported as 2012 (286) ELT 321 (SC) has held that: ''Time and again, the principle of common parlance as the standard for interpreting terms in the taxing statutes, albeit subject to certain exceptions, where the statutory context runs to the contrary, has been reiterated. The application of the common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law maker; "it is an attempt to dis....
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....of any heading make it abundantly clear that cheese which contain various additions that are battered or breaded and pre-cooked are included as ' cheese' under Heading 0406. Ingredients and characteristics of the product with which we are concerned do not contain any material or feature, which will take the said product out of goods falling under Heading 0406." Discussion and Findings: 15. We have considered the material on record including the appellants grounds, 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. 16. We now proceed to record our discussions and findings. 16.1 The appellant has contended that the Product "pizza topping" containing 14.5 percent Mozzarella cheese and 15 per cent of other milk products such as milk solids and skimmed milk powder along with other ingredients forms a type of cheese; that topping maintains its basic cheesy character even after addition of other ingredients. Thus, it is classifiable under Chapter Heading 0406 (SI. No. 13 of Schedule -Il to Notification No. 1/2017 Integrated T....
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..... 3. Products obtained by the concentration of whey and with the addition of milk or milkfat are to be classified as cheese in heading 0406 provided that they have the three following characteristics: (a) a milkfat content, by weight of the dry matter, of 5 % or more; (b) a dry matter content, by weight, of at least 70 % but not exceeding 85 %; and (c) they are moulded or capable of being moulded. 4. This Chapter does not cover: (a) products obtained from whey, containing by weight more than 95% lactose, expressed as anhydrous lactose calculated on the dry matter (heading 1702); (b) products obtained from milk by replacing one or more of its natural constituents (for example, butyric fats) by another substance (for example, oleic fats) (heading 1901 or 2106); or" (c) albumins (including concentrates of two or more whey proteins, containing by weight more than 80% whey proteins, calculated on the dry matter) (heading 3502) or globulin (heading 3504). SUB-HEADING NOTES : 1. For the purposes of sub-heading 0404 10, the expression "modified whey" means products consisting of whey constituents, tha....
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...., the presence of "vegetable fat" in substantial quantity, results the impugned item do not qualify to be categorized as "Process cheese" or a type of cheese. 18. The appellant relied upon the decision of Appellate Authority for Advance Ruling, Uttar Pradesh in the case of Savencia Fromage & Dairy (P) Ltd 2019 (4) TMI 1545. In this case Appellate Authority for Advance Ruling, Uttar Pradesh has held that the product "Breaded Cheese" is classifiable under Heading 0406. 18.1 We have gone through the said decision of Authority for Advance Ruling Uttar Pradesh. We find that cheese form the most important constituent (55% of total volume). Since the product in question in this case consisting predominantly cheese, hence the Authority has correctly classified the product under Heading 0406. However, in the case before us cheese is not the predominant constituent. Hence the case relied upon by the appellant is not at all applicable in the case before us. 18.2 The appellant also contended that the impugned product is a type of cheese and relied upon the case of CCE vs. Wood Craft Products Limited, 1995 (77) ELT 23 (SC). In this case the Apex Court has observed that the HSN Explanat....
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.... 90 99. 19.1 Chapter Note 5 of Chapter 21 provides that "Heading 2106 (except tariff items 2106 90 20 and 2106 90 30), inter alia, includes:- (a) .......................................; (b) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption; (c) .......................................... (d) ...................................... Further, Chapter Note 6 of Chapter 21 reads as under: "Tariff item 2106 90 99 includes sweet meats commonly known as " Misthans" or " Mithai" or called by any other name. They also include products commonly known as "Namkeens", "mixtures", "Bhujia", "Chabena" or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients. 19.2 We find that the product in question i.e. ''Pizza Topping' is a product made out of mozzarella cheese, vegetable oil and milk solids as main ingredients with premixes of emulsifiers and stabilizers. The mozzarella cheese is blended with other ingredients and heated upto a required degree. After heating, th....