TaxTMI 
TaxTMI 
2008 (7) TMI 37
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....butter, emulsifier (soya lecithin), colour, wheat protein, synthetic food colour and added artificial flavouring substances. The wrapper describes it Nestle Milky bar Choo-soft chewing fudge with white chocolayer. It is seen that the chocolayer is nothing but white chocolate. It is also seen that the fudge in the subject goods as well as white chocolayer are made up of the same ingredients. The appellant was clearing this product as sugar confectionery, not containing cocoa at a concessional rate of duty of 8% ad valorem vide Sl. No. 247 of Notification No. 6/2002-C.E., dated 1-3-2002, as amended and Sl. No. 16 of Notification No. 3/2006-C.E., dated 1-3-2006. 3. It appeared that the composition of the impugned goods conforms to the definition of 'White Chocolate' as per HSN Notes to Chapter 17. It was also found by the Deptt. that in trade parlance the impugned goods are also known as 'White Chocolate'. The appellant was, therefore, served with a Show cause Notice dated 4-4-2007 seeking to deny the benefit of the notification and demanding duty of Rs. 98,89,138/- and Education Cess thereon of Rs. 1,97,783/- for the period March, 2006 to January, 2007. The notice also proposed to....
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....it contains partially hydrogenated vegetable oils. Referring to the HSN Chapter Note to Chapter Heading 18.06, he submitted that Chocolate may contain vegetable oils. He also submitted that any dispute with respect to classification of any product has to be resolved on the basis of its description under the relevant chapter heading/sub-heading read with relevant Chapter Notes, if any, of the Central Excise Tariff which is based on the internationally accepted Harmonised System of Nomenclature (HSN). In support of this submission, he relied upon the Apex Court's decision in CC, Bombay v. Business Forms Ltd. - 2002 (142) E.L.T. 18 (S.C.). Shri Mondal also submitted that definition of 'Chocolate' in the Prevention of Food Adulteration Rules, 1955 has no relevance for the purpose of classification of Chocolate under the Central Excise Tariff. He submitted that the object of the Prevention of Food Adulteration Act, 1954 and the Rules made thereunder is to prevent adulteration of food, while the object and purpose of the Central Excise Tariff Act, 1985 is to classify goods for charging Central Excise duty. The two Acts operate in different fields. He also submitted that it is well settle....
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....ly, Milkybar Choo is not White Chocolate as it contains partially hydrogenated vegetable oils as one of its ingredients. As 'per definition of Chocolate in the Prevention of Food Adulteration Rules, 1955, Chocolate shall not contain any vegetable fat other than cocoa butter. Since White Chocolate is one of the varieties of Chocolate and it contains partially hydrogenated vegetable oil, it cannot be marketed as White Chocolate. Hence the impugned goods cannot be treated as White Chocolate for the purpose of the Central Excise Tariff and SI. No. 16 of Notification No. 3/2006-C.E. Ld. Counsel heavily relied upon the Tribunal's decision in Little Star Foods Pot. Ltd. v. CCE - 2006 (199) E.L.T. 451 (T) which, in turn, has relied upon the Tribunal's decision in the case of Nestle (India) Ltd. v. CCE - 2004 (124) E.L.T. 898 and CCE v. Britannia Industries Ltd. - 2005 (183) E.L.T. 257 and submitted that use of vegetable oil is prohibited in Chocolates in terms of Prevention of Food Adulteration Rules, 1955. 11. We find that the wrapper of Milkybar Choo shows that the same is registered product of the appellant. Explanation (b) of Rule 37A (2) of the PFA Rules, 1955 reads as under: (b....
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....portion of the chocolates by weight or value. For the sake of convenience and proper appreciation, we reproduce herein below paras 10 & 11 of the Tribunal's order in Nestle (India) Ltd. "10. In the light of this correspondence reference to the explanatory note in deciding the scope of the tariff is justified. The Supreme Court stated in paragraph 18 of its judgment CCE v. Wood Craft Industries Ltd. (1995 (77) E.L.T. 23) that the structure of the Central Excise Tariff is based on the internationally accepted nomenclature in the HSN and therefore dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless a different intention in the statute is indicated by the Central Excise Tariff Act, 1985. The comparison between the headings in both the tariffs and the explanatory notes, when we have attempted does not show the presence of a different intention. On the contrary, the headings are closely aligned and in many cases are identical. Reference to the HSN explanatory notes is therefore called for. 11. These notes are clear that biscuits and waffles covered with chocolate are to be classified under He....
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....PFA Rules are not relevant for that purpose. We observe that this decision is per incuriam inasmuch as the Tribunal has not noticed the judgment of the Hon'ble Bombay High Court in the case of Kaira Dist. Co-op. Milk Producer's Union Ltd. v. Union of India - 1989 (41) E.L.T. 186 (Bom) holding that for purposes of classification of food, resort to the definition of food contained in the Prevention of Food Adulteration Act is wholly unjustified. That Act deals with entirely a different subject. It is not a part of the family of the same laws, i.e. Indian Tariff Act, 1934. In view of this, the Tribunal's decision in Britannia Industries Ltd. will have no precedential value. 17. Learned Counsel for the appellant also relied upon the judgment of the Hon'ble Punjab and Haryana High Court in the case of Food Specialties Ltd. v. Union of India - 1991 (51) E.L.T. 310 (P & H) which has been upheld by the Hon'ble Apex Court as reported in 1998 (97) E.L.T. 402 (S.C.) and submitted that for purposes of classification of a product or its exemption from payment of duty, Prevention of Food Adulteration Rules can be resorted to. 18. We have gone through the judgment. We find that the dispute ....
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....ople conversant with the subject matter of the statute or statutory instrument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject. Craies on Statute Law (6th Edn.) says thus at page 164: "in construing a word in an Act caution is necessary in adopting the meaning ascribed to the word in other Acts." it would be a new terror in the construction of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone "Macbeth v. Chislett - (1910) A.C. 220, 223." 20. In the case of C.C.E., Cochin v. Tata Tea Ltd., the issue involved was whether 'instant tea' manufactured and exported by the respondent was 'tea' within the definition of Section 3(n) of the Tea Act, 1953 and liable to cess under Section 25 of the said Act. The Assistant Commissioner confirmed the demand, which was upheld by the Commissioner (Appeals). However, the Tribunal set aside the order of the Commissi....
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....ng rulings, we are unable to accept the appellant's contention that since 'Milkybar Choo' does not conform to the definition of 'Chocolate' in the P.F.A. Rules, 1955, it cannot be considered to be 'White Chocolate' for the purposes of classification under the Central Excise Tariff Act and Sr. No. 16 of the Notification No. 3/2006-C.E., dated 1-3-2006. 23. We find that HSN Note to Chapter heading 18.06 gives composition of chocolate as follows: "Chocolate is composed essentially of cocoa paste and sugar or other sweetening matter, usually with the addition of flavouring and cocoa butter; in some cases, cocoa powder and vegetable oil may be substituted tor cocoa paste. Milk, coffee, hazelnuts, almonds, orange-peel, etc., are sometimes also added." 24. From the above composition, there is no doubt that use of vegetable oil in chocolate will not take it out of the purview of chocolate. Since White Chocolate is one of the varieties of chocolate, presence of partially hydrogenated vegetable oil in it will not take it out of the purview of white chocolate. It will continue to be white chocolate as per HSN chapter notes to Chapter heading 18.06. We, therefore, confirm the Commissi....
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....is also established from the independent web material, Wikipedia, the free encyclopedia (page 95 of the Paper Book). This web material, inter alia, says as follows "Some "white chocolate" is made from inexpensive solid or hydrogenated vegetable fats, and as such, is not at all derived from cacao. These preparations may actually be white in color (in contrast to white chocolate's ivory shade) and will lack cocoa butter's flavor". 29. Ld. Counsel for the appellant made a submission that earlier the appellant was not using partially hydrogenated vegetable oil in 'Nestle Milkybar', another product manufactured by it in Mangalors Commissionerate. Hence the appellant was classifying it as White Chocolate. But now the appellant is using partially hydrogenated vegetable oil in it and hence it is not being classified as white chocolate. In support of this submission, he had shown, two wrappers of 'Nestle Milkybar' indicating the use of various ingredients. He also produced the copies of the invoices indicating payment of duty @ 16% in the former case and @ 8% in the latter case. We are not aware of the circumstances and the background in which it is being done and what is the stand of....