TaxTMI 
TaxTMI 
2024 (3) TMI 847
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.... Excise duty along with interest and also for imposing penalties. After due process of law, the original authority confirmed the classification of Savory Oats to be under 19042000 and confirmed the proposal to demand Excise Duty along with interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 2. The Ld. Counsel Sri G. Krishnamoorthy appeared and argued for the appellant. It is submitted that the very same issue in the appellant's own case was decided by the Tribunal for the different periods. The Tribunal held that the classification of 'Savoury Oats' would fall under 11041200 and also that the activity of appellant does not amount to "manufacture". The said Final Order was passed by Tribunal on 16.08.2023 setting aside the demand, interest and penalties, observing that the activity of appellant does not amount to "manufacture". The Department had filed appeal against such order before Hon'ble Supreme Court and the Civil Appeal filed by the Department was dismissed on 25.01.2024. (Civil Diary No.53435/2023). Ld. Counsel prayed that the appeal may be allowed. 3. Ld. A.R Sri Anoop Singh appeared for the Department. The findings in the im....
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....various ingredients in the specified proportion and packing these premix into plastic pouch and cardboard boxes. There is no process of pre-heating or pre-cooking involved in process undertaken by the appellant. It is thus argued by the Ld. Counsel that mixing of dried vegetables / condiments in the Savoury Oats does not give rise to a new distinct and marketable product. The product retains its essential character as Oats. The process of manufacture of Silk Oats is similar to that of Savoury Oats, except that in the case of 'silk oats, the plain oats (i.e. quick oats) are sprayed with flavouring liquid and mixed with dry fruits and sugar. Ld. Counsel for the appellant thus argued that as the product obtained after the process undertaken by the appellant does not give rise to a new distinct product, the same has to be classified under tariff item 1104 1200 itself. 11. Whereas, the Ld. A.R has argued that after mixing vegetables and condiments, the plain oats looses its original form and character and becomes Masala Oats which is a new and distinct product. That therefore 'Savoury Oats' has to be classified under 1194 20 00. At this juncture, it requires to be stated that departme....
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....ating. Savoury Oats thus cannot be directly consumed by opening the packet and has to be cooked. In other words, Savoury oats / Silk Oats are not cooked preparations but are to be cooked by the consumer. The cooking instructions are given on the packet. It says that the content of the packet along with 1½ cups of water has to be cooked for 3 minutes over medium flame or microwaved for 3 minutes on full power. It cannot therefore be said that the raw material (oats) has been processed beyond the extent provided in Chapter 11 so as to make it a prepared food. Further, the ingredients of the packet says 'Rolled Oats' to be 73.9%. Thus even after the process undertaken, the product remains as rolled oats only. Again, the HSN Explanatory notes to Chapter 1104 (which has already been noticed in para 5.10 above) states that breakfast food of the type which are cooked preparations and ready for consumption fall under heading 1904. We therefore have to hold that the impugned order has erred in holding that the Savoury Oats/ Silk Oats have to be classified under 1904. The process undertaken by the appellant does not change the essential character of the raw material used. The raw mate....
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..... However, the assessee filed a revised classification declaration under Rule 173B of the Central Excise Rules, 1944, with effect from 17th July, 1997, claiming classification of its product under Chapter sub-heading 0801.00 of the Central Excise Tariff. It was contended by the assessee that the crushing of betel nuts into smaller pieces with the help of machines and passing them through different sizes of sieves to obtain goods of different sizes/grades and sweetening the cut pieces did not amount to manufacture in view of the fact that mere crushing of betel nuts into smaller pieces did not bring into existence a different commodity which had a distinct character of its own. .. .. ... 19. It follows from the above that mere addition in the value, after the original product has undergone certain process, would not bring it within the definition of 'manufacture' unless its original identity also under goes transformation and it becomes a distinctive and new product. 20. When we apply the aforesaid principle to the facts of this case, it is clear that mere addition of dehydrated vegetables and certain spices to the raw rice, would not make it a different product. Its primary ....
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....nsumption it would fall under 1904. The relevant part of the order read as under : 5.2 It will be seen from the provisions of Chapter 11, sub-heading 11.04 and the corresponding Explanatory Notes that, flaked corn, which is steam-heated or rolled between heated rollers, but which has not reached the stage of a cooked preparation ready for consumption would be covered under sub-heading 11.04. 6. Chapter 19 of Schedule I to the Tariff Act deals with preparation of cereals, flour, starch or milk; pastry cooks' products. Under Heading 19.04 prepared foods obtained by the swelling or roasting of cereals or cereal products (for example, corn flakes); cereals [other than maize (corn)] in grain form or in the form of flakes or other worked grains (except flour and meal), pre-cooked or otherwise prepared, not elsewhere specified or included. The HSN Notes corresponding to Chapter 19, referred to Chapter Note 4, which reads as under :- "For the purposes of Heading No. 19.04, the expression "otherwise prepared" means prepared or processed to an extent beyond that provided for in the headings of or Notes to Chapter 10 or 11". [emphasis added] Under HSN Explanatory Note 1904, which corr....
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....veral times its original volume. This group further includes crisp savoury food products obtained by submitting moistened cereal grains (whole or in pieces) to a heating process which makes the grains swell, these being subsequently sprayed with a flavouring consisting of a mixture of vegetable oil, cheese, yeast extract, salt and monosodium glutamate. Similar products made from a dough and fried in vegetable oil are excluded (heading 19.05)." 6.2 It will be noticed that under Heading 19.04 of the Schedule to the Tariff Act, both prepared foods obtained by swelling or roasting of cereals as well as cereals products such as corn flakes are covered. On a harmonious construction of these two, namely Headings 11.04 and 19.04, it would appear that if corn flakes are processed beyond the extent, which is provided in Chapter 11, so as to make them prepared foods, they would fall under Heading 19.04, but if they are processed only to the extent which is covered by Heading 11.04, namely till the stage of being steam-heated or rolled between heated rollers, they would fall only under Heading 11.04, because at that stage they are not breakfast food commonly known as "corn flakes" which is....