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2024 (4) TMI 46
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....n certificate issued under the ASEAN Free Trade Area Preferential Tariff Certificate of Origin. Officers of SIIB, examined the cargo pertaining to the above Bill of Entry under mahazar proceedings dated 1.2.2022. Samples were drawn from the consignment containing 20 Kg carton boxes packed with 'Ajitide'. The imported goods were felt to be used during food preparations in the food industry and it appeared that the same are rightly classifiable under CTH 2106 9060 as food flavouring material. Show Cause Notice dated 29.11.2022 was issued to the Appellant. The SCN proposed to demand differential duty, on imports covered by 68 bills of entry, from 1-12-2017 to 29-10-2022. After due process of law, the adjudicating authority reclassified the goods under CTH 2106 9060 and ordered for reassessment of the same denying the benefit of Notification No. 46/2011 dated 1.6.2011. Differential duty amount of Rs.40,83,51,948/- was confirmed along with interest and redemption fine imposed. An equal penalty was also imposed under sec. 114A of the Customs Act, 1962. Aggrieved, the appellant is before this Tribunal. 3. Department has not filed any cross-objection. 4 Shri R. Parthasarathy, learned....
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....ant: (i) Ajitide (Disodium ribonucleotide) is a Chemical mixture of just two chemicals - Di Sodium 5' Inosinate and Di Sodium Guanalyte. Both these are separately defined organic compounds. (ii) They have been classifying the subject goods under TI 3824, as miscellaneous chemical products, at least since 2011 without being disputed by the customs department. (iii) Ajitide by itself is not a food preparation. It is not meant for human consumption directly or after processing such as cooking, dissolving, or boiling in water without adding any other foodstuff. (iv) No other food stuff is added to it nor does it have other substances with nutritive value added to it, Chapter Note 1 (b) clearly points out that Classification under 2106 is automatically ruled out. (v) Chapter Note 1 (b) implies that the chemical mixture will fall under 3824. (vi) Ajitide is a chemical which is recognized as a food additive by FSSAI and Codex Alimentarius. (v) The Codex Alimentarius, uses the 'International Numbering System for Food Additives' (INS) for harmonised naming system for food additives as an alternative to the use of the specific name, which may be lengthy. Di sodium Inosin....
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....ed to food or drink to give it a particular taste. (v) The imported goods are known to the public as flavoring material The same includes flavor enhancers as the "flavoring material" is a wider term. Thus, the term 'flavoring material' specified under CTI 2106 9060 includes material which provide characterized taste and the imported goods are essentially providing the same. (vi) The FSSAI clarification submitted by the Importer was examined and it was found that though the letter states that the imported item is a flavor enhancer it is silent about the inherent characteristics of the goods. 7. We find that both the parties do not dispute that the classification of the impugned goods are to be done primarily as per their identity in common or commercial parlance. However as per Revenue the imported goods are known to the public as flavoring material whereas as per the Appellant they are known in the trade and are also marketed as flavor enhancers. So the basic question arises as to whether flavoring material and flavor enhancers are one and the same thing or not. The learned Adjudicating Authority thinks so but the Appellant demurs. We would hence have to look into the ....
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....enhance the existing taste or depress certain undesirable taste/ flavour in food or odour's. A taste has a distinct set of taste bud receptors in the oral cavity. Umami, one of the five fundamental taste sensations, is also known to have its own specific receptor for its taste. Umami is described in the Merriam-Webster dictionary as: Umami: the taste sensation that is produced by several amino acids and nucleotides (such as glutamate and aspartate) and has a rich or meaty flavor characteristic of cheese, cooked meat, mushrooms, soy, and ripe tomatoes. Umami is often described as a meaty flavor and is particularly strong in aged or fermented products, like cheese and wine.-Carla Ranicki As per the discussions of the rival parties it is understood that glutamate, inosinate, and guanylate are umami-related substances. However, the precise role of these substances has not been well elucidated. 7.3 The question arises as to under which group does Ajitide falls. The impugned order has at para 33 referred to the technical literature provided by the importer, extract of which is reproduced here under: "AJITIDE(r) I+G is a flavor enhancer composed by nucleos....
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.... and they have not been assigned a "INS" code number, whereas Di sodium Inosinate (INS 631), Di sodium Guanylate (INS 627) & Disodium 5' Ribonucleotides (INS 635) have INS numbers allotted to them. Since INS numbers are allotted to them, the subject goods are food additives and not food flavouring material. They have also referred to the letter of FSSAI differentiating between enhancers and flavouring material by way of different product codes for registration. Hence CTH 2106 9060 which covers food flavouring material is to be ruled out. 7.5 We find that both food flavouring and food enhancers are within the pale of additives as seen from the definition of food additives given in Codex Alimentarius and FSSA reproduced below and since the distinction of food additive being applicable equally, it will not take food enhancers beyond the pale of food flavouring material. Codex Alimentarius Food Additives Definition • Food additive means any substance not normally consumed as a food by itself and not normally used as a typical ingredient of the food, whether or not it has nutritive value, the intentional addition of which to food for a technological (including o....
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....e, to understand the legislative intent by the one principle which is fairly well settled by a catena of judgments by the Supreme Court, that words and expressions describing goods in a taxing statute should be construed in the sense in which they are understood in the trade, by the dealer and the consumer. The reason is that it is they who are concerned with it and it is the sense in which they understood it which constitutes the definitive index of the legislative intention. This perhaps reflects the Constitutional Court's thinking on the inability of the English language to convey complex technical information with a high degree of legal certitude in the classification of goods and services. The test commonly applied to such cases is: how is the product identified by the class or section of people dealing with or using the product? 8.1 It has been held in M/s Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, [1981 (2) SCC 528], that "if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in commo....
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....r Note 1(b) to Chapter 38 the said item is excluded from chapter 38 and is covered under Chapter 2106. Note 1(b) of Chapter 38 of the Indian Customs Tariff reads as follows:- "1. This Chapter does not cover: (a) . . (b) mixtures of chemicals with foodstuffs or other substances with nutritive value, of a kind used in the preparation of human foodstuffs (generally, heading 2106)" He then referred to the Supplementary note 1(5) of Chapter 21 of the Indian Customs Tariff which reads as follows:- "1.(5). 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; He also referred to the relevant Extract of the CTH 2106 from WCO HSN classification which is reproduced below:- 21.06 - Food preparations not elsewhere specified or included 2106.10 - Protein concentrates and textured protein substances 2106.90 - Other Provided that they are not covered by any other heading of the nomenclature, this headin....
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....ds and expressions used in an Act must take their colour from the context in which they appear. In Hari Khemu Gawali v. Deputy Commissioner of Police, Bombay and another [AIR 1956 SC 559], a Constitution Bench of the Apex Court stated: "It has been repeatedly said by this Court that it is not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia." 'Preparation' and 'food preparation' have also not been defined. As per the Collins Dictionary 'preparation' means; "Preparation is the process of getting something ready for use or for a particular purpose or making arrangements for something." In common parlance 'food preparation' refers to the process of transforming edible ingredients into acceptable, delicious, and safe food. Chemical mixtures which are edible additives to food are understood in common parlance to be a part of food preparation. Since one of the main purposes of eating is to supply nutrients and calories to the body, the process is enhanced and made enjoyable by the palatability of food. This is achieved by various techniques, that help achieve particular food charact....
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....ished. In M/S. Itspossible Marketing Ltd vs Cc, Chennai-II [FINAL ORDER No. 43013/2017, dated: 27.11.2017] the goods imported were "Concentrated Mineral Drops", declared under Chapter 3004 5020 of Customs Tariff Act, 1975. The imported goods/products were saline solution having concentrated natural sea minerals from inland sea. The Department took the view that those products should be classified under CTH 2106 9099. The Tribunal held that the Department failed to prove by way of conclusive evidence as to why the imported goods should not be classified under CTH 3004. The judgment had not given a positive finding on the classification of the imported goods and is hence distinguished. In Banner Pharmacaps (I) Pvt. Ltd. vs Commissioner Of C. Ex. [2005 (183) ELT 151 (TRI-BANG)] the Adjudicating Authority confirmed the classification of imported products as 'Dietary Food Supplements' under Chapter sub-heading 2108.99 of the CETA, 1985 as against the claim of the appellant for a classification under Chapter Heading 1503.00. The Tribunal held that mere encapsulating the vegetable oils into capsule form does not make it a different product. The issue involved is different and is h....
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....and mis-classifying them has lead to evasion of duty and hence the extended period of time as per section 28(4) of the Customs Act 1962 is rightly invokable and the goods are liable for confiscation under Section 111(m) & (o) ibid and the importer is also liable for a penalty. 13.1 In Associated Cement Companies Ltd. Versus Commissioner Of Customs [2001 (128) ELT 21 (S.C.)], the Apex Court observed; "52.Though it was sought to be contended that Section 28 of the Customs Act is in pari materia with Section 11A of the Excise Act, we find there is one material difference in the language of the two provisions and that is the words "with intent to evade payment of duty" occurring in proviso to Section 11A of the Excise Act are missing in Section 28(1) of the Customs Act and the proviso in particular." "with intent to evade payment of duty" hence is not an essential condition for evoking the extended time limit, if the statute so provides. However, 'suppression' means failure to disclose full, correct or complete information. The expression has been used in Section 28(4) and 114A of the Customs Act accompanied by strong words such as "collusion" and, "wilful mis-statement"....