TaxTMI 
TaxTMI 
2025 (6) TMI 1875
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....s and Wafer Uncoated Reject the Products manufactured by the appellant are classifiable under Excise Tariff Item ETI 1905 32 11 of the Central Excise Tariff Act, 1985 the Excise Tariff as claimed by department, or under ETI 1905 32 90 as claimed by the appellant. 3. The appellant claims to be engaged in the manufacture of various food preparations containing cocoa, classifiable under Chapters 18 and 19 of the First Schedule to the Excise Tariff. According to the appellant, the manufactured Products are classifiable under ETI 1905 32 90 with duty @ rate of 16%/12.5% during the relevant period. Serial No. 19 of Notification No. 3/2006-CE dated 01.03.2006 (for period upto March 2012) and Serial No. 28 of Notification No. 12/2012-CE dated 17.03.2012 (for period from March 2012) the Exemption Notification prescribed reduced rate of duty of 8% Changed to 4% w.e.f. 07.12.2008, 5% w.e.f. 01.03.2011 and 6% w.e.f. 17.03.2012 on "Wafer Biscuits" classified under ETI 1905 32 90. The appellant cleared the Products at the reduced rate of duty claiming classification under ETI 1905 32 90 and benefit of the Exemption Notification. One more intermediate product, namely, Real Milk Chocolate was c....
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....rk and Ulta Perk. The only difference between these products are, in Perk, wafer is coated/ dipped in chocolate and in Ulta Perk, chocolate is sandwiched in between wafers. I find that noticee has also not disputed this aspect i.e. both the product contain wafers and chocolate. xxxxxxxxxxx 35. I find that noticee has grossly erred in understanding the classifications of the products reflected under Chapter sub heading 1905.32, as reproduced in previous para. Chapter Sub heading 1905.32 covers "waffles and wafers" and "Communion Wafer" without any tariff entry. Furthermore the sub heading 190532 have been further sub divided into 19053211, which refers coated with chocolate or containing chocolate. It is also noteworthy that the sub heading are differentiated with "-", "--" "---" and "----". From the clarification given above in the general explanatory notes, it is clear that the where the description of an article or group of articles preceded by "---" or "----", the said article or group of articles shall be taken to be a sub- classification of the immediately preceding description of the article or group of articles which has "-" or "--". It means the Communion ....
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....fiable under Chapter sub heading 19053211. Held accordingly. xxxxxxxxxx 39. On perusal of the definitions of "Waffles & Wafers" and "Communion Wafer" given in HSN, I find that under waffles and wafers, it has been stated that "Waffles may also be chocolate covered and Wafer are products similar to waffles. It means wafers may also be chocolate covered. However as regards Communion Wafer, no such possibility of chocolate coating is reflected. Thus the law is very clear that wherever coated with chocolate or containing chocolate is narrated in the Central Excise Tariff under 19053211, it is specifically and only related to Waffles and Wafers and not to Communion Wafer. In light of the aforesaid definitions given in HSN also, the contention of the noticee that 19053211 and 19053219 is related to Communion Wafer only, seems to be incorrect and liable to be rejected. 40. xxxxxxxxxx. The flow chart makes it very clear that their products Perk contains Wafer and Chocolate along with other ingredients. The chapter sub heading 190532 covers Waffles and Wafers. As the wafer is coated with chocolate, the same is classifiable under 19053211, as discussed in aforesaid....
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.... expanded products savoury or salted Kg. Nil 1905 90 40 --- Papad Kg. Nil 1905 90 90 --- Other Kg. Nil 10. It would also be relevant to refer to the General Explanatory Notes contained in the General Rules for the Interpretation of First Schedule and they are as follows: General Rules for the Interpretation of First Schedule xxxxxxxxxx General Explanatory Notes 1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "--", the said article or group of articles shall be taken to be a sub- classification of the immediately preceding description of the article or group of articles which has "-". Where the description of an article or group of articles is preceded by "---" or "----", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles....
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.... was issued in exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944. It provides that the Central Government, on being satisfied that it is necessary in the public interest so to do exempts excisable goods of the description specified in column (3) of the Table from so much of the duty of excise specified thereon under the First Schedule to the Excise Tariff, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions, if any, specified in the corresponding entry in column (5) of the Table. The relevant portion of said Table making reference to ETI 1905 32 19 or ETI 1905 32 90 is reproduced below: Effective Rates of duty for Goods of Various Chapters "The Central Government, on being satisfied that it is necessary in the necessary in the public interest so to do, hererby exempts excisable goods of the description specified in column (3) of the Table below and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985. xxxxxxxxxx from so much of the duty ....
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....uty. Therefore, if the four dash ( ) coated with chocolate or containing chocolate entry is directly read as sub-classification of (--) waffles and wafers, it would render the triple dash ( ) communion wafers entry otiose. In this regard reliance has been placed on a decision of the Tribunal GAIL (India) Ltd. vs. CCE & S.T. Vadodara-II 2019 (24) G.S.T.L 626(Tri. Ahmd); (iv) ETI 1905 32 11 has, therefore, to be read as "communion wafers: covered with chocolate or containing chocolate", whereas ETI 1905 32 19 has to be read as "communion wafers: other"; (v) Once entry ETI 1905 32 11 is ruled out because of the fact that the Products are not in the nature of communion wafers, the only remaining classification for the Products of the appellant would be ETI 1905 32 90, which classification has been claimed by the appellant. This submission is supported by the fact that Explanatory Notes to Customs Tariff Act, 1985, which were in pari materia to Excise Tariff were amended by the Finance Act, 2023 in such a manner that four dash (---- ) entry has be read as sub-classification of preceding three dash (---). The said amendment was introduced to clarify the prev....
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....ions and classification of the product; and (xiii) As the demand itself is not sustainable, interest confirmed by the department is not recoverable. 16. Shri Sanjay Jain, learned special counsel for the department and Shri Bhagwat Dayal, learned authorised representative appearing for the department, however, supported the impugned order and made the following submissions: (i) The issue involves is related to concessional excise duty under the Exemption Notification for wafers dipped in chocolate/chocolate sandwiched in between wafers and not of classification of communion wafers. For eligibility of concessional excise duty under the Exemption Notification, the burden of proving applicability would be on the appellant to show that the case comes within the parameters of the Exemption Notification; (ii) Concessional excise duty of 8% was provided for "Wafer biscuits" under erstwhile 6 digit classification by Notification No. 37/2003-CE dated 30.04.2003. The erstwhile Sub-Heading 1905 39, covered only waffles and wafers other than coated with chocolate or containing chocolate. With effect from 01.03.2006, Notifications were issued/amended so as to align ....
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.... other. 21. It is the third single dash, in which the goods have been described as sweet biscuits; waffles and wafers, that requires consideration. The third (-) entry has two (--) entry namely; (i) sweet biscuits; and (ii) waffles and wafers. The issue that arises for consideration in this appeal is whether (----) entry at ETI 1905 32 11, in which the goods have been described as "coated with chocolate or containing chocolate" and is preceded by (---) entry in which the goods have been described as "communion wafers", should be read as sub-classification of (--) entry "waffles and wafers" at Excise Tariff Sub-Heading 1905 32 or as sub- classification of (---) entry "communion wafers" which does not have any Tariff Heading. It is on this sub-classification that the entire controversy regarding the classification of the Products would depend. 22. The Principal Commissioner has relied upon the General Explanatory Notes to conclude that the (----) entry at ETI 1905 32 11 is a sub-classification of (--) entry "waffles and wafers" at Excise Tariff Sub-Heading 1905 32. 23. The relevant portion of the General Explanatory Notes, on which reliance has been placed, is reproduced bel....
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....al held that if the contention of the department is accepted, (---) entry with no prescribed rate of duty will be rendered otiose. The observations of the Tribunal are reproduced: "4.3 xxxxxxxxxxx. It is seen that "Motor Spirit" is "---" entry with no tariff item number. The argument of the Revenue is that sub- heading 2710 11 11, 2710 11 12, 2710 11 13 and 2710 11 19, which are "- - - -" entries, are not sub-classifications of "Motor Spirit", which is a "- - -" entry immediately preceding those " " entries. 4.3.1 A perusal of the heading 2710, post 1-3- 2005, shows that the said heading 2710 has been first divided into two unnumbered "-" entries, one relating to "Petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, other than waste oils" And the other "-" entry relating to "Waste oils". 4.3.2 Thereafter the first "-" entry is further divided into two "- -" entries, one numbered as 2710 11, namely "Light Diesel ....
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....to provide that (----) entry may be read as sub-classification of the preceding (---) entry. Section 135 of the Finance Act 2023 amended the Fourth Schedule. The said amendment is reproduced below: "The Fourth Schedule [see section 135(c)] In the First Schedule to the Customs Tariff Act,- (1) in the General Explanatory Notes, in paragraph I, after the portion beginning with the words "Where the description of an article or group of articles" and ending with the words "the article or group of articles which has "- " or "--".", the following shall be inserted, namely:- "Where the description of an article or group of articles is preceded by " ", in addition to being a sub-classification of "-" or "--", the said article or group of articles may also be taken to be a sub-classification of the immediately preceding description of the articles or group of articles which has " "."; (2) for the List of Abbreviations Used, the following shall be substituted, namely:-" 29. It is clear that the said amendment was introduced to clarify the dispute as to where by interpretation to the General Explanatory Notes would have....
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....ion at all. 38. In this connection, it would be useful to refer to the decision of the Tribunal in Pepsico Holdings Pvt. Ltd. vs. Commissioner of C.Ex., Pune-III 2019 (25) G.S.T.L. 271 (Tri.-Mumbai). The department proposed classification of 3D choco filled snacks under ETI 1905 32 11. The Tribunal did not accept such a classification for the reason that this entry was for "communion wafers", which has a religious purpose. The relevant portion of the decision of the Tribunal is reproduced below: "1. xxxxxxxxxxxxxx. The heading claimed by the appellant was the residual entry in "bread, pastry, cakes, biscuits and other bakers" wares, other than crispbread, ginger bread and the like and sweet biscuits, waffles and wafers and communion wafers, pastries and cakes, extruded or expanded products and papad". Contrarily, Central Excise authorities proposed classification under the sub-heading of "sweet biscuits, waffles and wafers" and specifically under Heading No. 1905 32 11 pertaining to "communion wafers coated with chocolate or containing chocolate". xxxxxxxxxxxxx 5. "Communion wafers" are produced for religious purposes which is evident from the adjectiv....
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....e notice that the product deserved to be valued under Section 4A instead of Section 4 of Central Excise Act, 1944. Thereafter, another show cause was issued to the appellant covering the period October 2009 to September 2011. In this second show cause notice, the department did not contest either classification by the appellant or the fact that they are not covered by Section 4A but are covered by Section 4 for the purpose of valuation. The second show cause notice only sought to deny the exemption notification claimed by the appellant and also sought to value the goods under Section 4 of Central Excise Act, 1944 as per the price list denying some exclusions claimed by the appellant. Both the show cause notices were decided by Ld. Adjudicating authority vide O-I-O No. 09/2012-Adjn. (Commr.) CE, dated 26-3-2012. He dropped the proceedings in pursuance of the first show cause notice. Therefore, the dispute with regard to the classification and valuation under Section 4A instead of under Section 4 have reached finality. The adjudicating authority has also held that their products are classifiable under chapter Heading 1905 32 90 and that their products are not covered under Section 4A....
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....or to the ultimate consumers on their wrappers. Thus, we find nobody in the chain of trade from the manufacturer to the ultimate consumer know the products as "wafer biscuits" but know them only called as coated wafers. It is not for this Tribunal to enlarge the scope of an exemption notification meant for "wafer biscuits" to cover "coated wafers" as well. Even if it is held that "wafers" could possibly be broadly considered as wafer biscuits, the matter is definitely not free from doubt/ambiguity. xxxxxxxxxxx." (emphasis supplied) 42. It needs to be noted that the aforesaid decision of the Tribunal is in the context of six appeals which had been filed by Little Star Foods and Mondelez India Foods. Thus, when in the case of the appellant itself, the department classified "Perk" under ETI 1905 32 90, it is not open to the department to now contend that "Perk" would not fall under ETI 1905 32 90 but would fall under ETI 1905 32 11. It also needs to be noted that the product "Perk" was found to be not a "wafer biscuit". 43. In the present appeal, the order passed by the Principal Commissioner in paragraph 41 accepts the contention of the appellant that "Perk" is a "wafe....
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....r-irons or tongs, formerly eaten with wine; a similar biscuit eaten with ice-cream a thin round cake of unleavened bread. These definitions leave us in no doubt that wafer is a kind of biscuit. Although it might be different in size and shape. Mr. V. Jagannandha Rao has taken me through Encylopaedia Britannica to show that the method of manufacture of biscuits and wafers is completely different and, therefore, it would not be proper to place wafers in the category of biscuits. In Encyclopedia Britannica, 1953 Education, it is stated that the variety of products by the term biscuits has shown a marked increase since the beginning of the 20th Century, and the products of a large modern biscuit bakery include a great number of specialized varieties of which the composition and methods of manufacture differ widely and that in the United States among the most popular varieties are also sugar and other wafers". The ingredients used in biscuits are numerous and of these wheat flour is the most important. The type of flour used depends upon the kind of biscuit to be produced and varies. from a very soft flour, used in the more tender cookies, to "stronger" flours, used in soda crackers, co....
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.... placed reliance upon the decision of the Tribunal in Dukes Consumer Care to conclude that wafer containing chocolates would fall under ETI 1905 32 11. The issue that arose for consideration before the Tribunal in Dukes Consumer Care was whether the products were classifiable under ETI 1905 32 11 or ETI 1905 32 19. These two entries were examined by the Tribunal and it was held that the product would fall under ETI 1905 32 11. The classification of the products under ETI 1905 32 90 was not examined by the Tribunal. In the present case, as noticed above, the two competing entries are ETI 1905 32 11 and ETI 1905 32 90. This apart, the issue as to whether ETI 1905 32 11 pertains to "communion wafers" was not raised nor considered by the Tribunal. The said decision would, therefore, not come to the aid of the department. 50. It has also been contended by learned counsel for the appellant that in any view of the matter the Products would not fall under ETI 1905 32 11 as the said entry covers products that are "coated with chocolate" or "containing chocolate". 51. This contention advanced by learned counsel for the appellant deserves to be accepted. The main ingredients of the Prod....