Customs, Excise and Gold Tribunal - Bangalore
Warner Lambert India Ltd. vs Commissioner Of C. Ex. on 10 August, 2004
Equivalent citations: 2004(174)ELT268(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. The appellant is aggrieved with the Order-in-Appeal No. 331/2001-CE., dtd. 20-2-2001 by which the Commissioner (Appeals) has confirmed the classification of the chewing gum base under Chapter sub-heading 1704.10 which reads 'chewing gum, whether or not sugar coated' as against the claim of the appellants for classifying the chewing gum base under the residual entry 1704.90 with description 'other'.
2. It is the contention of the appellants that chewing gum base is one among the 22 ingredients used in the chewing gum. The item becomes a chewing gum only when all the 22 items are added and when it is marketed as chewing gum and is ready for chewing by the consumer. It is stated by the appellants and supported by their affidavit that the item is only a base and one of the raw materials which cannot be equated to chewing gum and for the tariff purpose it cannot be classified under Chapter sub-heading 1704.10 which covers a final product "chewing gum coated with sugar or not". The finding recorded by the Commissioner that the sub-heading 1704.10 refers also to uncoated sugar chewing gum brings within its ambit the chewing gum base is not a correct order. The chewing gum base has not attained the stage of chewing gum and not marketed as chewing gum at all and therefore it has to be classified only in the residual item 'other'. It was submitted that the Apex Court in the case of CCE, Madras v. Gum Products (P) Ltd [1997 (91) E.L.T. 249 (S.C.)] has clearly held that bubble gum being commercially a distinct item than chewing gum cannot be classified in tariff item 1A of the erstwhile Tariff and is required to be classified in residual tariff item 68. It was further submitted by the Tribunal in the case of Joyco India Pvt. Ltd. v. CCE, Chandigarh [2002 (143) E.L.T. 593 (Tri. - Del)] likewise has held that bubble gum is distinct from chewing gum and is required to be classified under sub-heading 1704.90 of Central Excise Tariff Act. It was pointed out that after the Tribunal's judgment the tariff was amended to bring within the ambit of tariff sub-heading 1704.10 bubble gum, however, the ingredients of chewing gum cannot be brought within the ambit of chewing gum and they are required to be classified only under the residual entry 1704.90 as 'other'. The ld. Chartered Accountant arguing for the appellants also relied on the HSN explanatory note appearing at Page 133 with reference to Chapter Heading 1704 and argued that chewing gum refers only to a complete chewing gum which is in a position to be marketed as such with all its ingredients. It is his contention that the single ingredient chewing gum base cannot be considered as chewing gum and by no stretch of imagination it can be treated as complete chewing gum and therefore it has to be classified only as a residual item under the heading 'other'. He also refers to the manufacturing flow chart and pointed out the various processes the ingredients have to undergo to ultimately bring into existence the final product chewing gum. He submitted that chewing gum base does not undergo any of the various processes along with other 22 items to bring into existence chewing gum and therefore it has to be classified only as a residual item.
3. Ld. SDR reiterated the departmental view as expressed by the lower authorities.
4. We have carefully considered the submissions and find lot of force in the submission made by ld. Chartered Accountant. The chewing gum is a final product, which is readily consumed and it is not a semifinished base. For the purpose of manufacturing chewing gum, 22 ingredients are used and it has to undergo various processes before the chewing gum comes into existence. The manufacturing process given by the appellant is extracted herein :-
"Gum Manufacturing Process: Raw materials like Ester gum, white wax, Natural Latex, etc., are mixed and melted in a mixture to form base. This base is mixed with Sugar, Glucose and other flavors to form Gum. This gum is passed through Rolling and Scoring machine to form Gum centers. These Gum centers are then cured to achieve the desired hardness. The cured centers are coated with Sugar syrup to form Pellets. These pellets are then polished to give a smooth surface. The pellets are packed into different packs."
In the light of the manufacturing process, it is very clear that along with the chewing gum base are added 22 other ingredients and it has to undergo various processes of melting/mixing/rolling/scoring/sheet forming/curing/coating with flavoured and sugar syrup/polishing/sizing/pillow packaging/Packing/ shippering. Even in terms of HSN notes the chewing gum is one, which is ready to be marketed in a solid or semi-solid form and generally suitable for immediate consumption and collectively referred to as sweet meats/confectionery or candies. In the light of the explanatory notes, the chewing gum base is not marketed as chewing gum in a solid or semi-solid form and it is not suitable for immediately consumption. Therefore the chewing gum base cannot be considered as the final product 'chewing gum'. The finding recorded by Commissioner (Appeals) that chewing gum without sugar coated also falls within 1704.10 and therefore chewing gum base also falls under 1704.10 is not a correct finding. When the chewing gum base has not attained the stage of chewing gum and is in the ingredient stage and it is not in a consumable form then, it cannot be considered as a chewing gum at all for the purpose of classification under sub-heading 1704.10. The bubble gum, which was in a consumption form itself was not considered as a chewing gum by the Apex Court and by the Tribunal in the above cited judgments. We find merit in the appellants' contentions and we are of the considered opinion that chewing gum base cannot be treated as chewing gum and it is required to be classified in the residual entry 'other' under sub-heading 1704.90 of the tariff. The impugned order is not legal and proper and the same is set aside by allowing the appeal with consequential relief, if any.