Custom, Excise & Service Tax Tribunal
Bright Performance Nutrition Private ... vs Mundra Customs on 30 January, 2025
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Customs Appeal No. 10072 of 2024 - DB
(Arising out of Order in Original MUN-CUSTM-000-COM-16-23-24 dated 03/11/2023
passed by Commissioner of Customs-Custom House Mundra)
BRIGHT PERFORMANCE NUTRITION
PRIVATE LIMITED ........Appellant
317, CTS No. 240/1-8, Neelkanth Corporate IT Park,
Kirol, Vidya Vihar (West), Mumbai - 400086
VERSUS
Commissioner of Customs-Mundra Customs ......Respondent
Office of the Principal Commissioner of Customs,
Customs House, Mundra, Kutch, Mundra Port
And Special Economic Zone, Mundra-370421
APPEARANCE:
Shri Pramod Kedia, Advocate, appeared for the Appellant
Shri G Nair, Assistant Commissioner (AR) appeared for the Respondent
CORAM: HON'BLE MR. C. L. MAHAR, MEMBER ( TECHNICAL )
HON'BLE MR. Dr. AJAYA KRISHNA VISHVESHA, MEMBER
( JUDICIAL)
Final Order No.10073/2025
DATE OF HEARING: 06.01.2025
DATE OF DECISION: 30.01.2025
C L MAHAR
The brief facts of the matter are that the appellant have been
importing "Mass Weight Gainer" classifying the same under CTH
21061000. The description of the imported consignment was made as
"Mass Weight Gainer-Nutrition Supplement" on their bills of entry cleared
through Mundra port and paid basic customs duty at the rate of 30% and
40% ad valorem from the year 2018 till date. The department is of the
view that the Mass/ Weight Gainer is high calorific value food supplements
enriched of carbohydrates and therefore, the same is more appropriately
classifiable under Customs Tariff Heading 21069099. The basic argument
of the department has been that the classification under the CTH
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21061000 covers only "Protein Concentrates and textured Protein
Substance" which are enriched of protein and therefore, only the goods
namely "Protein Concentrates" are classifiable under CTH 21061000.
However, the other food items such as "Protein Enriched Food
Supplements" like "Whey Protein, Protein Food Supplements" are more
appropriately classifiable under CTH 21069099. Thus, the department has
entertained a view that Mass Weight Gainer-Nutrition Supplement" is
more properly classifiable under 21069099 and therefore, the
classification of the subject goods declared by the importer as CTH
21061000 should be rejected and the bills of entry are to be re-assessed
in terms of the provisions of the Section 17 of the Customs Act,1962. A
show cause notice dated 25.01.2023 came to be issued demanding
differential amount of the customs duty as well as change in classification
of imported product from CTH 21061000 to CTH 21069099 of the Customs
Tariff Act. The matter got adjudicated vide impugned order-in-original
dated 03.11.2023 wherein all the charges has invoked in the show cause
notice have been confirmed by the Adjudicating Authority. The appellant
are before us against the above mentioned impugned order-in-original.
2. The Learned Advocate appearing for the appellant has pointed out
that the Learned Adjudicating Authority under para 13.1 of the impugned
order-in-original has given finding that the appellant has imported Mass
Gainer from M/s. Glanbia Performance Nutrition, M/s. Scitec (Jumbo
Nutrition), M/s. Ultimate Nutrition and M/s.Mutant (Mutant Mass Weight
Gainers) with following ingredients:-
(i) On Serious Mass-whey protein concentrate blends-15%,
Carbohydrate-76.64%, Fat-06% and other nutritional
elements
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(ii) Mutant Mass contains Protein-20%, Carbohydrate-70%, Fat-
3.5% and other nutritional elements,
(iii) Scitec Jumbo- Protein-22.7%, Carbohydrate-66%, Fat-3.1%
and other mineral elements.
2.1 From above, it was concluded that in the imported consignments
wherein, the protein contents varied between 15% to 20% whereas,
Carbohydrate substance varied between 66% to 77%. The Adjudicating
Authority reached to the conclusion that the imported consignment
namely "Mass Weight Gainers" are nothing but high calorie supplements
that contains various % levels of the proteins, fat, carbohydrates,
minerals, vitamins, amino acids and various other supplements. The
Adjudication Authority has concluded that since, the imported
consignment were having low level of the protein in comparison to other
nutritional supplements like carbohydrates and fats and therefore, the
'Mass Gainer' is typically consumed to increase the calorie intake in the
body and further to instigate muscle gain.
2.2 The Learned Advocate has further submitted that the Adjudicating
Authority failed to appreciate the fact that the item under import namely
"Mass Weight Gainer-Nutrition Supplement" is nothing but a type of the
protein supplement and is used for weight gain and building muscle mass
of the body. The imported consignments were nothing but 'Whey protein
concentrates' and same are a dietary supplement.
2.3 The Learned Advocate has pointed out that percentage of the
protein varies in various imported brands and same is not fixed for all
brands. The Learned Advocate has strongly contended that in order to be
called "a protein concentrate" it does not require that a particular product
need to have 100% protein in it in order to make itself eligible for
4 C/10072/2024-DB
classification under CTH 21061000. The Learned Advocate has pointed
out that it is standard practice that a 'protein concentrate' powder may
include other ingredients such as added sugars, artificial flavoring,
thickeners, vitamins and minerals. It has been pointed out that the
amount of protein per scoop can vary from 10 to 50 grams and even if
protein content varies between 10 to 50 grams, the same is called a
protein concentrate in commercial parlance and same is used for body
building and as a food supplement.
2.4 It has further been submitted that this can be appreciated from the
Labels used on these products that the said powders do essentially contain
"Whey protein concentrate" and other nutrients and flavouring materials.
These powders are marketed in retail as "weight gainers/mass gainers"
which is essentially a function of "protein". Though the said powders also
contain other substances viz. carbohydrates, other nutrients or flavouring
materials, but the fact remained that the product is nothing but protein
concentrate which gives them the essential characteristics and
marketability. In these circumstances, it is submitted that applying the
principles enunciated under Rule 2(b) and also 3(b) of General Rule of
Interpretation of the Customs Tariff, the goods confirm to the specific
description "Protein Concentrate and Textured Protein Substances" at
Tariff Heading 21061000 and accordingly the appropriate duty of Customs
has been paid on such goods. It is further submitted that as per Rule 1 of
the General Rules of Interpretation of the Customs Tariff, for legal
purposes, the classification of goods has to be determined in accordance
with terms of heading and any relative Section Note or Chapter Note. It
is also submitted that in terms of Rule 2 (b) of the said Rules, a reference
in a heading to a material or substance shall be taken to include a
5 C/10072/2024-DB
reference to mixtures or combination of that material or combination of
that material or substance with other material or substance. Any
reference to goods of a given material or substance shall be taken to
include a reference to goods consisting wholly or partly of such material
or substance. The said Rule also provides that classification of goods
consisting of more than one material or substance shall be according to
the principles of Rule 3. Further, as per Rule 3 (a), the heading which
provides the most specific description shall be preferred to headings
providing a more general description and as per Rule 3 (b), mixtures,
composite goods consisting of different materials or made up of different
components, and goods put up in sets for retail sale, which cannot be
classified by reference to Rule 3 (a), shall be classified as if they consisted
of material or component which gives them their essential character,
insofar as this criterion is applicable. In the instant case by application of
Rule 3 (a) and Rule 3 (b), the most specific description for the product in
question is Protein concentrates and also it is this component which gives
the said product it's essential character and marketability. Thus, the said
product has been rightly classified by the Appellants at Tariff Heading
21061000 while importing.
2.5 It is contended by the Learned Advocate that That the order issued
by the Ld. Adjudicating that Authority failed to appreciate that the
combination of complex amino acids with the proteins, fortifies the fact
that the essential character of the products lies in proteins. These proteins
and amino acids are used for building muscular mass, not simply for
weight gain as assumed in the show cause notice. These are body building
products which includes muscle mass gain. In Collector of Central Excise
Hyderabad v. Bakelite Hylam Ltd. (1997 (91) E.L.T. 13 (S.C.)] it was held
6 C/10072/2024-DB
that even the Decorative Laminate Sheets contained 60-70% paper, 30-
40% resin, the essential character was determined by the presence of
resin, though numerically in lesser quantity, by applying the rule 3 (b) of
the GRIs. This case was followed in Collector of Central Excise,
Ahmedabad v. Jai Laminates Ltd. (1997 (93) E.L.T. 368 (Tribunal)), which
was also affirmed in the Hon'ble Supreme Court in Jai Laminates Ltd. v.
Collector [1997 (93) E.L.T. 368 (Tribunal)]. The ratio of Hon'ble Tribunal
Order in Rana Enterprises v. Commissioner of Customs, Mumbai (2011
(267) E.L.T. 546 (Tri. Mumbai)) is that classification has to be determined
by essential character test and not by percentage of composition. Further,
even in value terms, the 'essential character' of the imported products
consists of high quality concentrated proteins and amino acids and not
carbohydrates. One cannot go by just comparative weight of the
constituents. The expression used is not "main ingredient", but "essential
character".
2.6 It is humbly submitted that recently in case of M/s Glanbia
Performance Nutrition India Pvt. Ltd. Versus Commissioner of Customs,
Mundra {(2023) 10 Centax 390 (Tri.-Ahmd)), the stand of the Customs
Department was that Nutritional Supplements are correctly classifiable
under CTH 21061000 (Para 31 of the said decision), as against the CTH
18069040 claimed by the Importers. The case was decided in favor of the
Customs Department by the Hon'ble Tribunal. In the case of present
appellants also, the goods under import are Mass Gainer Nutritional
Supplements only and therefore the classification of these goods also
merit under CTH 21061000 following the ratio of aforesaid judgment
2.7 The case law of Raptakos Brett & Co. Ltd. Versus Commissioner of
C. Ex., RAIGAD (2014 (307) E.L.T. 565 (Tri. Mumbai)} as quoted by the
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Ld. Adjudicating Authority in Para 13.7 of the said Order-in-Original is not
squarely applicable to the present case, since in that case the product was
consumed by people recuperating from illness, which is not the case here.
In the present case, the product under import i.e. Mass Gainer Nutrition
Supplement is consumed by people desirous of gaining muscle and mass
and not by people recuperating from illness.
2.8 The Ld. Adjudicating Authority in Para 13.8 of the subject Order-in-
Original has examined Section 17 of the Customs Act, 1962 and in Para
13.8.1 concluded that the differential duty is payable by the importer (the
Appellant in this case). In this regard, it is humbly submitted that the
description of goods was well written on the Bills of Entry filed with the
Department which is not at all in dispute. The show cause notice dated
25.01.2023 and also the subject Order-in-Original dated 03.11.2023 does
not point towards any instance or any particular instance which was
suppressed intentionally from the department at the time of filing of Bills
of Entry or other documents, thus there was no instance of suppression
of any fact on the part of the importer. The acts of the importer were
purely based upon bona-fide belief and the issue in this case is purely
related to interpretation of the statute and declaration of CTH in the
import Bills of Entry, hence there was no intention to evade the Customs
duty on the part of the importer. Moreover, in case of Samsung India
Electronics Pvt Ltd us Principal Commissioner, Customs, ACC, New Delhi
on 20 December, 2023 the Hon'ble CESTAT, Principal Bench, New Delhi in
Customs Appeal no. 50484 of 2021 in Para 31 has held that,
31. "...All the elements necessary for assessing the duty are filled in the
Bill of Entry itself which is the entry of the goods made under Section 46.
Thus, the Bill of Entry has factual elements such as the nature of the
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goods, quality, quantity, weight, transaction value, country of origin, etc.
which all need to be correctly declared and elements which are in the
nature of the opinion of the importer such as classification of the goods,
exemption notifications which apply, etc. While the facts are verifiable as
correct or incorrect, opinions can differ. The importer may find that the
goods are classifiable under one CTH while the officer re-assessing the
goods may classify them under a different CTH. If appealed against,
different views can be taken at different levels of judicial hierarchy from
Commissioner (Appeals) all the way up to the Supreme Court. Similar will
be the case with the availability of the benefit of exemption notifications.
32. It is impossible for the importer to predict if the proper officer would
re-classify the goods and if the proper officer would, after rejecting the
transaction value, re-determine the value based on contemporaneous
imports or through other methods or what value the officer will fix.
Nothing in the law requires an importer to anticipate what classification
the proper officer will find proper for the goods and classify the goods or
anticipate if the proper officer will reject the transaction value and
anticipate what value he will determine and assess duty accordingly".
2.9 The Learned Advocate has also submitted that entire demand is
barred by the period of limitation as impugned show cause notice dated
25.01.2023 demands the short payment of customs duty on the Bills of
entry which cover the period from 28.03.2018 to 03.03.2021. The
Learned Advocate has submitted that there was no misdeclaration on the
Bills of entry or any other import documents by the appellant. All the facts
were before the department. It has further been mentioned that once the
description of the goods is not at all in dispute and it is only a question of
the interpretation of the classification, the charge of deliberate
misdeclaration against the appellant is legally not sustainable. It has
further been said that the neither the impugned show cause notice nor
order-in-original brings out any evidences to allege that the appellant
have intentionally within intent to evade customs duty has mis-declared
the description or any other documents in the subject import
consignments. It has further been mentioned the extended period of
limitation for demand of the customs duty can be invoked only when
deliberate attempt to mis-declare or suppress the facts are present. It is
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clear from the plain reading of Section 28 (4) of the Customs Act, 1962
that element of collusion, suppression of facts, mis-declaration or any
other contravention within intend to evade customs duty need to be
present for invoking the extended time proviso under the Customs Act,
1962. The Learned Advocate has vehemently contended that none of the
above elements are present in this case, the description which has been
given by them on the bills of entry and accompanying import documents
were very much before the assessing officers and same was accepted by
the assessing officers in the first hand and therefore, it is wrong on the
part of the department to invoke extended time proviso for demanding
customs duty under Section 28(4) of Customs Act, 1962. In support of
his arguments, the Learned Advocate has cited the decision of Hon'ble
Apex Court in case of Collector of the Central Excise vs. CHEMPHAR
DRUGS & LINIMENTS reported under 1989 (40) E.L.T. 276 (SC). It has
further been contended that since there was no mis-declaration in the
description of the import consignments, therefore, invoking of the Section
111 (m) of the Customs Act, 1962 is also not warranted and legally not
sustainable.
3. The Learned Departmental Representative, Shri Girish Nair has
reiterated the findings has given in the impugned order-in-original and
has relied upon following decisions to support his arguments:-
• Judgement of Hon'ble CESTAT, Mumbai in the case of Raptakos Brett
& Co Ltd vs Commissioner of C.Ex., Raigad reported at 2014 (307)
E.L.T. 565 (Tri.-Mumbai)
• Judgement of Hon'ble CESTAT, Principal Bench, New Delhi in the
case of Dry Tech Processors (1) Pvt Ltd vs Commissioner of C. Ex.,
Bhopal reported at 2015 (327) E.L.T 696 (Tri.-Del.)
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• Judgement of Hon'ble Supreme Court in the case of Union of India
vs Jain Shudh Vanaspati reported at 1996 (86) E.L.Τ. 460 (S.C.)
4. Having heard the rival contentions and going through in detail the
record of the appeal, we find that following questions need to be answered
by us in this matter:-
i. Whether the classification of the imported consignments of Mass
Gainer- Food Supplement classified by the appellant under Customs
Tariff Heading 21061000 is correct or same is to be rejected and re-
classified under 21069099 of the Customs Tariff Act,1962.
ii. Whether the demand of customs duty by invoking extended time
proviso under Section 28 (4) of the Customs Act, 1962 is legally
sustainable or not.
4.2 Before proceeding to answer the above mentioned questions, we
would like to mention the facts that up to January, 2018 the basic customs
duty on the goods falling under CTH 21061000 and the goods classifiable
under CTH 21069099 were charged to same rate of customs duty i.e. at
the rate of 30% in terms of the Notification No.12/2012-CUS dated
17.03.2012. However, vide the Notification No.06/2018-CUS dated
02.02.2018 effective rate of the BCD in resect of the sub heading 210690
was increased to 50%. However, the customs duty rate under CTH
21061000 remained the same at the rate of 30% till 22.05.2018. Further,
vide Notification No.45/2018- CUS dated 23.05.2018 effective rate of the
basic customs duty in respect of Customs Tariff Heading 21061000 was
increased to 40%. However, the basic customs duty under sub heading
210690 still remained it 50% ad valorem. The entire dispute has arisen
only after the difference in the effective rate of the customs duty was
11 C/10072/2024-DB
created by the above mentioned customs notification. It is worthy to note
as submitted during hearing of the matter that before January 2018 and
thereafter, the department has accepted the classification of product
under import namely Mass gainer- Food supplement under CTH
21061000. The department is seeking re-assessment of Bills of entry
under CTH 21069099 vide impugned show cause notice dated
25.01.2023.
4.3 The fact remain that the appellant has declared the imported
consignment as "Mass Weight Gainer-Nutrition Supplement" and paid the
custom duty at the rate of 30% and 40% ad valorem as per the effective
rates of the customs duty as per Notification No.12/2012-CUS dated
17.03.2012 and Customs Notification 45/2018-CUS dated 23.05.2018.
The department in the impugned show cause notice has only one
argument that subject import consignment were of the food supplement
and not of the protein concentrates and therefore, the consignment
should have been classified under CTH 21069099 under the entry
"Others" of Chapter Heading 2106 and not under 21061000 which
primarily covers "Protein Concentrates and textured Protein Substance".
4.4 Before proceeding further in this matter, it will be relevant to have
a glance at the relevant entries under Chapter Sub Heading 2106 of the
Customs Tariff Act, 1975:-
Tariff Item. Description of goods
(1) (2)
2106 Food Preparations Not Elsewhere Specified
or Included
21061000 Protein concentrates and textured protein
substances
210690 -Other:
--Soft drink concentrates :
21069011 --- Sharbat
12 C/10072/2024-DB
21069019 --- Other
21069020 --- Pan masala
21069030 --- Betel nut product known as "Supari"
21069040 --- Sugar-syrups containing added flavouring or
colouring matter, not elsewhere specified or
included; lactose syrup; glucose syrup and malto
dextrine syrup
21069050 --- Compound preparations for making
nonalcoholic beverages
21069060 --- Food flavouring material kg.
21069070 --- Churna for pan
21069080 --- Custard powder
--- Other :
21069091 --- Diabetic foods
21069092 --- Sterilized or pasteurized millstone
21069099 --- Other
4.5 A perusal of the above Chapter Sub Heading reveals that CTH 2106
cover " Food preparation not elsewhere specified or included", it primarily
has two sub headings one is "Protein Concentrates and textured Protein
Substance" and second is "Others". The sub heading "Others" have
various other sub headings which includes products such as, Sharbat, Pan
masala, Diabetic food, Custard powder, Food flavouring material etc. The
supplementary Chapter note to the Chapter 21 under Serial No.6
mentions as follows:-
"6. Tariff item 2106 90 99 includes sweet meats commonly known as
"Misthans" or "Mithai" or called by any other also include products
commonly known as "Namkeens", "mixtures", "Bhujia", "Chabena" or
called by any other S products remain classified in these sub-headings
irrespective of the nature of their ingredients."
4.6 The Customs Tariff itself explains that Tariff item 21069099 includes
product like sweet meats, misthans etc. and such products to remain
classified under this sub heading irrespective of nature of their
ingredients. The products which have been imported by the appellant is
13 C/10072/2024-DB
not of the category of mithai, namkins, bhujia etc. which are primarily
covered under 21069099. The products which have been imported under
the impugned bills of entry by the appellant are primarily food supplement
which contains protein concentrate along with other substances such as
Carbohydrate, Fats etc. From the submission which have been made by
the appellant before us and the literature which have been submitted
indicate that the mass gainer is nothing a product containing protein
concentrate along with other substances which are used for weight gain
and for building muscle mass. It has further been mentioned that import
consignment of the Mass Gainer- Food Supplements contains whey
protein concentrate and other dietary supplements. The some of the
literature as well as photographs which have been produced before us at
the time of hearing are reproduced herebelow:-
14 C/10072/2024-DB
15 C/10072/2024-DB
4.7 it can be seen from the perusal of the photographs of the product
submitted by the appellant that it mentioned that the import consignment
was of the high protein weight gainer powder. Before proceeding further
in this matter, it will be appropriate to have a reference to General Rules
Of Interpretation of the Customs Tariff, the relevant rule 2 and 3 are
reproduced hearing below:
"2.(a) Any reference in a heading to an article shall be taken to include a
reference to that article incomplete or unfinished, provided that, as
16 C/10072/2024-DB
presented, the incomplete or unfinished article has the essential character
of the complete or finished article. It shall also be taken to include a
reference to that article complete or finished (or falling to be classified as
complete or finished by virtue of this rule), presented unassembled or
disassembled.
(b) Any reference in a heading to a material or substance shall be taken
to include a reference to mixtures or combinations of that material or
substance with other materials or substances. Any reference to goods of
a given material or substance shall be taken to include a reference to
goods consisting wholly or partly of such material or substance. The
classification of goods consisting of more than one material or substance
shall be according to the principles of rule 3.
3. When by application of rule 2(b) or for any other reason, goods are,
prima facie, classifiable under two or more headings, classification shall
be effected as follows:
(a) The heading which provides the most specific description shall be
preferred to headings providing a more general description. However,
when two or more headings each refer to part only of the materials or
substances contained in mixed or composite goods or to part only of the
items in a set put up for retail sale, those headings are to be regarded as
equally specific in relation to those goods, even if one of them gives a
more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made
up of different components, and goods put up in sets for retail sale, which
cannot be classified by reference to (a), shall be classified as if they
consisted of the material or component which gives them their essential
character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall
be classified under the heading which occurs last in numerical order
among those which equally merit consideration."
4.8 It can be seen that Rule 2 (b) specifically mentions that any
reference to goods of a given material of substance shall be taken to
include a reference to the goods consisting wholly or partly of such
material of such substance and the classification of the goods consisting
more than one material or substance shall be according to principles of
Rule 3.
4.9 It can be seen that general Rule of interpretation 3 (a) provides
that heading which provides most specific description shall be preferred
to the heading providing a more general description. From the literature
and photographs as mentioned above, it can be seen that the product is
17 C/10072/2024-DB
primarily sold in the commercial parlance and know as protein concentrate
for weight gain and building muscles and since the customs tariff heading
21061000 have a specific mention of "Protein Concentrates and textured
Protein Substance" and the entry under 210690 is generic entry covering
the goods which are otherwise not a specifically mentioned under the sub
heading 2106. We are of the opinion that entry 21061000 covers two
element, (1) Protein Concentrate and (2) Textured Protein and the word
"Substances" covers both of these elements i.e. Protein Concentrate and
Textured Protein. Since the import consignment are made of the protein
concentrate along with other substances, we are of the opinion that
appropriate classification for the imported consignment will be CTH
21061000 not CTH 21069099 which is primarily for the goods not
elsewhere specified and supplementary chapter note (6) provides as what
kind of the goods will fall under chapter sub heading 21069099, we are
opinion that this sub-headings certainly does not cover the food
supplement containing protein concentrate. It can be seen that
supplementary chapter note (6) provides that only products such as
mithais, namkins, chabanas and such kind of the goods are classifiable
under CTH 21069099. While holding above view, we also take support of
this Tribunal's decision in case of Glambia Performance Nutrition India Pvt
Ltd vs. Commissioner of Customs, Mundra reported at (2023)10 Centax
390 (Tri-Ahmedabad):-
"43. We have considered the rival submissions. After raising the ground
of assessment being provisional and piecemeal finalisation of assessment
the appellants have given up this issue. The Ld counsel has sought that
the issue of classification may be finalised by the tribunal as is apparent
from the submissions recorded in para 30 above.The submission in this
regard is reproduced below:
"Having said the foregoing, in order to conclude the classification
dispute, it is most respectfully prayed before this Hon'ble Tribunal
to pass orders on the classification of the impugned goods
determinatively."
18 C/10072/2024-DB
In view of above, we proceed to decide the classification issue despite the
assessment being provisional on account of Valuation.
44 The following table contains the classification sought by the
appellant and the classification adjudicated by the Revenue.
S.No. Product Name Department's Appellant's
Classification Classification
1. BSN Syntha 6 Chocolate 21061000 18069040
2. BSN Truemass 1200
Chocolate 21061000 18069040
3. Isopure Low Carb -
Chocolate 21061000 18069040
4. Isopure Zero Carb -
Chocolate Mint 21061000 18069040
5. Optimum Nutrition 100%
Casein-Chocolate Supreme 21061000 18069040
6. Optimum Nutrition 100%
Whey Gold Standard-
Chocolate 21061000 18069040
7. Optimum Nutrition 100%
Whey Gold Standard-
Chocolate Hazelnut 21061000 18069040
8. Optimum Nutrition 100%
Whey Gold Standard-
Chocolate Malt 21061000 18069040
9. Optimum Nutrition 100%
Whey Gold Standard-
Chocolate Mint 21061000 18069040
10. Optimum Nutrition 100%
Whey Gold Standard-
Chocolate Peanut Butter 21061000 18069040
11. Optimum Nutrition 100%
Whey Gold Standard-
Cookies and Cream 21061000 18069040
12. Optimum Nutrition 100%
Whey Gold Standard-
Double Rich Chocolate 21061000 18069040
13. Optimum Nutrition 100%
Whey Gold Standard Isolate
- Chocolate 21061000 18069040
14. Optimum Nutrition 100%
Whey Gold Standard Isolate
- Chocolate Bliss 21061000 18069040
15. Optimum Nutrition 100%
Whey Gold Standard- Mocha
Cappuccino 21061000 18069040
16. Optimum Nutrition 100%
Whey Gold Standard- Rocky
Road 21061000 18069040
17. Optimum Nutrition Serious
Mass - Chocolate 21061000 18069040
45 The appellants have themselves ruled out the classification under
chapter 4 or chapter 35 of the Customs tariff as the said headings do not
relate to food preparations. In the written submissions they have argued
as follows:
"B.2 Nature of food preparation:In the present case,
on perusal of the Bills of Material and Labels available on
Page 288 and Page 273 of Additional Paper Book,
respectively, constituents of the impugned goods have
undergone a process to make them independent of its
constituents [Process Chart, Additional Paper Book, p.
19 C/10072/2024-DB
305]. Hence, the impugned goods are in the nature of
"food preparations". This fact is undisputed between the
parties. It is on this ground alone, classification under CTH
3502 and CTH 3504 of Customs Tariff are ousted as they
do not relate to food preparations [HSN Explanatory
Notes to CTH 3502, Para (1), pg. VI-3502-1; and
HSN Explanatory Notes to 3502, Para B (6), pg. VI-
3504-1] [Compilation, p. 33-34]
B.4 Coming to classification under CTH 1901, the
impugned goods contain albumin and other protein
concentrates which are acting as the base material
[Bill(s) of Material, Additional Paper Book, p. 288-
287].In other words, the impugned goods are food
preparations of having constituent ingredients from CTH
3502 and CTH 3504, and are not food preparations of CTH
0401 to CTH 0404. Thus, it is submitted that the impugned
goods do not satisfy the condition of classification under
CTH 1901 of Customs Tariff. Furthermore, cocoa used in
the food preparation is not defatted cocoa."
They have themselves argued that the impugned goods are food
preparations having constituent ingredients from CTH 3502 and CTH 3504
and are not food preparations of CTH 0401 to CTH 0404. They have also
argued that the impugned goods do not satisfy the condition of
classification under CTH 1901 of the Customs Tariff Act. They have also
argued that the coco used by them in the food preparation is not defatted
coco as required for classification under heading 1901. In view of the
above, the only contesting classification that remain are CTH 1806 and
CTH 2106.
46 In this regard the competing heading in the schedule to Custom
Tariff Act 1975 in the instant case are reproduced below:
1806 CHOCOLATE AND OTHER FOOD PREPARATIONS
CONTIANING COCOA
1806 10 00 - Cocoa powder and other food preparations Kg. 30% -
containing coca
1806 20 00 - Other preparations in blocks, slabs or bars Kg. 30% -
weighing more than 2 kg or in liquid, paste,
powder, granular or other bulk form in
containers or immediate packings, of a
content exceeding 2 kg.
- Other, in blocks, slabs or bars:
1806 31 00 -- Filled Kg. 30% -
1806 32 00 -- Not filled Kg. 30% -
1806 90 - Other:
1806 90 10 --- Chocolate and chocolate products Kg. 30% -
1806 90 20 --- Sugar confectionary containing cocoa Kg. 30% -
1806 90 30 --- Spreads containing cocoa Kg. 30% -
1806 90 40 --- Preparations containing coca for making Kg. 30% -
beverages
1806 90 90 --- Other Kg. 30% -
2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED
OR INCLUDED
2106 1000 - Protein concentrates and textured protein Kg. 40% -
substances
2106 90 - Other : -
--- Soft drink concentrates :
2106 90 11 ---- Sharbat Kg. 150% -
2106 90 19 ---- Other Kg. 150% -
2106 90 20 --- Pan masala Kg. 150% -
2106 90 30 --- Betel nut product known as "Supari" Kg. 150% -
2106 90 40 --- Sugar-syrups containing added flavouring or Kg. 150% -
colouring matter, not elsewhere specified or
20 C/10072/2024-DB
included; lactose syrup; glucose syrup and
malto dextrin syrup
2106 90 50 --- Compound preparations for making non-alcoholic Kg. 150% -
beverages
2106 90 60 --- Food flavouring material Kg. 150% -
2106 90 70 --- Churna for pan Kg. 150% -
2106 90 80 --- Custard powder Kg. 150% -
--- Other :
2106 90 91 ---- Diabetic foods Kg. 150% -
2106 90 92 ---- Sterilized or pasteurized millstone Kg. 150% -
2106 90 99 ---- Other Kg. 150% -
The products imported by the appellant are essentially Protein
Concentrates of Whey Protein with additives, in different proportions. The
other additives to the product can be of various kinds like flavouring
agents, stabilisers etc. The argument of the appellant is that the
description of Customs Tariff Heading 2106 which reads as under
"CHOCOLATE AND OTHER FOOD PREPARATIONS CONTIANING
COCOA "
is more appropriate classification for the 'Protein Concentrates containing
Cocoa' as compared to the Customs Tariff Heading 1806 which reads as
under
"FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR
INCLUDED".
While doing so the Ld counsel has totally ignored the Supplementary Note
5(a) to Chapter 21. It is seen that the Supplementary Notes appearing in
Chapter 21 distinguish the Chapter 21 of Customs Tariff from the Chapter
21 of the HSN (para 49 below). It is seen that in the entire appeal as well
as written submissions the appellant has not dealt with the
Supplementary Notes to Chapter 21. The argument of the appellants that
while other 'Protein Concentrates' imported by them are classifiable under
Customs Tariff Heading 2106 (Sub Heading 2106 1000), the 'Protein
Concentrates containing Cocoa' are classifiable under Customs Tariff
Heading 1806 (Sub Heading 1806 9040). This claim is solely based on the
HSN ignoring the Supplementary Notes to Chapter 21. The competing
subheadings are as follows
1806 CHOCOLATE AND OTHER FOOD PREPARATIONS
CONTIANING COCOA
1806 90 40 Kg. 30% -
--- Preparations containing coca for making
beverages
2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED
OR INCLUDED
2106 1000 - Protein concentrates and textured protein Kg. 40% -
substances
The heading 2106 is qualified by the Supplementary notes to Chapter 21.
Therefore the Heading 2106 needs to be read with Supplementary Note
5(a) in terms of rule 1 of the Rules of Interpretation of Customs Tariff as
discussed in para 49 onwards below..
47. Whey proteins are available in different flavours like Double Rich
Chocolate, Chocolate Bliss, Cream Vanilla, Delicious Strawberry, Vanilla
Ice-Cream, Mocha Cappuccino etc.The appellant has described the goods
in the appeal memorandum as follows:
21 C/10072/2024-DB
"The appellant is primarily engaged in the business of
importing and selling nutritional supplements in India. In
this regard, the appellant imported certain nutritional
supplements containing cocoa, glutamine powder, creatine
powder and certain unflavoured nutritional supplements
from M/s Glanbia Nutritionals (Ireland) Ltd. The basic raw
material of nutritional supplements imported by the
appellant is 'WHEY'."
Ld Counsel has described the product as "chocolate protein
powders/chocolate-flavoured protein powders" as can be seen from
his submissions in para 6 above.These powders are used by the athletes
and sport persons as food supplements to supplement their protein intake.
The argument of the appellants is that mere presence of cocoa in
the impugned products rules out classification under heading
2106 and takes it into heading 1806.
48 Such Protein Concentrates of Whey Protein are made in many
flavours like Double Rich Chocolate, Chocolate Bliss, Cream Vanilla,
Delicious Strawberry, Vanilla Ice-Cream, Mocha Cappuccino etc. The
compositions and the main ingredients of all such products is similar. All
such products, except those containing cocoa, are classified by
appellants themselves under heading 2106. The dispute is solely
related to the Protein Concentrates of Whey Protein containing some
amount of cocoa. The appellants are seeking to classify the same under
heading 1806. The assertion is based on the Chapter and heading notes
of the HSN to chapter 18 and 21 and some decisions of foreign countries
and international bodies.
49 To examine the issue the comparative chart of relevant chapter
notes appearing in HSN as compared to those appearing in Customs Tariff
is reproduced below
COMPARISON OF CHAPTER 21 OF HSN with THE CHAPTER
21 OF THE CUSTOMS TARIFF
CHAPTER NOTES OF CHAPTER 21 OF CHAPTER NOTES OF CHAPTER 21 OF
CUSTOMS TARIFF ACT HSN
MISCELLANEOUS EDIBLE MISCELLANEOUS EDIBLE
PREPARATIONS PREPARATIONS
NOTES:- CHAPTER NOTES:-
1.- This Chapter does not cover : 1.- This Chapter does not cover :
(a)Mixed vegetables of (a)Mixed vegetables of
heading 0712; heading 0712;
(b) Roasted coffee (b) Roasted coffee
substitutes containing substitutes containing
coffee in any coffee in any
proportion (heading proportion (heading
0901); 0901);
(c) Flavoured tea (c) Flavoured tea
(heading 0902); (heading 0902);
(d) Spices or other (d) Spices or other
products of headings products of headings
0904 to 0910; 0904 to 0910;
(e) Food preparations, (e) Food preparations,
other than the other than the
products described in products described in
heading 2103 or heading 2103 or
2104, containing 2104, containing
more than 20 % by more than 20 % by
22 C/10072/2024-DB
weight of sausage, weight of sausage,
meat, meat offal, meat, meat offal,
blood, fish or blood, fish or
crustaceans, molluscs crustaceans, molluscs
or other aquatic or other aquatic
invertebrates, or any invertebrates, or any
combination thereof combination thereof
(Chapter 16); (Chapter 16);
(f) Yeast put up as a (f) Yeast put up as a
medicament or other medicament or other
products of heading products of heading
3003 or 3004; or 3003 or 3004; or
(g) Prepared enzymes of (g) Prepared enzymes of
heading 3507. heading 3507.
2.- Extracts of the substitutes referred to 2.- Extracts of the substitutes referred to
in Note 1 (b) above are to be in Note 1 (b) above are to be
classified in heading 2101. classified in heading 2101.
3.- For the purposes of heading 21.04, 3.- For the purposes of heading 21.04,
the expression "homogenised the expression "homogenised
composite food preparations" composite food preparations"
means preparations consisting of a means preparations consisting of a
finely homogenised mixture of two finely homogenised mixture of two
or more basic ingredients such as or more basic ingredients such as
meat, fish, vegetables or fruit, put meat, fish, vegetables or fruit, put
up for retail sale as infants or up for retail sale as infants or
young children or for dietetic young children or for dietetic
purposes, in containers of a net purposes, in containers of a net
weight content not exceeding weight content not exceeding
250g. For the application of this 250g. For the application of this
definition, no account is to be definition, no account is to be
taken of small quantities of any taken of small quantities of any
ingredients which may be added to ingredients which may be added to
the mixture for seasoning, the mixture for seasoning,
preservation or other purposes. preservation or other purposes.
Such preparations may contain a Such preparations may contain a
small quantity of visible pieces of small quantity of visible pieces of
ingredients. ingredients.
SUPPLEMENTRY NOTES :
1. In this Chapter, "Pan masala" means
any preparation containing betel nuts and
any one or more of the following
ingredients, namely: lime, katha
(catechu) and tobacco whether or not
containing any other ingredient, such as
cardamom, copra or menthol.
2. In this Chapter "betel nut product
known as Supari" means any preparation
containing betel nuts, but not containing
any one or more of the following
ingredients, namely: lime, katha
(catechu) and tobacco whether or not
containing any other ingredients, such as
cardamom, copra or menthol.
3. For the purposes of tariff item 2106 90
11, the expression "Sharbat" means any
non-alcoholic sweetened beverage or
syrup containing not less than 10% fruit
juice or flavoured with non-fruit flavours,
such as rose, Khus, Kevara, but not
including aerated preparations.
4. Tariff item 2106 90 50, inter alia,
includes preparations for lemonades or
other beverages, consisting, for example,
23 C/10072/2024-DB
of flavoured or coloured syrup, syrup
flavoured with an added concentrated
extract, syrup flavoured with fruit juice
and intended for use in the manufacture
of aerated water, such as in automatic
vending machines.
5. Heading 2106 (except tariff items
2106 90 20 and 2106 90 30), inter
alia, includes:
(a) protein concentrates and
textured protein substances;
(b) preparations for use, either directly
or after processing (such as cooking,
dissolving or boiling in water, milk or
other liquids), for human
consumption;
(c) preparations consisting wholly or
partly of foodstuffs, used in the
making of beverages of food
preparations for human
consumption;
(d) powders for table creams, jellies,
ice-creams and similar preparations,
whether or not sweetened;
(e) flavouring powders for making
beverages, whether or not
sweetened;
(f) preparations consisting of tea or
coffee and milk powder, sugar and
any other added ingredients;
(g) preparations (for example, tablets)
consisting of saccharin and
foodstuff, such as lactose, used for
sweetening purposes;
(h) pre-cooked rice, cooked either fully
or partially and their dehydrates;
and
(i) preparations for lemonades or other
beverages, consisting, for example,
of flavoured or coloured syrups,
syrup flavoured with an added
concentrated extract, syrup
flavoured with fruit juices and
concentrated fruit juice with added
ingredients.
6. Tariff item 2106 90 99 includes sweet
meats commonly known as "Misthans" or
"Mithai" or called by any other name.
They also include products commonly
known as "Namkeens", "mixtures",
"Bhujia", "Chabena" or called by any other
name. Such products remain classified in
these sub-headings irrespective of the
nature of their ingredients.
COMPARISON of CHAPTER 18 of HSN with THE CHAPTER 18
OF THE CUSTOMS TARIFF
CHAPTER NOTES OF CHAPTER 18 OF CHAPTER NOTES OF CHAPTER 18 OF
CUSTOMS TARIFF ACT HSN
NOTES:- NOTES:-
1. This Chapter does not cover the 1. This Chapter does not cover the
preparations of headings 0403, preparations of heading 04.03,
1901, 1904, 1905, 2105, 2202, 19.01, 19.04, 19.05, 21.05,
2208, 3003 and 3004. 22.02, 22.08, 30.03 or 30.04.
24 C/10072/2024-DB
2. Heading 1806 includes sugar 2. Heading 18.06 includes sugar
confectionary containing cocoa confectionery containing cocoa
and, subject to Note 1 to this and, subject to Note 1 to this
Chapter, other food Chapter, other food
preparations containing cocoa. preparations containing cocoa.
Not alligned GENERAL
This Chapter covers cocoa (including
cocoa beans) in all forms, cocoa
butter, fat and oil and preparations
containing cocoa (in any proportion),
except:
(a) Yogurt and other products of
heading 04.03.
(b) White chocolate (heading
17.04).
(c) Food preparations of flour,
groats, meal, starch or malt
extract, containing less than
40% by weight of cocoa
calculated on a totally defatted
basis, and food preparations of
goods of headings 04.01 to
04.04 containing less than 5%
by weight of cocoa calculated
on a totally defatted basis, of
heading 19.01.
(d) Swelled or roasted cereals
containing not more than 6%
by weight of cocoa calculated
on a totally defatted basis
(heading 19.04).
(e) Pastry, cakes, biscuits and
other bakers' wares, containing
cocoa (heading 19.05).
(f) Ice cream and other edible
ice, containing cocoa in any
proportion (heading 21.05).
(g) Beverages, non-alcoholic or
alcoholic (e.g, "crème de
cacao"), containing cocoa and
ready for consumption
(Chapter 22).
(h) Medicaments (heading
30.03 or 30.04).
The Chapter also excludes
theobromine, an alkaloid extracted
from cocoa (heading 29.39).
25 C/10072/2024-DB
50. The dispute in the instant case relates to classification. For the
purpose of classification, the Custom Tariff Act prescribes the general
rules of interpretation. Rule 1, 2 and 3 of the said Rules are reproduced
below:
"Classification of goods in the Nomenclature shall be
governed by the following principles:
1. The titles of Sections, Chapters and sub-
Chapters are provided for ease of reference only, for
legal purposes, classification shall be determined
according to the terms of the headings and any
relative Section or Chapter Notes and, provided such
headings or Notes do not otherwise require, according
to the following provisions:
2. (a) Any reference in a heading to an article shall
be taken to include a reference to that article
incomplete or unfinished, provided that, as presented,
the incomplete or unfinished article has the essential
character of the complete or finished article. It shall
also be taken to include a reference to that article
complete or finished (or falling to be classified as
complete or finished by virtue of this Rule). presented
unassembled or disassembled.
(b) Any reference in a heading to a material or
substance shall be taken to include a reference to
mixtures or combinations of that material or
substance with other materials or substances. Any
reference to goods of a given material or substance
shall be taken to include a reference to goods
consisting wholly or partly of such material or
substance. The classification of goods consisting of
more than one material or substance shall be
according to the principles of Rule 3.
3. When by application of Rule 2 (b) or for any
other reason, goods are, prima facie, classifiable
under two or more headings, classification shall be
effected as follows:
(a) The heading which provides the most specific
description shall be preferred to headings providing a
more general description. However, when two or more
headings each refer to part only of the materials or
substances contained in mixed or composite goods or
to part only of the items in a set put up for retail sale,
those headings are to be regarded as equally specific
in relation to those goods, even if one of them gives a
more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different
materials or made up of different components, and
goods put up in sets for retail sale, which cannot be
classified by reference to 3 (a), shall be classified as if
they consisted of the material or component which
gives them their essential character, insofar as this
criterion is applicable.
26 C/10072/2024-DB
(c) When goods cannot be classified by reference to 3
(a) or 3 (b), they shall be classified under the beading
which occurs last in numerical order among those
which equally merit consideration."
We agree with the proposition made by the Ld counsel reproduced in para
8 above that product is to be classified basis the condition in which such
goods are presented for clearance to the Customs Authorities referred to
in para 8 above. He relied on the following
(i) Taj Sats Air Catering Ltd. v. CC Ex., Delhi-II, 2016 (334)
E.L.T. 680 (Tri-Del.);
(ii) Circular 36/2013-Cus. Dated 05.09.2013
We also agree to the proposition referred in para 8 above to the effect
that the appropriate classification of goods is determined by following the
General Rules for the Interpretation of Import Tariff which must be applied
sequentially. We also agree in principle to the proposition that only if
classification cannot be made following Rule 1, can resort be made to rule
2, and thereafter only if classification cannot be made by following rule 1
or 2 can a recourse to rule 3 be made, and so on.We also find support for
this proposition in the following decisions
(i) In the case of CCE Nagpur vs Simplex Mills Co Ltd. 2005
(181) ELT 345 SC Hon'ble Apex Court has observed as
follows:
"11.The rules for the interpretation of the Schedule
to the Central Excise Tariff Act, 1985 have been
framed pursuant to the powers under Section 2 of
that Act. According to Rule 1 titles of Sections
and Chapters in the Schedule are provided for
ease of reference only. But for legal purposes,
classification "shall be determined according
to the terms of the headings and any relevant
section or Chapter Notes". If neither the
heading nor the notes suffice to clarify the
scope of a heading, then it must be construed
according to the other following provisions
contained in the Rules. Rule-I gives primacy to
the Section and Chapter Notes along with
terms of the headings. They should be first
applied. If no clear picture emerges then only
can one resort to the subsequent rules. The
appellants have relied upon Rule 3. Rule 3 must be
understood only in the context of sub-rule (b) of Rule
2 which says inter alia that the classification of goods
consisting of more than one material or substance
shall be according to the principles contained in Rule
3. Therefore when goods are prima facie, classifiable
under two or more headings, classification shall be
effected according to sub-rules (a), (b) and (c) of
Rule 3 and in that order. The sub-rules are quoted :-
"(a) The heading which provides the most specific
description shall be preferred to heading providing a
more general description. However when two or
more headings each refer to part only of the
materials or substances contained in mixed or
composite goods or to part only of the items in a set,
those headings are to be regarded as equally specific
27 C/10072/2024-DB
in relation to those goods, even if one of them gives
a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of
different materials or made up of different
components, and goods put up in sets, which cannot
be classified by reference to (a), shall be classified
as if they consisted of the material or component
which gives them their essential character, insofar
as this criterion is applicable.
(c) When goods cannot be classified by reference
to (a) or (b), they shall be classified under the
heading which occurs last in the numerical order
among those which equally merit consideration."
12.Applying the Rules of Interpretation
particularly Rule 1, we are of the opinion that the
reasoning of the Tribunal in Jyoti Overseas is
unexceptionable and in our opinion the decision in
Simplex-I was correctly overruled."
(ii) The Hon'ble Apex Court in the case of C.C. Amritsar vs D.L.
Steels 2022 (381) ELT 289 (SC) has observed as follows:
"10.Classification under the Harmonised
System is done by placing the good under the
most apt and fitting sub-heading. This is done by
choosing the appropriate Chapter, Heading, and
sub-heading respectively. To facilitate
interpretation and classification, each of the 97
Chapters in the HSN contain corresponding
Chapter Notes, General Notes, and Explanatory
Notes applicable to the Headings and sub-
headings within that Chapter. In addition, there
are six General Rules of Interpretation applicable
to the Harmonised System as a whole.
11.GRI-1 states that the titles of Sections,
Chapters, and sub-chapters are provided for
ease of reference only. Therefore, they have
no legal bearing on classification.
Classification is to be effected : (a)
according to the terms of the Headings and
any relative Section or Chapter Notes; and,
(b) provided the Headings or Chapter Notes
do not otherwise require according to the
provisions thereinafter contained, viz., GRIs
2 to 6. Thus, it is clear from the above that :
(i) the Headings, and, (ii) the relative
Section or Chapter Notes must be
considered before classification is done.
Only after this exercise is done, if a conflict
in classification still persists, the
subsequent GRIs are to be resorted to. GRI-
2 is not germane to the present case and
therefore, we make no reference to it. GRI-3
provides for classification in the event when the
goods are classifiable under two or more
28 C/10072/2024-DB
Headings. As per GRI-3, when by application of
GRI-2(b) or for any other reason, the goods are,
prima facie, classifiable under more than one
Heading, then; (a) the 'most specific description'
is preferred, (b) a mixture of different goods will
be classified as that good which gives the mixture
its 'essential characteristic', and (c) when goods
cannot be classified with reference to (a) or (b),
they should be classified under the Heading
which occurs last in the numerical order. The
order of priority therefore is; (a) specific
description, (b) essential character, and (c) the
Heading which occurs last in numerical order.
However, GRI-3 can only take effect provided the
terms of the Heading or Section or Chapter Notes
do not otherwise require. GRI-4 states that when
the goods cannot be classified in accordance with
the aforementioned rules, they shall be classified
under the heading appropriate for the goods "to
which they are most akin". GRI-5 applies
exclusively to cases and packing material, and
therefore, is not apropos. GRI-6 states that the
classification of goods in the sub-headings of a
Heading shall be determined according to the
terms of those sub-headings and any related
Notes, and mutatis mutandis to the above GRIs,
on the understanding that only sub-headings at
the same level are comparable."
(iii) In the case of Westinghouse Saxby Farmers Ltd. 2021 (376)
ELT 14 (SC) the Hon'ble Apex Court has observed as follows:
"31.But in invoking General Rule 3(a), the
Authorities have omitted to take note of 2
things. They are : (i) that as laid down by this
Court in Commissioner of Central Excise v.
Simplex Mills Co. Ltd. [(2005) 3 SCC 51 = 2005
(181) E.L.T. 345 (S.C.)] the General Rules of
Interpretation will come into play, as
mandated in Rule 1 itself, only when no clear
picture emerges from the terms of the
Headings and the relevant section or chapter
notes; and (ii) that in any case, Rule 3 of the
General Rules can be invoked only when a
particular goods is classifiable under two or
more Headings, either by application of Rule
2(b) or for any other reason. Once the
authorities have concluded that by virtue of
Note 2(f) of Section XVII, 'relays'
manufactured by the appellant are not even
classifiable under Chapter Heading 8608, we
do not know how the Authorities could fall back
upon Rule 3(a) of the General Rules. There is a
fundamental fallacy in the reasoning of the
Authorities, that Rule 3(a) of the General Rules will
apply, especially after they had found that 'relays'
are not classifiable under Chapter Heading 8608, on
account of Note 2(f) of Section XVII."
29 C/10072/2024-DB
In all the aforesaid cases, it has been held that when the
classification can be made on the basis of Interpretative Rule 1,
there is no need to go for rule 2 to 6.
51. The Hon Apex court has held in many cases that if there is a
difference between the chapter notes and Section notes of the Customs
Tariff and the chapter notes and Section notes appearing in HSN, then
those appearing in the Customs Tariff take precedence over those
appearing in the HSN. In other words HSN can be relied for the purposes
of classification under Customs Tariff only if the HSN is harmonised with
the Customs Tariff.
(i)We find that Hon'ble Apex Court in the case of Global Healthcare
Products 2015 (322) ELT 365 (SC) has observed as follows:
"10. The Commissioner, thus, noted that in the HSN
Notes, sub-heading 3306.10 deals with dentifrices. The
Commissioner noted that the meaning of dentifrices as per
the Concise Oxford Dictionary is 'a paste or powder for
cleaning of teeth'. On that basis, he concluded that the
product in question was paste, namely, the toothpaste for
cleaning the teeth and, therefore, would fall under sub-
heading 3306.10. En passe, the Commissioner also
observed that there is no major difference in these
products, namely, Close-Up Whitening and Close-Up
Red/Blue/Green, except one ingredient used in the
manufacture of Close-Up Whitening and the addition of
that ingredient does not change the purpose, nature as
well as definition of the product in a common market
parlance. He observed that in the market the product was
known as toothpaste. He also observed that it is treated
as toothpaste as per the product manual issued by the
Dental Invocation Centre, Mumbai. Discussion is summed
up in para 32 of the order passed by the Commissioner,
which reads as under :
"32. As narrated in the SCN that the tooth paste, being
dentifrice has been correctly classified under the HSN and
the Central Excise Tariff has been based on HSN.
Accordingly it is essential to follow the correct
classification of the product in question as described and
classified under the relevant chapter of HSN. In this
connection it may be mentioned that the Hon'ble Supreme
Court in the case of CCE, Shillong v. Wood Craft Product
Ltd. reported in 1995 (77) E.L.T. 23 (S.C.) in para 18 has
held that the structure of Central Excise Tariff is based on
the internationally accepted nomenclature found in the
HSN and therefore, any dispute relating to tariff
classification must, as far as possible be resolved with
reference to the nomenclature indicated by the HSN unless
there be an express different intention indicated in the
Central Excise Tariff Act, 1985 itself.
Further it may be mentioned that the Hon'ble Bombay
High Court in the case of Jagdish D. Devgekar v. Collector
of Central Excise, Poona reported in 1978 (2) E.L.T. (J581)
in para 6 has held that the correct test in interpreting any
item mentioned in the First Schedule to the Central Excise
Act is to see the commercial sense in which the item is
understood or the sense in which traders or persons
30 C/10072/2024-DB
dealing in that terms understand it and not the technical
or scientific sense.
Even it may be mentioned that the Hon'ble Tribunal in case
Veto Co. v. CCE reported in 1992 (62) E.L.T. 584 (T) in
para 6 has held that the goods have to be classified under
the tariff schedule according to their popular meaning or
as they are understood in their commercial sense and not
as per their scientific or technical meaning. While holding
so the Hon'ble Tribunal has referred to the observations of
the Hon'ble Supreme Court's judgment in case of Plasmac
Machine Mfg. Co. Pvt. Ltd. v. CCE reported in 1991 (51)
E.L.T. 161 (S.C.) (Para 13)."
11. The aforesaid approach adopted by the
Commissioner has been found fault with by the
Tribunal. The Tribunal pointed out that there was
material difference in the sub-heading 3306.10 in
the Indian statute when contrasted with
Harmonized Commodity Description and Coding
System. Whereas, as per the Tariff Entry 3306.10 in
the Excise Act, it is 'tooth powder' and 'toothpaste',
under the Harmonized Commodity Description and
Coding System, what is mentioned is 'dentifrices'. It
is further noticed by the Tribunal that dentifrices
was more generic in nature as it recognized all three
types of products, namely, (i) toothpaste, (ii) other
preparations for teeth and (iii) denture cleaners,
than tooth powders and toothpaste. Thus, when
under Indian statutory regime there is a restricted
sub-heading under 3306.10, namely, tooth powder
and toothpaste only, the approach of the
Commissioner in taking aid of HSN Notes was
erroneous. Discussion on this aspect runs as
follows:
"A perusal of the HSN notes would indicate
that all three types of 'Dentifrices' are
recognized as (i) 'Toothpaste', (ii) Other
preparations for teeth, and (iii) 'Denture
cleaners'. The Note further explains that
"Dentifrices" to include 'toothpaste' and
"other preparations for teeth" whether for
cleaning or polishing the assessable surface
of teeth or for other purposes such an
Anticaries prophylactic treatment. The Note
also enumerates that 'toothpaste' and
'other preparations for teeth' remains
classified under Heading 3306 whether or
not they contain abrasives and whether or
not they are used by dentist. The correct
scope of the heading as per the submission
of the appellants is that when one refers to
HSN Item 3306 and the bifurcations as also
under CETA, 1985 there is a variance seen.
In other words, this bifurcation under
Heading 3306 for HSN and is not pari
materia and under CETA, 1985 and
therefore, the sub-heading structure of
HSN would not apply to CETA. The CETA
31 C/10072/2024-DB
proves preparation for oral or dental
hygiene including Dentifrices and Denture
Fixative paste and powders under Heading
3306 and at the four digit level it is para
material HSN. The scope of sub-heading
3306.10 of CETA, 1985 restricts it to only
'tooth powder and paste' and any entity
which is not a 'toothpowder or toothpaste'
would be covered under Heading 3306.90.
This submission has to be upheld."
We find ourselves in agreement with the aforesaid
approach of the Tribunal having regard to the cogent
reasons given by it.
12. This Court in the case of Camlin Limited v.
Commissioner of Central Excise, Mumbai - (2008) 9 SCC
82 = 2008 (230) E.L.T. 193 (S.C.) held that if the entries
under HSN and the entries under the Central Excise Tariff
are different, then reliance cannot be placed upon HSN
Notes for the purposes of classification of goods under
Central Excise Tariff. This is so stated in para 24 of the
judgment that makes the following reading :
"24. In our considered view, the Tribunal
erred in relying upon the HSN for the purpose
of marker inks in classifying them under
Chapter sub-heading 3215.90 of the said
Tariff. The Tribunal failed to appreciate that the
entries under the HSN and the entries under
the said Tariff are completely different. As
mentioned above, it is settled law that when
the entries in the HSN and the said Tariff are
not aligned, reliance cannot be placed upon
HSN for the purpose of classification of goods
under the said Tariff. One of the factors on
which the Tribunal based its conclusion is the
entries in the HSN. The said conclusion in the
order of the Tribunal is, therefore, vitiated and,
accordingly, set aside. We agree with the
findings recorded by the Commissioner
(Appeals)."
(iii) Hon'ble Apex Court in the case of Camlin 2008 (230) ELT 193
(SC) has observed as follows:
"26. In our considered view, the Tribunal erred in
relying upon the HSN for the purpose of marker inks
in classifying them under Chapter Sub-Heading
3215.90 of the said Tariff. The Tribunal failed to
appreciate that the entries under the HSN and the
entries under the said Tariff are completely different.
As mentioned above, it is settled law that when the
entries in the HSN and the said Tariff are not aligned,
reliance cannot be placed upon HSN for the purpose of
classification of goods under the said Tariff. One of the
factors on which the Tribunal based its conclusion is
the entries in the HSN. The said conclusion in the
Order of the Tribunal is, therefore, vitiated and,
32 C/10072/2024-DB
accordingly, set aside. We agree with the findings
recorded by the Commissioner (Appeals)."
(iii) From the above decisions of Hon'ble Apex Court, it is apparent that
reliance on the HSN Section Notes, Chapter Notes and Explanatory Notes
can be placed only when the Customs Tariff is harmonized with HSN.
Wherever there is a difference between the Customs Tariff and HSN
reliance cannot be placed on HSN Section Notes, Chapter Notes and
Explanatory Notes for the purpose of classification. In such cases reliance
is to be placed on the Chapter Notes and Section Notes appearing in the
Customs Tariff. The appellants have also relied on the decision of Tribunal
in the case of Anutham Exim P. Ltd. 2021 (378) ELT 611 (T-Kol.). In the
said decision also in para 13 following has been observed:
"13.The Schedule to the Customs Tariff Act, 1975
(commonly referred to as Customs Tariff) is based on,
although it is not identical to, the Harmonised System
of Nomenclature (HSN) - an internationally recognised
scientific method of classifying all goods. Sometimes
there are differences between the HSN and the
Customs Tariff in which case, the latter is relevant for
determining the duty liability under the Customs Act.
In view of the explanation to this effect in the IGST
Notification specifying the rates of IGST chargeable on
different goods, IGST is also to be charged as per the
classification under the Customs Tariff. Customs Tariff,
groups goods into Sections, each of which is further
divided into Chapters with a two digit Chapter number.
Within each Chapter, there are four digit headings
which are further divided into six digit and still further
divided into eight digit tariff headings."
Thus even going by the decision cited by the appellant, it is seen that no
reliance can be placed on HSN when the Schedule to the Customs Tariff
Act is not aligned with the HSN.
52. It is seen that there are major differences between Customs Tariff
and the HSN in respect of Chapter 21. A comparative table of the Chapter
Notes appearing in Customs Tariff and the HSN is reproduced in para 49
above. It is noticed that while the Customs Tariff contains supplementary
notes in Chapter 21, there are no such notes in the HSN. While
supplementary notes are there in Chapter 21 of the Customs Tariff Act
the same are not appearing in the HSN. In the HSN, there are only three
chapter notes, which are as follows:
"Chapter Notes to Chapter 21 of HSN (Harmonized System
of Nomenclature)
1-This Chapter does not cover:
(a) Mixed vegetables of heading 07.12;
(b) Roasted coffee substitutes containing coffee in any
proportion (heading 09.01):
(c) Flavoured tea (heading 09.02);
(d) Spices or other products of headings 09.04 to 09.10;
(e) Food preparations, other than the products described in
heading 21.03 or 21.04. containing more than 20% by
weight of sausage, meat, meat offal, blood, fish or
crustaceans, molluses or other aquatic invertebrates, or
any combination thereof (Chapter 16);
(f) Yeast put up as a medicament or other products of
heading 30.03 or 30.04; or
(g) Prepared enzymes of heading 35.07.
33 C/10072/2024-DB
2- Extracts of the substitutes referred to in Note 1 (b) above are
to be classified in heading 21.01.
3- For the purposes of heading 21.04, the expression"
homogenised composite food preparations" means
preparations consisting of a finely homogenised mixture of
two or more basic ingredients such as meat, fish,
vegetables or fruit, put up for retail sale as infant food or
for dietetic purposes, in containers of a net weight content
not exceeding 250 g. For the application of this definition,
no account is to be taken of small quantities of any
ingredients which may be added to the mixture for
seasoning. preservation or other purposes. Such
preparations may contain a small quantity of visible pieces
of ingredients."
In the Custom Tariff Act, notes apart from three chapter notes there are
additional 'Supplementary Notes' whichreads as follows:
"SUPPLEMENTRY NOTES :
1. In this Chapter, "Pan masala" means any preparation containing betel
nuts and any one or more of the following ingredients, namely: lime, katha
(catechu) and tobacco whether or not containing any other ingredient,
such as cardamom, copra or menthol.
2. In this Chapter "betel nut product known as Supari" means any
preparation containing betel nuts, but not containing any one or more of
the following ingredients, namely: lime, katha (catechu) and tobacco
whether or not containing any other ingredients, such as cardamom, copra
or menthol.
3. For the purposes of tariff item 2106 90 11, the expression "Sharbat"
means any non-alcoholic sweetened beverage or syrup containing not less
than 10% fruit juice or flavoured with non-fruit flavours, such as rose,
Khus, Kevara, but not including aerated preparations.
4. Tariff item 2106 90 50, inter alia, includes preparations for lemonades
or other beverages, consisting, for example, of flavoured or coloured
syrup, syrup flavoured with an added concentrated extract, syrup
flavoured with fruit juice and intended for use in the manufacture of
aerated water, such as in automatic vending machines.
5. Heading 2106 (except tariff items 2106 90 20 and 2106 90 30),
inter alia, includes:
(a) protein concentrates and textured protein substances;
(b) preparations for use, either directly or after processing (such
as cooking, dissolving or boiling in water, milk or other
liquids), for human consumption;
(c) preparations consisting wholly or partly of foodstuffs, used in
the making of beverages of food preparations for human
consumption;
(d) powders for table creams, jellies, ice-creams and similar
preparations, whether or not sweetened;
(e) flavouring powders for making beverages, whether or not
sweetened;
(f) preparations consisting of tea or coffee and milk powder, sugar
and any other added ingredients;
(g) preparations (for example, tablets) consisting of saccharin and
foodstuff, such as lactose, used for sweetening purposes;
(h) pre-cooked rice, cooked either fully or partially and their
dehydrates; and
34 C/10072/2024-DB
(i) preparations for lemonades or other beverages, consisting, for
example, of flavoured or coloured syrups, syrup flavoured with
an added concentrated extract, syrup flavoured with fruit
juices and concentrated fruit juice with added ingredients.
6. Tariff item 2106 90 99 includes sweet meats commonly known as
"Misthans" or "Mithai" or called by any other name. They also include
products commonly known as "Namkeens", "mixtures", "Bhujia",
"Chabena" or called by any other name. Such products remain classified
in these sub-headings irrespective of the nature of their ingredients."
These supplementary notes appearing in Custom Tariff are not part of the
HSN. In this background it is seen that the Customs Tariff Act is not
aligned to the HSN (Harmonized System of Nomenclature) on account of
the text contained in supplementary notes to Chapter 21. Thus it is seen
that Government of India has deliberately chosen to deviate from
the Harmonised System of Nomenclature (HSN).By this
Supplementary note the Government of India has chosen to
enlarge the scope of the Heading 2106 by specifically including in
it the various items listed in Supplementary note. In view of
deliberate changes made in the Customs Tariff the HSN notes lose
their relevance.
53. The Supplementary notes of Chapter 21 of the Schedule to the
Custom Tariff Act prescribes at S.No. 5(a) that 'Protein Concentrate and
Textured Protein Substances' would fall under heading 2106.The heading
2106 of the Custom Tariff Act reads as follows:
2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR
INCLUDED
2106 1000 -Protein concentrates and textured protein substances Kg. 40% -
- Other :
2106 90 --- Soft drink concentrates : -
---- Sharbat
2106 90 11 ---- Other Kg. 150% -
2106 90 19 --- Pan masala Kg. 150% -
2106 90 20 --- Betel nut product known as "Supari" Kg. 150% -
2106 90 30 --- Sugar-syrups containing added flavouring or colouring Kg. 150% -
2106 90 40 matter, not elsewhere specified or included; lactose Kg. 150% -
syrup; glucose syrup and malto dextrin syrup
--- Compound preparations for making non-alcoholic
beverages
2106 90 50 --- Food flavouring material Kg. 150% -
--- Churna for pan
2106 90 60 --- Custard powder Kg. 150% -
2106 90 70 --- Other : Kg. 150% -
2106 90 80 ---- Diabetic foods Kg. 150% -
---- Sterilized or pasteurized millstone
2106 90 91 ---- Other Kg. 150% -
2106 90 92 Kg. 150% -
2106 90 99 Kg. 150% -
It is seen that OIA in the instant case relies on Supplementary Note 5(a)
and interpretative Rule1 for the purpose of classifying the Protein
Concentrates containing coco imported by the appellant under Heading
2106. There is no argument made in the appeal memorandum or in the
written submissions of the appellant as to why the Supplementary Note
5(a) should not be followed in the instant case. It is apparent from the
above reading of supplementary note 5(a) to Chapter 21 and that the
"Protein Concentrate and Textured Protein Substances" would fall under
the "heading 2106". It is seen that the sub heading 21061000 of Customs
Tariff (just like HSN) specifically covers "Protein Concentrates and
Textured Protein Substances", still a chapter supplementary note was
introduced to place the 'Protein Concentrate and Textured Protein
Substances'under heading 2106. It is noted that the supplementary Note
5(a) does not prescribe that "Protein Concentrate and Textured Protein
Substances" would fall under 'sub heading 2106 1000' but it clearly states
that "Protein Concentrate and Textured Protein Substances" would fall
35 C/10072/2024-DB
under 'Heading 2106'. This provision in the chapter notes has been
prescribed specifically to place "Protein Concentrate and Textured Protein
Substances" under the 'heading 2106'. Any other interpretation would
make the said note 5(a) redundant since these goods are as it is covered
under sub heading 2106 1000 in the tariff itself. In other words there was
no need of the Supplementary Note 5(a) if the goods are already covered
under sub heading 2106 1000. Hon'ble Supreme Court in the case of
Oswal Agro Mills Ltd. 1993 (66) ELT 37 (SC) has observed as follows:
3. The provisions of the Tariff do not determine the
relevant entity of the goods. They deal whether
and under what entry, the identified entity attracts
duty. The goods are to be identified and then to
find the appropriate heading, sub-heading under
which the identified goods/products would be
classified. To find the appropriate classification
description employed in the tariff nomenclature
should be appreciated having regard to the terms
of the headings read with the relevant provisions
or statutory rules of interpretation put up thereon.
For exigibility to excise duty the entity must be
specified in positive terms under a particular tariff
entry. In its absence be deduced from a proper
construction of the tariff entry. There is neither
intendment nor equity in a taxing statute. Nothing
is implied. Neither can we insert nor anything can
we delete but it should be interpreted and
construed as per the words the legislature has
chosen to employ in the Act or Rules. There is no
room for assumption or presumptions. The object
of the Parliament has to be gathered from the
language used in the statute. The contention that
toilet soap is commercially different from
household and laundry soaps, as could be seen
from the opening words of Entry 15, needs careful
analysis. It is well, at the outset, to guard against
confusion between the meaning and the legal
effect of an expression used in a statute. Where
the words of the statute are plain and clear, there
is no room for applying any of the principles of
interpretation which are merely presumption in
cases of ambiguity in the statute. The court would
interpret them as they stand. The object and
purpose has to be gathered from such words
themselves. Words should not be regarded as
being surplus nor be rendered otiose. Strictly
speaking there is no place in such cases for
interpretation or construction except where the
words of statute admit of two meanings. The safer
and more correct course to deal with a question of
construction of statute is to take the words
themselves and arrive, if possible, at their
meaning, without, in the first place, reference to
cases or theories of construction. Let us, therefore,
consider the meaning of the word soap
"household". The word household signifies a family
living together. In the simplistic language toilet
soap being used by the family as household soap
is too simplification to reach a conclusion.
Therefore, one has to gather its meaning in the
36 C/10072/2024-DB
legal setting to discover the object which the Act
seeks to serve and the purpose of the amendment
brought about. The task of interpretation of the
statute is not a mechanical one. It is more than
mere reading of mathematical formula. It is an
attempt to discover the intention of the legislature
from the language used by it, keeping always in
mind, that the language is at best an imperfect
instrument for the expression of actual human
thoughts. It is also idle to expect that the
draftsman drafted it with divine prescience and
perfect and unequivocal clarity. Therefore, court
would endeavour to eschew literal construction if it
produces manifest absurdity or unjust result. In
Manmohan Das v. Vishnu Das [AIR 1967 SC 643]
a Constitution bench held as follows :
"The ordinary rule of construction is
the provision of a statute must be
construed in accordance with the
language used therein unless there
are compelling reasons, such as,
where a literal construction would
reduce the provision to absurdity or
prevent manifest intention of the
legislature from being carried out."
Hon'ble Apex Court in the case of Calcutta Jute Manufacturing Co. 1997
(93) ELT 657 has observed as follows:
"10. The State is empowered by the legislature
to raise revenue through the mode prescribed in
the Act so the State should not be the sufferer on
account of the delay caused by the tax payer in
payment of the tax due. The provision for charging
interest would have been introduced in order to
compensate the State (or the Revenue) for the loss
occasioned due to delay in paying the tax [vide
Commissioner of Income Tax (A.P.) v. M. Chandra
Sekhar - 1985 (1) SCC 283 and Central Provinces
Manganese Ore Co. Ltd. v. Commissioner of
Income Tax - 1986 (3) SCC 461]. When
interpreting such a provision in a taxing statue a
construction which would preserve the purpose of
the provision must be adopted. It is well-settled
that in interpreting a taxing statute normally, there
is no scope for consideration of principles of equity.
It was so said by Rowlatt J. in Cape Brandy
Syndicate v. Inland Revenue Commissioners [1921
(1) KB 64 at page 71] :
"In a taxing Act one has to look
merely at what is clearly said. There
is no room for any intendment. There
is no equity about a tax. There is no
presumption as to a tax. Nothing is to
be read in, nothing is to be implied.
One can only look fairly at the
language used."
37 C/10072/2024-DB
The above observation has been quoted with
approval by a Bench of three Judges of this Court
in Commissioner of Income Tax, Madras v. Ajax
Products Ltd. [55 STC 741]. In another decision
rendered by a Bench of three Judges of this Court
in The State of Tamil Nadu v. M.K. Kandaswami
and others [36 STC 191] it has been observed
thus:
"In interpreting such a provision, a
construction which would defeat its
purpose and, in effect, obliterate it
from the statute book should be
eschewed. If more than one
construction is possible, that which
preserves its workability and efficacy
is to be preferred to the one which
would render it otiose or sterile."
In view of above, it is apparent that Supplementary Note 5(a) would be
rendered otiose if we read it to mean that "Protein Concentrate and
Textured Protein Substances" are to be classified under sub-heading 2106
1000. The note clearly means and states that the said goods are to be
classified under "Heading 2106".
54. From the above proposition in para 49 to 53 above it is apparent
that
(i) The Customs Tariff is not harmonized with the HSN,
and therefore the conclusions based on HSN cannot
be relied when it contradicts prescriptions of the
Customs Tariff.
(ii) If the classification can be made relying on
interpretative Rule 1 there is no need to proceed
further on any other Rule.
(iii) The Supplementary Note 5(a) clearly provides that
Protein Concentrate and Textured Substances
would be classified under "Heading 2106".
Rule 1 of the General rules of interpretation is reproduced below:
"Classification of goods in the Nomenclature shall be
governed by the following principles:
1. The titles of Sections, Chapters and sub-
Chapters are provided for ease of reference only,
for legal purposes, classification shall be
determined according to the terms of the headings
and any relative Section or Chapter Notes and,
provided such headings or Notes do not otherwise
require, according to the following provisions:
It is seen that it clearly states that 'for legal purposes, classification shall
be determined according to the terms of the headings and any relative
Section or Chapter Notes'. In the instant case Supplementary Note 5(a)
clearly provides that Protein Concentrate and Textured Substances would
be classified under "Heading 2106".In view of above in terms of
interpretative Rule-1, the goods imported by the appellant would be
classified under Heading 2106 in terms of Supplementary Note 5(a). Any
other interpretation would make Supplementary Note 5(a) otiose. Since
the goods are specifically classified under heading 2106 by virtue of
38 C/10072/2024-DB
Supplementary Note 5(a), there is no need to further go into
interpretative Rule 2 to 6.
55. The appellants have relied on various international decisions. The
said decisions are examined as under:-
(I) In the decisions given by Thomas J Russo, in US Cross Ruling N204559
dated 02.03.2012, following has been observed:
"Ingredients breakdowns accompanied your November letter.
Additional information was provided with your February letter and
an email transmission dated February 29, 2012. Whey Protein
Powder will be offered in two flavors-chocolate and vanilla.
Ingredients common to both products are approximately 37-38
percent whey protein isolate, 34-36 percent whey protein
concentrate, 12-13 percent fructose, 6 percent l-glutamine, 2-3
percent chicory root extract (inulin), one percent erythritol, and less
than one percent, cach, colloid gum powder, sodium chloride,
aminogen (plant enzyme), cream flavor, red orange extract,
ascorbic acid and stevia- rebiana. Other ingredients, depending on
the flavor, include about 2 percent cocoa (lecithinated), 2 percent
chocolate flavor and I percent natural vanilla flavor. Both products
will be put up for retail sale in containers holding 908 grams, net
weight, and used as a food supplement.
You have suggested that the subject products are classifiable in
subheading 0404.10.0500. Harmonized Tariff Schedule of the
United States (HTSUS), which provides for whey protein
concentrates. We disagree. Based on the ingredients breakdowns,
they will be classified elsewhere.
The applicable subheading for the Chocolate Whey Protein Powder
will be 1806.90.9090, HTSUS, which provides for other food
preparations containing cocoa... other... other...other. The rate of
duty will be 6 percent ad valorem.
The applicable subheading for the Vanilla Whey Protein Powder will
be 2106.90.8200, HTSUS, which provides for food preparations not
elsewhere specified or included... other... other...
containing over 10 percent by weight of milk solids... other... other.
The rate of duty will be 6.4 percent ad valorem.
Duty rates are provided for your convenience and are subject to
change. The text of the most recent HTSUS and the accompanying
duty rates are provided on the World Wide Web at
http://www.usitc.gov/tata/hts/.
This merchandise is subject to The Public Health Security and
Bioterrorism Preparedness and Response Act of 2002 (The
Bioterrorism Act), which is regulated by the Food and Drug
Administration (FDA). Information on the Bioterrorism Act can be
obtained by calling FDA at 301-575-0156, or at the Web
site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 177 of the
Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should
be provided with the entry documents filed at the time this
merchandise is imported. If you have any questions regarding the
ruling, contact National Import Specialist Bruce N. Hadley, Jr. at
(646) 733-3029."
From the above decision it is apparent that the said authority has held
that:
39 C/10072/2024-DB
(i) Vanilla Whey protein will be classifiable under heading
2106.90.8200 of HTSUS;
(ii) The chocolate whey protein powder will be classifiable under
1806 90.9090 HTSUS (Harmonized Tariff Schedule of United
States);
(iii) Whey proteins of this kind will not be classified under
heading 0404.10.0500 HTSUS.
(II) Similar conclusion has been reached in ruling No. 025135 dated
15.04.2008 given by Robert B. Swierupski Director National Commodity
Special Division wherein he has clarified as follows:
"The subject merchandise is described as 100% Whey Classic -
Chocolate and 100% Whey Gold Standard-Chocolate. The main
ingredients in 100% Whey Classic-Chocolate are Protein Blend
(Whey Protein Isolate, Whey Protein Concentrate and Whey
Peptides), Cocoa (processed with alkali), Artificial Flavor, Lecithin
and Acesulfame Potassium. The main ingredients in 100% Whey
Gold Standard-Chocolate are Protein Blend (Whey Protein Isolate,
Whey Protein, Concentrate and Whey Peptides), Cocoa (processed
with alkali), Artificial Flavor, Lecithin and Acesulfame Potassium.
All products are in powder form, put up for retail sale in plastic
containers. The 100% Whey Classic-Chocolate comes in sizes
weighing either 2 pounds or 5 pounds. The 100% Whey Gold
Standard - Chocolate comes in sizes weighing 1 pound, 2 pounds,
5 pounds or 10 pounds. The product is mixed with water, milk or
other beverages to make a dietary supplement.
The applicable subheading for the 100% Whey Classic - Chocolate
and 100% Whey Gold Standard-Chocolate will be 1806.90.90,
Harmonized Tariff Schedule of the United States (HTSUS), which
provides for chocolate and other food preparations containing
cocoa... other... other... other. The rate of duty will be 6 percent ad
valorem."
(III) Similarly in the tariff Ruling No. N028196 dated 02.06.2008 by
Robert B. Swierupski Director National Commodity Specialist Division, has
clarified as follows:
"Ingredients breakdowns, descriptive information, and a
manufacturing flow chart for two products were submitted with
your letter. The products, described as pink-colored, free-flowing
powders, will be used as nutritional supplements. 100 percent
Whey Gold Standard - Strawberry consists of approximately 55 9
percent whey protein isolate, 37.9 percent whey protein
concentrate, 4.8 natural and artificial flavor, and less than one
percent each of whey peptides, Sucralose, color, citric acid,
aminogen, and lactase. Classic Whey-Strawberry consists of
approximately 95.7 whey protein concentrate, 1.3 percent each of
lactalbumen (whey peptides) and whey protein isolate, 1 percent
natural and artificial flavors, and less than one percent each of
Sucralose, acesulfame potassium, citric acid, and color. 100
percent Whey Gold Standard-Strawberry, containing
approximately 78 percent protein, will be put up in 2-, 5-, and 10-
pound containers. The Classic Whey- Strawberry product,
containing approximately 69 percent protein, will be put up in 2-
and 5-pound containers.
The applicable subheading for these products will be
2106.10.0000, Harmonized Tariff Schedule of the United States
(HTSUS), which provides for food preparations not elsewhere
specified or included... protein concentrates and textured protein
substances
40 C/10072/2024-DB
This ruling is being issued under the provisions of Part 177 of the
Customs Regulations (19 CFR. 177)."
From the above rulings, it is apparent that the various
international rulings are based on harmonized system of
nomenclature and have ruled that the "Protein Concentrates" of
the kind imported by the appellant are to be classified under
heading 21061000 if the same do not contain cocoa. However
same product, "Protein Concentrates",if containing coco would be
classifiable under 1806.90.90 of HTSUS. This conclusion is based on
the reading of HSN and its chapter and section notes.In most cases the
HSN has been totally adopted in the Schedule to the Customs
Tariff Act, 1975. However, in some cases, like in case of heading
2106, the government has chosen to deviate from the language
and prescription of the HSN by introducing Supplementary Notes
to Chapter 21. Since all international rulings are based on the HSN,
which is different from the Customs Tariff in respect of Chapter
Heading 2106, no reliance can be placed on these decisions.
56. Ld counsel has also relied on the fact that the Explanatory Notes to
the HSN were amended by the HSN Committee in its 64th Session in
September 2019 to introduce a specific exclusion for Chapter heading
2106 ("Amendment to Chapter heading 2106"). The amendments
were made applicable from 1st December 2019. The relevant extract of
the Amendment to Chapter heading 2106 is reproduced below for ease of
reference-
.. CHAPTER 21
Heading 21.06
Page IV-2106-3. Item (16)
....
Insert a new exclusion note (c):
(a) Preparations containing cocoa, put up as food supplements for human consumption (heading 18.06).
While such amendments would have relevance if the Customs Tariff is aligned with the HSN, such changes have no relevance when Government of India has chosen to deviate from the HSN by specially prescribing that the impugned products would be classified under 'Heading 2106". The prescription in Chapter Supplementary Note 5(a) would take precedence over the HSN Heading Notes of the CTH 2106.In case of heading 2106, the government has chosen to deviate from the prescription of the HSN by introducing Supplementary Notes to Chapter 21 which specifically classify the impugned products under 'Heading 2106'. In these circumstances the HSN notes to the Chapter heading, and amendments made therein, which are in conflict with the supplementary notes to the Chapter, are to be ignored.
57. In view of above discussion we hold that the impugned goods are rightly classifiable under Heading 2106, sub heading 2106 1000 of the Customs Tariff. The impugned order is upheld and the appeals are dismissed."
41 C/10072/2024-DB 4.10 The Departmental Representative has primarily relied upon the decisions of this Tribunal's decision in case of Raptakos Brett & Co Ltd vs Commissioner of C.Ex., Raigad reported at 2014 (307) E.L.T. 565 (Tri.- Mumbai). The Tribunal in this particular case has held as follows:-
"5.4 It is a settled position in law, that it is for the Revenue to lead evidence in classification matters and not for the appellant. In Vicco Laboratories case [2005 (179) E.L.T. 17 (S.C.)] the Hon'ble Apex Court held that the "burden of proof that a product is classifiable under a particular tariff head is on Revenue and must be discharged by proving that it is so understood by consumers of product or in common parlance". In the present case, the Revenue has completely failed in this regard. On the contrary, the appellant has led evidences by way of expert opinion and technical literature to show that the products manufactured by them did not come within the category of protein concentrates or textured protein substances. The appellant's products are consumed as such by people who are recuperating from illness and, therefore, it is a ready to eat packaged product. Consequently, the product merit classification under CETH 2106 90 99 and the appellant is rightly entitled to the benefit of Notification 3/2006, dated 1-3-2006. In Wockhardt Life Sciences Ltd. [2012 (277) E.L.T. 299 (S.C.)], the Hon'ble Apex Court held that in classification of goods functional utility and predominant usage of the commodity must be taken into account apart from understanding in common parlance. If we apply this ratio to the facts of the present case, the classification under CETH 2106 90 99 is more appropriate." 4.11 It can be seen from the reading of the above para that this Tribunal has allowed the classification of their product under 21069099 because the appellant in case of M/s. Raptakos could establish that the product manufacture by them was the products consumed under the category of the protein concentrate by the people who are recuperating from illness. We find that the product under import in the impugned show cause notice are not meant for use by the people suffering from any illness they are primarily used as food supplement and for building muscles, we therefore differentiate that following of this Tribunal in this case is not relevant to the matter of hand and other two decisions mentioned in the preceding para are not relevant to the imported consignment in this case. Therefore, the argument taken by the Learned AR not acceptable. 42 C/10072/2024-DB 4.12 In view of entire above discussion, we are of the opinion that import consignment namely Mass Gainer- Food Supplement are nothing but protein concentrates which are use as food supplements for building muscles and since there is specific entry to this effect under Chapter 21061000 and we follow the General Rules of Interpretation and hold that correct classification of the product will be under chapter 21061000. 4.13 Now coming to the second argument which has been taken by the appellant that entire demand is hit by period of limitation as show cause notice has been issued on 25.01.2023 by invoking the provisions of Section 28 (4) of the Customs Act, 1962 for the consignments which have been imported by the appellant from March 2018 to 03.03.2021. We find that Section 28(4) mentions as follows:-
"4) Where any duty has not been 10[levied or not paid or has been short-
levied or short-paid] or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,-
(a) collusion; or
(b) any wilful mis-statement; or
(c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been 11[so levied or not paid] or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice."
4.14 It can be seen that for invoking the provisions of sub section 4 of Section 28, the department needs to establish that the appellant has short paid the duty on account of collusion, any wilful mis-statement or suppression of facts with an intention to evade duty. We find that the description given by the appellant is the same as mentioned on the 43 C/10072/2024-DB product as well as on the import document such as invoice, purchase order and other documents accompanying the Bills of Entry. We also find from the show cause notice that the importer has submitted the literature/ brochure related to mass/ weight gainer- food supplement at the time of the import to the customs authorities. Since all the documents have been available before the customs authority at the time of the assessment, examination of the goods, we find that the allegation of the suppression of the facts or mis-declaration with regard to description of the imported goods as required for invoking the provisions of Section 28(4) of the Customs Act, 1962 have not been established by the department. We are also take note of the fact that for about three years i.e from March 2018 to March 2021 the department accepts the classification of the import consignments of Mass-gainer- Food Supplement under CTH 21061000. We are therefore of the opinion that extended time proviso is not invokable in this particular case and therefore the demand of the customs duty is barred by period of limitation as provided under Section 28(4) of Customs Act, 1962. While holding the above view, we take support of the decision of the Hon'ble Supreme Court in the case of Collector of the Central Excise vs. CHEMPHAR DRUGS & LINIMENTS reported under 1989 (40) E.L.T. 276 (SC), relevant extract of the same is reproduced herebelow:-
"8. Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before
44 C/10072/2024-DB the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence."
5. In view of entire above discussion, we hold that on merit as well as on the period of limitation the impugned order-in-original is not legally sustainable, therefore, we set aside the same. Accordingly, the appeal is allowed.
(Pronounced in the open court on 30.01.2025) (C L MAHAR) MEMBER ( TECHNICAL ) (DR. AJAYA KRISHNA VISHVESHA) MEMBER ( JUDICIAL ) Bharvi