Custom, Excise & Service Tax Tribunal
Shaik Iqbal Mohammed vs Hyderabad-Iv on 14 March, 2019
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CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Appeal No. Appellant Respondent Impugned Order No.
Shaik Iqbal CCCE & ST,
E/31067/2016 OIO: HYD-EXCUS-004-COM-020-
Mohammed Hyderabad - IV
16-17 dated 10.8.16 passed by
CCCE & ST,
E/31068/2016 CCCE & ST, Hyderabad - IV
Goldee Food Hyderabad - IV
Technologies OIO: HYD-EXCUS-001-COM-009-
CCT, Medchal -
E/30826/2018 Pvt Ltd 17-18 dated 23.1.18 passed by
GST
CCCE & ST, Hyderabad - IV
Appearance:
Shri R. Muralidhar, Advocate for the Appellants.
Shri B. Guna Ranjan, Superintendent/AR for the Respondents. Coram:
Hon'ble Mr. M.V. RAVINDRAN, MEMBER (JUDICIAL) Hon'ble Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 07.02.2019 Date of Decision: 14.03.2019 FINAL ORDER No. A/30349-30351/2019 [Order per: M.V. Ravindran]
1. These appeals are filed by M/s Goldee Food Technologies Pvt Ltd and its Director, Shri Shaik Iqbal Mohammad against Order-in-Original No. HYD-EXCUS-
004-COM-020-16-17 dated 10.08.2016 and Order-in-Original No. HYD-EXCUS-001- COM-009-17-18 dated 23.01.2018 passed by the Commissioner of Central Excise, Hyderabad. The relevant facts that arise for consideration are that the Appellant M/s Goldee Food are engaged in manufacture of Sweet meat Cereal Bars with brand name "Rite Bite Nutrition Bars" as job worker for M/s Naturell (India) Pvt. Ltd. The goods were classified by them under Chapter Sub-heading No. 21069099 of the Central Excise Tariff Act and they were claiming exemption from payment of duty under Sr. No. 29 of the Notification No. 3/2006 dated 01.03.2006 as amended claiming the same as Chikki sweet meat cereal bars under the category of Mithai/ Misthans. The ingredients of the product were mainly rice crispies, soya crispies, white oats, corn-syrup, edible veg. oil, raisins, edible starch, almonds etc. Some of the sweet meat cereal bars were also coated with cocoa. The Appellant were issued (2) show cause notice dated 09.10.2015 wherein it was alleged the chikki is primarily made of jiggery and sugar whereas the Appellant is using different ingredients. The usage of such ingredients make the manufactured goods distinct from group of items mentioned against Sl. No. 29 of Notification No. 03/2006 - CE dated 01.03.2006, which are general household preparations and easily identifiable and available in the market in ready for consumption form. The preparation of Misthans, Mithai, Namkeens, Bhujia, Mixture and similar items are also known in all parts of the country and are easily available. The Appellant has mentioned the product as "Chikki" type cereal sweet meat bars. "Chikki" in common parlance is a sweet generally made of roasted groundnut / til sesame) or such other nuts mixed with jiggery, which is not similar to the Rite bite Nutrition bars. Further, that the product containing cocoa is classified under tariff sub-heading 18069090 and liable to duty under said tariff heading. In case of products not containing cocoa, it was contended that the bar is packed in a wrapper containing details of MRP, ingredients, manufacturing date, net weight, batch number, and period within which the product is to be consumed. That the said bars are not Sweet meat and packed in sealed containers and are ready to eat packaged food and even though classifiable under chapter sub heading 2106 90 99 but are liable to 8% duty in terms of Sr. No. 30 of Notification No. 3/2006-CE dated 01.03.2006 as "Ready to eat packaged food". The first Show Cause Notice dt. 09.10.2015 demanded duty for the period from September 2010 to August 2015 by invoking extended period of limitation. Also another show cause notice dt. 29.09.2017 was issued demanding duty for the period September' 2015 to June' 2017.
2. The Adjudicating authority vide impugned orders confirmed the demands as proposed in both the show cause notices along with penalty and also imposed penalty upon Shri Shaik Iqbal holding that the impugned goods containing cocoa would fall under Chapter 18069090 and the goods not containing cocoa would fall under CSH 21069099 as "ready to eat packaged food" liable for duty.
3. Being aggrieved the present appeals have been filed by the Appellants. (3)
4. Ld. Counsel, Shri R. Muralidhar appearing for the appellant submits that they are manufacturing "sweet meat cereal bars" and thus classified the same under chapter sub heading 21069099. The products manufactured have been bifurcated into two categories i.e Products containing cocoa and products not containing cocoa. The department does not dispute the classification of products not containing cocoa but disputes the classification only of product containing cocoa. That if the product is known as sweet meat than irrespective of ingredients it would be classifiable under chapter 21069099, Sl. No. 29 of the Notification No. 3/2006 - CE dated 1.3.2006 exempts the goods, i.e. sweetmeat (known as 'misthans' or 'mithai' or by any other name), namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, papad and jaljeera; that subsequent Notification No. 12/2012-CE dated 17.03.2012 also exempted the goods; that in terms of Chapter Note 6 to Chapter Note 21 sweet meat commonly known as Mithai/ Misthan irrespective of their ingredients would be classifiable under Ch. 21 only. It is submitted that in many of the sweets i.e. mithai, some proportion of cocoa is used and only for that reason, the products cannot be classified as products of cocoa; Chapter 18 specifically deals with cocoa and other food preparations containing cocoa. Central excise tariff 1806 starts with words "Chocolate" and therefore, the words following 'chocolate' i.e. other food preparations containing cocoa would mean when cocoa and its preparations are the main ingredients and they induce the buyers to buy the product as Chocolate or as similar product. The adjudicating authority has held that when there is no use of cocoa in sweet meat cereal bars, they would fall under CH 21069099 which itself shows that by generic meaning the goods in question are mithai /misthans or similar products. He draws our attention to the affidavits of various dealers submitted before the adjudicating authority that the goods are known and sold in the market as "sweet meat" only. He has also produced copy of F-Forms issued by Sales Tax Authorities as per VAT provisions which shows that the goods are sweet meat. He also draws our attention to the sample copy of invoices / wrappers/ competitors wrappers/ showing that the goods are sold as "sweet meat" only (4) irrespective of its contents; it is submitted that Revenue has not given any evidence that the goods are sold as Chocolates or preparation of cocoa; there is no evidence that non-cocoa based cereal bar is being sold by any name other than "sweet meat". He submits that out of many ingredients, cocoa solids / cocoa powder is one of the ingredients in a very small proportion. He relies upon the lab test done for the composition and analysis for food of 13 products which show that the cocoa content is 0.56% for 'Choco Delite', 0.42% for 'Work out Classic', 0.33% for 'Easy Slim ', 0.51% for 'Professional Choco Bem', 0.13% for Rite Bite Max Protein Professional Choco Almond, 0.08% for Ritebite Max Protein Choco fudge, 0.17% for Rite Bite protein Green Coffee, 0.17% for Rite Bite Work out Choco Berry, 0.18% for Rite Bite work out Choco Almond, 0.08% for Rite Bite chocolate, 0.16% for Rite Bite Krunch, 0.16% for Rite Bite Sports Bar and 0.16% for Rite Bite Krunch. He submits that the percentage is less than even 1% of the total weight of the product and the low content would itself shows that the products cannot be termed as "Chocolate" and other food preparations containing cocoa". He submits that only when the goods are held to be classified under 21069099, the Chapter Note 6 is required to be applied; it would mean that even if one of the ingredients is cocoa, still the product cannot be classified under Chapter Excise Tariff pertaining to Cocoa and Cocoa products. He relies upon the judgment of Hon'ble Supreme Court in case of Tetragon Chemie P. Ltd 2001 (132) ELT 525 (SC), Vasu Pharmaceutical Pvt. Ltd Vs UOI [2017 (350) ELT 166 (Guj)] and Peshawar Soap & Chem Works Vs. CCE, Chandigarh 2001 (138) ELT 855 (Tri) in support of his contention. He submits that following the ratio of above judgments 'Sweet meat Bar' cannot be classified with SH 1806 9090. The adjudicating authority has incorrectly denied the benefit of Sl. No. 29 of Notification No. 3/2006-CE dated 1.3.2006 to Sweet meat Cereal Bars not coated with cocoa and denied the benefit of serial no. 29 holding that it is "Ready to eat packaged food". He relies upon the Tribunal judgment in case of Hindustan Lever Ltd 2005 (189) ELT 53 (Tri) to state that the term "Sweet Meat" covers all sorts of edible preparations and the edible preparations containing sugar in ready to consume form would be covered under (5) the term "Sweet Meat". That the term "similar edible preparations" cannot be restricted to Mithai as the term does not mean same or identical. It includes all sorts of preparations based on sugar which are ready for consumption. He relies upon the Tribunal judgment in case of Globe Confectionery 2005 (190) ELT 239, wherein it was held that the product would remain classified under 2108 irrespective of the nature of the ingredients and the scheme of the classification is to place all " Misthans" or "Mithais" under 2108. He submits that the Tribunal's judgment was confirmed by the Hon'ble Apex court, as reported in 2006 (197) ELT A191 (SC) submits that mere packing of 'Misthan' or 'Mithai' would not remove the same from heading 21069099 to make it 'ready to eat packed food'. He relied upon Chapter Note 6 of Ch. 21 of the Central Excise Tariff, which reads that "Tariff item 2106 90 99 includes sweet meat 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". He also relies upon Board Circular No. 841/18/2006-CX wherein it was stated that the exemption of NIL rate of duty would be available to goods covered by Sl. No. 29 of Notification No. 3/2006-CE dated 1.3.2006 even if the goods are also covered by Sl. No. 30. That once the goods fall under category of Sweet Meat, then irrespective of whether they are packed or not, still they would be classified under Sl. No. 29 only; the Department does not dispute that the goods not containing cocoa are not classified as Sweet meat and fall under 21069099. Learned Counsel also demonstrates the various samples of Sweet meat available in the market with local shops as well as in packaged condition which contain cocoa or are covered with Chocolate. He submits that the adjudicating authority has held that it is not clear as to whether the Form-F is for the product coated with cocoa or without cocoa coating. It is the submission that on the reverse side of Form - F invoice numbers are also mentioned under the cover of which the goods were removed which shows the nature of goods; the adjudicating authority has held that the Sales-tax definition cannot be applied for interpreting the provisions of (6) Central Excise which is incorrect, the product in dispute and similar products of the competitors are known in trade circle and to consumers as Sweetmeat, that even if one of the product contains ingredients such as Aswagandha, Brahmi and Shankpushpi, the usage of the product in dispute does not change due to addition of herbal extracts since it is intended to give different flavours to Sweetmeat and to market Sweetmeat as a health wellness product. He submits that even if the Sweetmeats contain cocoa or are covered by coating of cocoa but the same are sold in shops as Sweetmeat and therefore the classification adopted by the Appellant is correct. He relies upon the following judgments to submit that even the packaged ready to eat food products are classifiable under Sl. No. 29 of Notification No. 3/2006 only:
i) Parle Products P. Ltd Vs. CCE 2018 (10) GSTL 433 (Tri)
ii) Pepsico India Holding Pvt Ltd Vs CCE, 2016 (331) ELT 119 (Tri)
5. He alternatively submits that the adjudicating authority in respect of Sweet meat without cocoa has given the benefit of concessional duty of NIL, 1% and 2% in terms of Notfn. No. 1/2011 dated 1.3.2011. Therefore, in any view of the matter even the Sweetmeat cereal bars with cocoa, following the same ratio the above notification benefit has to be applied going by the department's own stand. He submits that in case of SCN dated 9.10.2015 the demands are barred by limitation as they had submitted the process of manufacture and ingredients vide their letter dated 25.7.2006. He draws our attention to the correspondence between the Appellant and the Department vide letters dated 25.7.2006, 2.8.2006, 5.4.2007, 12.4.2007, 4.9.2007, 29.2.2008, 19.4.2011, 4.5.2011, 15.2.2013, 4.3.2013, 28.11.2014, 10,9,2015, 5.12.2014, 01.06.2015, 03.08.2015, 06.10.2015 which clearly shows that the department was in knowledge of the manufacturing process, ingredients and nature of product since year 2006 - 07. He submits that in view of such communication, the demands are squarely time barred. He relies upon the following judgments:
i) COMM. Vs Adani Gas Pvt Ltd 2017 (356) ELT 541 (Guj)
(7)
ii) Suvidha Eng. Vs CCE, Noida 2013 (32) STR 735 (Tri)
iii) Neminath Fabrics Vs CCE, Surat -I 2009 (234) ELT 525 (Tri)
6. Per contra, Ld. AR appearing for the Revenue submits that in case of products containing cocoa, the same cannot be termed as Sweet meat as Chapter 21 is for miscellaneous edible preparations to cover solid edible preparations; that CETH 2106 is last resort of classification for the edible preparations which cannot classified under any other edible preparations, Central Excise Tariff Heading No. 21069099 covers only those sweet meats which are not covered by other entries of section; that in terms of Chapter Note 2 to Chapter Note 18 the food preparations containing cocoa are covered under the heading 1806; that even if the Appellant's products were held to be sweet meat under the central sales tax that cannot be used as a guide for classifying the goods as Sweetmeat under Central Excise tariff head. He submits that the affidavits of the dealers / consignee agents to under the product as Sweetmeat cannot be relied upon as it is not clear as to whether the words Sweetmeat were understood by them in the context of supplementary Note No. 6 to Ch 21 of CET 1985; that misunderstanding of product is very common in market and the products of one group are misunderstood as belonging to another group. 'Chikki' does not contain cocoa as an ingredient, that in case of product not containing cocoa the products cannot be considered as Sweet meat because they are not traditional sweets. The products are ready to eat packaged foods as they are not traditional chikki nor sweet meat. The goods are in packaged form and available in ready to eat packaged form and therefore liable for duty.
7. Heard both the sides and perused the facts of the case. The Appellants are manufacturing cereal bars with ingredients like rice crispies, soya crispies, white oat with nuts along with cane sugar, milk solids, soya proteins etc., minerals and vitamins are also included, few of the cereal bars does not contain cocoa. As per the manufacturing process detailed in records for the product containing cocoa the paste is prepared with vegetable oil and milk paste in an enrober and such paste is coated on bars which after cooling is packed. The Appellants are classifying both (8) types of cereal bars under tariff heading 21069099. These goods are sold by them as "Chikki - Nutrition Bar Sweet Meat.", one of the products also contain Aswagandha, Shankhpushpi and other ingredients to make the product healthy. The Revenue in case of product not containing cocoa, has classified the product under tariff item No. 21069099, but held that the products are "ready to eat packaged food" for the reason that the same were sold in packaged condition. In case of some products coated with cocoa, the adjudicating authority has classified the products under tariff item No. 1806 on the ground that in terms of Ch.Note - 2 to Ch. 18, the heading 1806 includes sugar confectionery containing cocoa and subject to Note-1 to this chapter 'other food preparations containing cocoa'. We find that the Appellant is marketing and selling the product as Sweet Meat. The photographs of the wrappers of all the products annexed to the Appeal Memo show that the product has been marketed and sold as Sweet Meat in market. The invoices issued by M/s Naturell for sale of the products in dispute specifically mention the product description as Sweet Meat. Even similar products of the competitors which are sold in market are known in trade circle and in mind of the consumers as Sweet Meat, as evidenced by wrappers of such products annexed to the appeal memo. It is not in dispute that the list of ingredients along with sweetness of the product puts the product in category of sweets only. The Appellant has also produced the sample of Sweet Meat, i.e. "Gajak" sold in market coated with cocoa and sample of their own products and test report of their own products, which shows that cocoa content in their coated product, is less than 1%. The adjudicating authority has held that the product not containing cocoa is not Sweet Meat as 'Chikki' is Sweet Meat which is made up of Til and Jaggery, whereas the product contains other ingredients. We find that it is not necessary that a product to be held as 'Chikki', the same should contain sugar or jaggery. In new development of products instead of sugar or jaggery, items like honey, cane sugar, liquid glucose and other items are used for giving sweet taste to product. Further even if the product is made of cashew nuts, cereals or other ingredients such as puffed rice or soya crispies, the goods would not lose their identity as Sweet Meat. (9) We find that from the Indian Standard "Peanut Chikki" (Candy) Specification IS 7592 of 1989 that the product Chikki is a variety of Sweet Meat. Apart from Jaggery, use of kandsari sugar, crystalline sugar, liquid glucose, spices and flavours etc are also well recognized. In our view, if the product is custom made to target a specific market i.e. even if it is advertised to be "diabetic friendly'/ 'just 99 calorie"
the product remains as sweet meat. Ingredients of different Sweet Meat can defer but it would not result into losing its basic identity as 'Chikki' or a "sweet meat' due to difference in ingredients. The adjudicating authority has held that Ashwaganda, Brahmi and Shankpushpi, use of such ingredients make the product in question different from Sweet Meat mentioned Sl. No. 29 of Notification No.3/2006, we find that only one of the products contains these ingredients in the Appellant's case. Adjudicating authority has also held that the group of items mentioned in Sl. No.29 of Notification No. 3/2006 dated 1.3.20006 are household preparations and easily identifiable and available in the market; has held that the product not containing cocoa in the Sweet Meat cereal bars would fall under tariff heading 21069099. Admittedly, the Department has not come out with any evidence to show that the goods are not 'mithai' or 'Misthans'. Mere packing of the sweet meat same would not remove the product from the heading of 'mithais / misthans' to make it "ready to eat packaged food". Sl. No. 29 of the Notification No. 3/2006 is a wide entry, which encompasses not only Sweet Meat known as 'mithais / misthans ( or by any other name), namkeen, Bhujia, Mixture, Chabena , but also similar edible preparations in ready for consumption form, papad, jalgira. The word similar edible preparation is of wide compass. If the goods are known as Sweet Meat and are marked and consumed as sweet meat in general parlance, then even-if packed would not lose its identity as 'misthans'. With the advancement of technology, the Sweet Meat such as Rasgulla, Peda, Sohanpappdi and various other Sweet Meat are being sold in market after packing. The intention of packing these 'mithais / misthans' is to preserve their freshness and save them from any contamination. But, this does not mean that only if the Sweet Meats are sold openly in sweet shops would classify as Sweet Meat and if sold in packaged form would change (10) their nature to 'ready to eat packaged food'. The CBEC vide Circular No. 841/18/2006 - CX dated 6.12.2006 has clarified that even if same items fall under two entries of the notification, the exemption of NIL rate of duty would be available to goods covered by Sl. No. 29 of Notification No. 3/2006-CE dated 1.3.2006 even when the said goods are also covered by Sr. No. 30. We find that in case of Hindustan Lever Ltd 2005 (189) ELT 53, the facts were quite similar. The Tribunal held as under:-
"2.1 After hearing both sides & considering the issues it is found -
(a) We find that the term 'sweet meat' used in the notification is a generic term & would cover all sorts of edible preparations not elsewhere specified, falling under heading 2108.99 which is a sort of repository of residual entry for edible preparation. The classification of the said goods under 2108.99 is not in doubt or contest. Sweet edible preparation containing 23% sugar in ready to consume form will fall under the heading and will be covered by the term "Sweet meats". Restricting the generic term 'Sweet meat' to the bracketed portions of "misthan or mithai" only, is therefore not called.
(b) The lower authorities are in error by looking for sale at Sweet Meat shops selling Misthan or Mithai e.g. Rasgullas packed in tins of the famous Calcutta dealer are sold in places other than Mithai or Misthan shops. Mithai is now packed & sold off the shelf in department stores. It does not cease to be mithai. Relating the term sweet meat to such entities which are sold at traditional 'Halwai' shops, is placing an artificial restriction to the coverage of the notification which is not envisaged. Once the said goods are sweet meats, as found, they are entitled to the coverage of the notification.
(c) The term "Similar edible preparation" & interpretation of the word 'similar' cannot be restricted to mithai as the term does not mean 'the same' or "identical". It would include all sorts of preparations based on sugar, not elsewhere specified & which are ready for consumption. The said goods are ready for consumption and on made up of sugar.
(d) There is force in the argument that in the predecessor notification No. 5/98-C.E. the benefit of exemption was restricted to sweet meats made at premises not covered by the word 'factory' as defined under Factories Act, 1948.
Therefore the deletion/doing away of that stipulation would indicate the extension of the exemption to the products emerging in the factory of the appellants herein.
(e) The notification benefit is available and the demands cannot be upheld. There is no case or cause for penalty, the same is to be set aside. 3.1 In view of the findings, the order is set aside & appeal allowed by ordering the grant of eligibility under Sl. No. 8 notification 6/2000 to the said goods and confirming the classification under 2108.99"
8. Similarly, in case of Globe Confectionery 2005 (190) ELT 239 (Tri), while dealing with the classification of product namely Rasgulla, Peda, the Tribunal held that irrespective of the ingredients, the scheme of classification is to place all "misthans" or 'mithais" under 2108. That despite sugar being a predominant (11) ingredient, the items cannot go under sugar confectionery. The above judgment of the Tribunal was affirmed by the Hon'ble Supreme Court, as reported in 2006 (197) ELT A191 (SC). We thus are of the view that the products not containing cocoa are eligible for exemption as "sweet meat". Coming to the classification of the products containing cocoa, we find that Chapter Note 6 to Chapter 21 clarifies that Sweet Meats, commonly known as only 'Misthans', irrespective of their ingredients, would be classified under Ch. 21 only. The adjudicating authority has classified the cereal bars containing cocoa under Tariff Item 1806, which pertains to classification of chocholates and other food preparations containing cocoa. We have already held that the cereal bars not containing cocoa are classifiable under Tariff Heading 2106 90 99, which even the adjudicating authority has also held so.
Admittedly, once the goods are classified under 2106 90 99 then even the addition of cocoa would not change the classification of such goods to 1806 9090. The products do not lose their identity as sweet meat. Chapter 18 deals specifically with cocoa and other food preparations containing cocoa. The Tariff item 1806 starts with chocolate and other food preparations containing cocoa, even if the goods predominantly being sweet meats, the presence of meagre amount of cocoa would not change its classification. It is even so in the light of the fact that the products not containing cocoa merit classification as sweet meat. We have observed from the test reports that the products contain less than 1% of cocoa. It is supported by the dealers of the products, who have given affidavits to the effect that the goods are known and sold in the market as Sweet Meat only. Even as per the VAT/ Sales Tax provisions the products were classified as Sweet Meat by Sales- tax authorities. The sample copies of invoices, wrappers, competitors wrappers also show that the goods are Sweet Meat irrespective of whether it contains cocoa or not. The low content of cocoa itself shows that the products are containing cocoa and hence cannot be termed as "Chocolates" and "other food preparations containing cocoa". In such case by applying Chapter Note 6 of Ch. 21, the goods are to be classified under 21069099. In case of Tetragon Chemi Pvt Ltd 2001 (132) ELT 525 (SC) the Hon'ble Supreme Court has held that mere usage of certain (12) ingredients would not change the classification of the product. The relevant operative paras of the said judgment are as under:-
"2. Entry 2302 reads as follows :
"For preparation of a kind used in animals feeding, including dogs and cats food"
the rate of duty for this is nil.
3. Entry 2936 reads as follows :
"The rate of duty prescribed is 15% for the vitamins."
4.The Collector of Central Excise had come to the conclusion that the product did not fall under Entry 2302 because the product had to be added in a small quantity to the main feed to get desired performance of the live stocks or to enhance the performance of the live stocks beyond the normal levels. He further observed that he would have accepted the plea of the assessees that the products were animal feed had the product manufactured by them been directly used as such for animals feeding. The claim of the respondents herein was rejected because according to the Collector the products merely were to enhance the performance of live stocks by addition of these supplements to the animal feeds. From this it is evident that the Collector regarded the products in question as animal feed supplements.
5. On further appeal to the Tribunal it came to the conclusion that animal feed supplements were rightly included in Tariff Item 2302 being preparation of a kind used in animal feeding including dogs and cats food. We agree with the conclusion of the Tribunal that even food supplements like the products of the respondents which are used in animals feeding would fall under the Heading 2302 and, therefore, we do not find any merit in this appeal. While affirming the decision of the Tribunal, this appeal is dismissed with no order as to costs."
9. In case of Vasu Pharmaceuticals Pvt Ltd 2017 (350) ELT 166 (Guj), the Hon'ble High Court held, as under:-
"33. Another aspect of the matter is that even while classifying the product under Chapter 33, the department has classified the same under sub-heading 3305.99, that is, "Other" instead of [sub-heading] 3305.10, that is, "Perfumed Hair Oils". A perusal of the show cause notice shows that it is the case of the department that 80% of the total ingredients are "Til Oil" and "Coconut Oil"
which are fixed vegetable oils and can be used for the purpose of "Hair Oil". Despite the aforesaid position, even after holding the product to be classifiable under Chapter 33, the authorities have held the same to be classifiable under the category of "Other" rather than "Perfumed Hair Oil". As per Note 6 of Chapter 33 Heading No. 33.05 applies, inter alia, to the following products; brilliantines, perfumed hair oils, hair lotions, pomades and creams, hair dyes (in whatever form), shampoos, whether or not containing soap or organic surface active agents. On a perusal of the products mentioned in the said Heading it is apparent that the product in question, even if the same were held to be a cosmetic would fall only under the category of "Perfumed Hair Oil" as the product in question cannot in any manner be said to be brilliantine, hair lotion, pomade and cream, hair dye or shampoo. In the circumstances, at best the product could have been classified under Chapter 33 sub-heading 3305.10 and not under sub- heading 3305.99."
10. Thus in view of above facts and judgments we hold that both types of cereal bars i.e those product not containing cocoa as well those containing cocoa would classification under 21069099 as Sweet Meat and are eligible for exemption under (13) S.N.29 of Notification No. 3/2006 - CE dated 1.3.2006 and subsequent analogous notifications.
11. Coming to the time bar though we hold that the demands are not sustainable on merits, but we also find that the appellant has disputed the demands on limitation also. We find that the Appellant was in correspondence with the Department from 2006-07 and the Department was in knowledge of every detail of ingredients, nature of product, the classification. The appellant has adduced the copies of such correspondence with the appeal memo which clearly shows that there was no suppression of facts by the Appellant. In such case we hold that the demands made against the appellant by invoking extended period of limitation are also time barred. As we are holding that on merits as well as limitation there is a case in favour of appellants, question of imposition of penalty on the individual does not arise. Penalty on Director set aside.
12. In view of our above observations and findings, we thus set aside the impugned order and allow all appeals with consequential reliefs, if any.
(Pronounced in the Open Court on 14.03.2019)
(P.VENKATA SUBBA RAO) (M.V. RAVINDRAN)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
Veda