Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Raptakos Brett & Co. Ltd on 24 July, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/102, 103/2005-Mum. (Arising out of Order-in-Appeal No. AT/MIII/98-99/2004 dt. 23.9.2004 passed by the Commissioner of Central Excise ((Appeals), Mumbai-III ) For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
=============================================================
Commissioner of Central Excise, Mumbai-III
:
Appellant
VS
M/s. Raptakos Brett & Co. Ltd.,
:
Respondent
Appearance
Shri V.K. Agarwal, Addl. Commr. (A.R.) for Appellant
Shri S.S. Gupta, C.A. for respondent
CORAM:
Mr. Ashok Jindal, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 24/07/2014
Date of decision : /2014
ORDER NO.
Per : P.S. Pruthi
Revenue is in appeals against order-in-appeal No. AT/MIII/98-99/2004 dt. 23.9.2004, which dropped the demands of Rs.6,27,195/- and Rs.87,838/- against M/s. Raptakos Brett & Co.Ltd. and the penalties too. The facts of the case are that appellants were manufacturing infant foods like Lactodoex, Lactodex Starter, Lactodex Follow-up, etc. under Central Excise Tariff Act, 1985 and clearing the same at nil rate of duty. In such manufacturing, they were also making intermediate products like Vitamin Premixes and Mineral Premixes which were captively consumed. Duty was demanded on Vitamin Premix under Central Excise Tariff Heading 2936 and on Mineral Premix under Chapter Heading 2851.90 denying the benefit of captive consumption notification No. 67/95-CE dt. 16/03/95, on the ground that the final products were exempted from payment of Central Excise duty. The Commissioner (Appeals) agreed with the appellants contention that the said products are classifiable under chapter heading 1901.99 attracting nil rate of duty.
2. The process of manufacture of Vitamins Premix and Mineral Premix is not in dispute. The process is that Maiz/Topioca starch is first made into slurry by addition of water, which is then hydrolysed by enzyme/acid further neutralized by calcium carbonate and finally nutrified by addition of nutrients like Vitamins and Minerals. This product i.e. the vitamins premix or mineral premix is the goods in question.
3. We have considered the submissions made by both sides at the time of hearing also. To facilitate the classification correctly, relevant tariff entries during material time are reproduced below :
Chapter Heading No. 2936 XI. PROVITAMINS, VITAMINS AND HORMONES Provitamins and vitamins, natural or reproduced 16% by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent. Chapter Heading No. 2851 Other inorganic compounds (including distilled or conductivity water ad water of similar purity); liquid air (whether or not rare gases have been removed); compressed air; amalgams, other than amalgams of precious metals
-Distilled or conductivity water ad water of similar purity);
2851.11 -- Used within the factory of production Nil 2851.19 -- Other 16% -- Liquid air (whether or not any fraction has been removed): 2851.21 -- Used within the factory of production Nil 2851.29 -- Other 16% 2851.30 -- Compressed air Nil 2851.90 -- Other 16% Chapter Heading 19.01 :
Malt extract; food preparations of flour, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of hearing Nos. 04.01 to 04.04, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included.
-- Put up in unit containers:
1901.11 -- For infant use Nil 1901.19 -- Other 16%
-- Other 1901.91 -- Malt extract 16% 1901.92 -- Food preparations containing malt or malt extract or cocoa powder in any proportion 16% 1901.99 -- Other Nil From the above, it is seen that the Central Excise Tariff Heading 2936.00 covers provitamins, Vitamins, derivates thereof which are used primarily as vitamins and inter mixtures of vitamins whether or not, in any solvent. The chapter notes under para General (A) in HSN on which the Central Excise Tariff is largely based explain the coverage of Tariff Entry 2936 under Chapter Note 1(a) as follows:
Separate chemically defined compound------ which does not contain other substances deliberately added during or after their manufacture (including purification). Accordingly a product consisting of saccharin mixed with lactose for example, to render the product suitable for use as a sweetening agent is excluded...
From the process of manufacture of vitamin premixes it may be concluded that vitamin pre-mix is excluded from Tariff Heading 2936 by virtue of the above chapter note. The process of manufacture shows that to the processed starch, only vitamins and minerals are added. Thus it is a starch based product. The premix so formed is not a simple mixture of vitamins, either natural or synthesized. Further, the language of Tariff Heading 2936 is that the vitamins and derivates are used primarily as vitamins. No evidence is placed on record to show that the pre-mix is primarily used as vitamins, its name notwithstanding. In fact it is a starch based product to which vitamins are added. Evidently the chapter heading 1901 is more specific. The Commissioner (Appeals) referred to Larger Bench decision in the case of Tetragen Chemie Vs. Commissioner reported in 2001 (138) ELT 414 (LB) which was affirmed by Supreme Court in 2001 (132) ELT 525 (S.C.) to rule out classification under CETH 2936. No judgement has been shown to us by Revenue to the contrary.
4. Revenue has also contended that the appellant manufactured and sold a product vitamin mixture to other buyers which is similar to the vitamin premix sought to be classified under CETH 2936. On the other hand, before the Commissioner (Appeals) it was stated by the appellant that the vitamin mixtures and mineral mixtures sold by them to M/s. Equs Stud Farm Pvt. Ltd. were actually animal food supplements which were initially classified by them under CETH 2936 but later changed to CETH 2303 in view of CBEC Circular No. 1/90-CXI dated 17.1.90 which stated that animal food supplements which are just intermixtures of vitamins only and there is no other ingredient except solvent would be covered under CETH 2936. The departments appeal has nowhere given any justification for disagreeing with the conclusion of Commissioner (Appeals) that CBEC Circular No. 1/90-CXI dated 17.1.90 only supports appellants case since in their products other ingredients were added. In fact, the grounds of appeal in the Revenues application before Tribunal is a half hearted one and seems to indicate that the department itself is unsure about its own case. We are holding this view as it is further fortified by the other ground of appeal ? that no opinion was sought from chemical examiner. It is strange to make an appeal on this ground when it is the department who has to seek the opinion of chemical examination if it so desires. Further, even reliance in the grounds of appeal on a statement of a Store Manager is very vague and does nothing to advance the case of the department.
5. The same arguments are given by the department in the case of mineral premixes stating that it is basically a mixture of mineral where new Maltodex is used as a diluent. The description under CETH 2851 shows that the department sought to classify mineral pre-mix under CETH 2851.90 as other inorganic compounds. We note that chapter Note 1 to Chapter 28 states that the headings of the chapter would apply to separate chemical elements and separate chemically defined compounds. The show cause notice itself states that goods in question are mixtures of various ingredients. From the process of manufacture it is clear that minerals were added to enhance the nutrient value of the starch preparation new Maltodex. The mineral premixes are homogeneous mixtures of ingredients and cannot be equated with separate chemically defined compounds. The Maltodex (70% to 80%) is added with various minerals to produce mineral premixes for the specific purpose of manufacturing infant food and, therefore, classification under heading 2851 is ruled out. In view of chapter Note 1( c) to Chapter 28 which states that the chapter will apply to separate chemically defined compound which are dissolved in solvent solely for reasons of safety or for transport. The HSN notes to Chapter 19 also state that malt extracts with added vitamins, salts etc. fall in Chapter 19 and that malt extracts are mainly employed for the preparation of products of a kind used as infant foods.
6. In view of the above, we hold that the vitamin pre-mix and mineral pre-mix are mixtures of starch preparations to which nutrients i.e. vitamins and minerals are added and merit classification under CETH 1901 as preparation of starch attracting Nil rate of duty. The Ld. Counsel made additional submissions in writing to the effect that in any case the goods i.e. premixes will be exempted intermediate products under notification No. 67/95 as amended by notification No. 35/2001 . According to him after the amendment by insertion of new clause at serial No.6 under which exemption is available to intermediate products even if used in the manufacture of exempted final products provided the manufacturer discharged the obligation prescribed in Rule 6 of the Cenvat Credit Rules. Since we have already decided the classification under Chapter 19 attracting Nil rate of duty. We do not find it necessary to go into the issue of notification No. 67/95.
7. Revenues appeals are rejected.
(Pronounced in court on .. ..) (Ashok Jindal) Member (Judicial) (P. S. Pruthi) Member (Technical) Sm ??
??
??
??
9