Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Narendrakumar & Co on 24 June, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.
APPEAL NO. E/2878/06 and E/99/07.
(Arising out of Orders-in-Original No. 07/KKS/2005-2006 dt. 25.11.2005 & 17/KKS/2005-2006 dt. 23.1.2006 Passed by the Commissioner of Central Excise, Mumbai-II
For approval and signature:
Honble Shri M. V. Ravindran, Member (Judicial)
Honble Shri K.K. Agarwal, Member (Technical)
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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?
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Commissioner of Central Excise, Mumbai-III
:
Appellant
VS
M/s. Narendrakumar & Co.
Respondent
Appearance
Shri B.K. Singh, Authorized Representative (Jt.CDR)
Shri Prakash Shah, Advocate for Respondent
CORAM:
Shri M. V. Ravindran, Member (Judicial)
Shri K.K. Agarwal, Member (Technical)
Date of decision : 18/6/08,23/6/08 & 24/06/08
Date of hearing :
ORDER NO.
Per : Shri M. V. Ravindran, Member (Judicial)
These two appeals are directed against the Orders-in-Original No. 07/KKS/2005-2006 dt. 25.11.2005 & 17/KKS/2005-2006 dt. 23.1.2006 vide which the adjudicating authority has dropped the proceedings initiated under show cause notices against the respondents. As the issues involved in these appeals are identical these appeals are disposed off by a common order.
2. The relevant facts that arise for consideration are M/s. S. Narendrakumar and Co. holders of Central Excise Registration No. AAAFS1245BXM002 located at 4/B, Everest House, L.B.S. Marg, Vikhroli, Mumbai 400 083 [hereinafter referred as the noticee] were engaged in the manufacture of products viz.1)Sabji Masala 2)Punjabi garam Masala, 3) Kitchen King, 4)Chhole Masala, 5) Biryani Pulav Masala/Shahi Biryani Masala, 6)Meat Masala, 7)Chicken Masala, 8) Tandoori Chicken Masala, 9) Special Garam Masala, 10) Tea Masala/Super Masala, 11)Pav Bhaji Masala, 12)Sambhar Masala, 13)Chaat Masala, 14)Jiraloo, 15)Rasam Powder, 16)Pani Puri Masala, [hereinafter referred as products in question). It appeared that the assessee wrongly classified the said products under Ch.0903.10 instead of Ch. S.H. 21.03 Schedule of Central Excise Tariff Act, 1985 and clearing the same at nil rate of Central Excise Duty in as much as :-
Rasam Powder : - The assessee classified the product under Ch.Sh.0903.10 and claiming nil rate of C.Ex. duty. Thus the notice claimed the product as spices but it was found out that the product was marketed as Rasam Powder and not as the spices. Moreover it is described as the product as perfect blend as mentioned on the packing of the product which aptly indicates that the product is simply not a mixture. It was a known fact that Rasam Powder was a particular recipe or particular food preparation/dish. The ingredients mentioned on packaging of the product indicated that it contained Pigeon Pea [Toover Dal/Arhar Dal] which was definitely not the spices. The resultant product did not retain essential character of spices but it was blend used as particular known recipe. Hence it appeared that the product Rasam Powder was different from spices envisaged under Ch.Sh0903.10 and it is more appropriately classifiable under Ch.Sh. 2103.10 as the same was covered under category of mixed condiments and mixed seasoning.
Jiraloo:- The product was also classified as spices under Ch.Sh.0903.10 and accordingly was cleared at nil rate of Central Excise Duty. The product was described on the packing of the product as ready to use dry chatani, it can be had same way as chatani or pickle is taken during meal. Thus the product did not need any preparation or addition for consumption as contended. Also the product did not retain essential character of spices. Hence it appeared that the classification of the product as claimed is incorrect.. Also the product did not retain essential character of spices. Hence it appeared that the classification of the product under 0903.10 was incorrect and it further appeared that the same was more appropriately classifiable under Ch.Sh.2108.99 of Schedule to Central Excise Tariff, Act, 1985 attracting C.Ex. duty at rate 16 percent Adv.
Tea Masala/Super Tea Masala :- As mentioned at Sr. No.1 and 2 above, this product was classified under Ch.0903.10 attracting nil rate of C.Ex.duty by them. As per directions for use given on packaging of the product it is used to make Ukala is hot brew of milk, water, sugar and pinch of this product. Thus the product appeared to be not spices covered under Ch.Sh.0903.10 as it did not retain essential character of spices. Whereas as per Chapter Note 9(b) of Chapter 21 of Schedule to Central Excise Tariff Act, 1985, the same appeared to be classifiable under Ch.Sh.2108.99 attracting C. Ex.duty at rate 16 percent Adv.
1)Sabji Masala 2)Punjabi garam Masala, 3) Kitchen King, 4)Chhole Masala, 5) Biryani Pulav Masala/Shahi Biryani Masala, 6)Meat Masala, 7)Chicken Masala, 8) Tandoori Chicken Masala, 9) Special Garam Masala, 11)Pav Bhaji Masala, 12)Sambhar Masala, 13)Chaat Masala, 16)Pani Puri Masala :- As mentioned at Sr. 1 & 2, all these products were also classified as spices under Ch.Sh.0903.10 claiming nil rate of Central Excise duty. These products were also described as perfect blend which indicated that the same were not simply, mixtures. All these products are not simply spices as generally known but these were identified along with particular recipe e.g. pani puri, pav-bhaji, Chhole, biryani, pulav, Tandoori chicken etc. Furthermore the directions for use printed on the packaging of these products [e.g. Punjabi Garam Masala, Chat Masala, Sabji Masala etc.]indicated that initially the preparation was to be done by user as they i.e. user normally did and thereafter the product in question were to be added for additional/particular flavour to the dishes. These directions for use distinctly bring out that these products were different from spices as commonly known/perceived and being used. These products were not substitute to the masala/spices but an addition as mentioned above to give specific flavor/taste as known for particular recipe. Even the product Garam masala of the noticee was to be used in addition to the spices being normally used by customers as indicated on the packaging of the product. Thus all above products were used in particular recipe and were not simply spices as claimed by the noticee for Central Excise classification. In other words with addition of these products a specific recipe with specific/taste could be made. Thus all these resultant products did not retain essential character of spices but it was blend used as particular known receipe. Even though the product Chat Masala was of category of ready to sue, as recipe printed on packaging of the product indicated its use as sprinkler for Punjabi preparations, fruit juices, dahi wadas etc. Thus it appeared that above products were not classifiable as spices but under Ch.Sh. 2103.10 under category mixed condiments and mixed seasoning attracting duty at rate 16 percent Adv.
3. After concluding that the respondent had incorrectly claimed the classification of said products under chapter sub-heading no.0903.10, a show cause notice V/Adj/SCN/15-223/Kanjur/Commr/M-III/04 dated 28.10.2004 was issued for the demand of the duty for the period 01.11.1999 to 31.07.2004 under proviso to section 11A(1) of the Central Excise Act, 1944, another show cause notice dated 22nd June 2005 was issued for the recovery of duty for the period 01.08.2004 to 31.12.2004 and it was also proposed to impose penalty under section 11AC of the act read with rule 173Q and Rule 25 of the Central Excise Rules besides proposal for recovery of interest under section 11AB of the act. Respondent herein, contested the show cause notice on merits, limitation and on the common parlance test. Adjudicating authority after granting an opportunity of hearing and considering the evidences brought on record, dropped the proceedings initiated by the show cause notices. Aggrieved by such orders, revenue is in appeal.
4. Learned Jt.CDR appearing for the revenue assails the order on the ground that the said order has not considered the issue in proper perspective. It is the submission that the respondent has classified the products in question under chapter heading no.0903 as spices while the revenue is seeking the classification under chapter heading no 2103 and 2108 as products of other edible preparations not elsewhere specified. At the outset he draws our attention to the report of the Deputy Chief Chemist that was brought on record by an application. It is his submissions that deputy chief chemist after conducting the tests on the samples of the appellant, has opined that Masala powder are obtained from mixing of different ground spices and common salt and the proportion of different spices could not be determined, as it is not possible to separate the various ingredients. It was further submitted that due to this it is not possible to ascertain what is the essential character of the products in question. It is his submission that respondents have not given the percentage of ingredients in each of the products in question. It was submitted that even today the respondent has not given the same, despite specifically requesting for the same. He draws our attention to the cartons of the various products in question, and submits that they are mixture of various spices and other ingredients and submits that the ingredients include items, which cannot be classified as spices under chapter No.9 of the schedule to the Central Excise Tariff Act, 1985. He draws our attention to the Chapter note no.3 of Chapter 9 and submits that plain reading of note no.3 would indicate that any addition of other substances to spicesis allowed and will be covered under chapter 9, provided the resulting mixture retain the essential character of spices included in the said chapter heading i.e.0903. It is his submission that in the absence of the percentage of the ingredients it is not possible to come to a conclusion that products in question retained the essential character of spices. It is his submission that by addition of other ingredients the products in question will not get covered under chapter heading no. 0903. It was submitted that other ingredients in the products in question contain common salt, asafoetida etc. which are not spices, and the essential character of the other ingredients would have to be considered while arriving at classification as per chapter note no. 3 of chapter 9. It is his submission that the products in question are marketed as Masala and respondent has classified products in question under chapter heading no.0903; taking advantage of the last sentence in the chapter note no.3. It is his submission that if classification has to be done based only on the word Masala then Milk masala Tea/Chai masala would be covered under chapter 09. It is his submission that word masala has to be under stood in context with the chapter note and not in isolation. It is his submission that essential character of the spices is lost as soon as they are ground and mixed. For this proposition he relies upon the decision of Apex court in the case of A.P.Products Vs. State of A.P. - 2007 (214) ELT 485 (SC) and decision of Allahabad High Court in the case of Ashok Griha Udyog Kendra Pvt. Ltd., Kanpur Vs CCE & Customs, Kanpur 1982 (10) ELT 309 (All.). It is his submission that the word including has to be read in context i.e. the word masala is to be read as that mixture containing only spices. For this proposition he relies on the case law of Aphali Pharmaceuticals 1989 (44) ELT 613 (SC). He also draws our attention to the meaning of the word seasoning as is commonly understood and submits that combined reading of the words mixed seasonings and chapter note to HSN of chapter 21 would clearly indicate that the products in question would falll under chapter heading no. 2103 or 2108. He draws our attention to the said chapter note in chapter 21 of HSN. He also draws our attention HSN headings of chapter 9 and chapter 21. It is his submission that the adjudicating authority has not considered all this and has erred in passing the orders dropping the proceedings initiated by SCNs.It is submitted that the determination of nature of entity is a must. It is the submission that in this case the products in question do not merit classification under chapter heading no.0903 as they are not spices per se and hence there has to be determination of the entity. For this proposition he relies upon the decision of the Tribunal in the case of Denso Kirloskar Industries Pvt.Ltd., Vs Commr. Of Cust. (Appeals), Chennai 2003 (158)ELT 187. It is submitted that adjudicating authority has erred in not noting the relevant chapter notes and section notes while passing the impugned orders. It is submitted that the chapter notes and section notes have over-riding force on the respective headings. For this proposition he relies upon the order of the tribunal in the case of Tractor and Farm Equipments Ltd., and others Vs Collector of Customs, Madras and others 1986 (25) ELT 235. It was submitted that the past practices followed by the department should not a hurdle to take a different view as is held in the case of Eastern Pigments (P) Ltd., - 1999 (107) ELT 510. For the proposition that in that case it may be that the products in question were earlier classified under chapter 9 but the revenue is not precluded in taking a different view now on the very same products. It was submitted that the tribunal in the case of Hindustan Lever Ltd., Vd CCE, Belapur 2007 (212) ELT 141 has held that mixed condiments and mixed seasonings will fall under chapter 21 and since the products in question in these appeals are mixed condiments hence would merit classification under chapter 21. It is the submission that though all the products merit classification under chapter 21, out of them products i.e. Jiraloo, Rasam Powder, Tea Masala and chaat masala would require special mention as they cannot by any stretch of imagination be considered as Masala or spices, considering the fact that appellant is marketing them as either chutney or additives on the food. It was submitted that the extended period of limitation was correctly invoked against the respondent, as they had not submitted the required details to the department to ascertain the correct classification.
5. Learned Counsel appearing for the respondent at the outset submits that the reliance placed by the learned Jt.CDR on the case of Hindustan Lever Ltd. (supra) case is totally misplaced in as much that in that case the issue was whether the ketchups, sauces and soup mixes can be classified different chapter headings of chapter 21 only, and the dispute was not whether the products in question in that case would fall under chapter 9 or 21. It is his submission in view of this fact the interpretation of the words mixed condiments and mixed seasonings will not apply to this case. It was submitted that the reliance placed by the Jt CDR in the case of AP Products and Ashok Griha udyog is also not correct as those cases were deciding the issue whether ground spices mixed together would amount to manufacture. It is his submission that the revenue understood the products in question as Masala, is not confined only to the respondents products but also of their competitors across India. He draws our attention to the information obtained by the respondent under RTI from various commissionerates and submits the products in question are identical except the brand name. He also produces a comparative chart to indicate the ingredients of the products vis-`-vis respondents products and submits that all the ingredients are same. It is his submission that in the cases of their competitors either the products in question are classified under chapter 9 or it has been informed that the units are manufacturing non-excisable goods. It was submitted that in case of taxation there has to be uniformity. For this proposition he relies upon the decision of the Apex court in the case of Damodar Malpani Vs CCE 2002 (146) ELT 483 (SC) and also decision of Tribunal in the case of R.K.Chemicals Vs. Commr of Customs 2007 (220) ELT 160 and in the case of Thermosystems Vs CCE,Hyderabad 2004 (178) ELT 402. It was further submitted that the revenue was given liberty by the Tribunal to rebut the evidence submitted by the respondent and draws our attention to the rebuttal letter to point out that there is no rebuttal of the information obtained under RTI act. He draws our attention to chapter note no 3 of chapter 9 and submits that that said note has three parts viz vegetable products and mainly used as condiments, other added ingredients can be present provided the essential character is maintained and they are commonly known as Masalas. It is his submission that in reply to the show cause notice the respondent had taken a specific ground that the products in question contain only 4% to 5% of other ingredients and it is his submission that the revenue accepts this, as there is no rebuttal in the grounds of appeal. He reads the show cause notice and submits that the products in question are accepted as masala. He brings to our notice CBEC circular no 427/60/98 to submit that the essential character as per understanding of revenue is clearly indicated. He submits that even if 85% of a mixture is made up of other items, if the balance 15% gives the essential character classification of the products has to be done accordingly. It is his submission that the common parlance test is a crucial test for classification of the products in question. He would rely on the case law Jalani Enterprises Vs CCE 2001 (132) ELT 422, CCE Nagpur Vs Vicco Laboratories - 2005 (179) ELT 17 (SC), Hindustan Ferodo Ltd., Vs CCE, Bombay 1997 (89) ELT 16 (SC). He draws our attention to the evidences lead by the respondent before the adjudicating authority as regards the products in question beiong known in the market as Masala. It is his submission that revenue has not produced any contrary evidence even today. It is his submission that word includes should be given a wider meaning, for this proposition he relies upon the decision of Apex Court in the case of Commercial Taxation Officer, Udaipur Vs Rajasthan Taxchem Ltd., - 2007 (209) ELT 165 (SC). It is his submission that prior to 1998 the said chapter note 3 to chapter 9 did not include the words Commonly known as Masalas. It is his submission that inclusion part of the chapter note would indicate there is deviation from the HSN. It is his submission that products in question are mixture of spices and will get covered under chapter 9 and revenue has not led any evidence to classify these products under chapter 21. He relies upon the decision of the Tribunal in the case of CCE 7 Customs, Guntur Vs Crane Betel nut Powder Works 2007 (208) ELT 376 for the submission that this case squarely covers the issue in favor of respondent. It is submitted that the respondent were filing the declarations with the department about the products in question and during interregnum period these very same products were dutiable and they discharged the duty, due which it cannot be said that there was mis-declaration. It is his submission as regards the Rasam powder, Tea masala, chaat masala and jiraloo, that revenue has not adduced any evidence that these products cannot be classified under chapter 9, it is his submission that these four products are nothing but mixtures of spices and are marketed as such.
6. In rejoinder learned Jt. CDR would submit to be classified under chapter the ingredients should be only spices and the respondent did not adduce evidence that products in question do not include other ingredients.
7. We considered the submissions made by both sides at length and perused the records. The issue in this case is regarding the correct classification of the products in question. The adjudicating authority has come to the conclusion tat the products in question merit classification under chapter heading no. 0903 while the revenue is disputing the same. In order to appreciate the rival claims it is necessary to reproduce the competing tariff entries, those are as under:
09.03 Spices 0903.10 - Put up in unit containers and Nil Bearing a brand name 0903.90 - Other Nil 21.03 Sauces, ketchup and the like and Preparations therefore; mixed Condiments and mixed seasonings; mustard flour and meal and prepared mustard 2103.10 - Put up in unit containers and bearing 16% brand name 2103.90 - Other. Nil
8. On careful perusal of the entries it can be noted that chapter sub heading no. 0903 covers spices. In order to merit classification under Chapter 09 it would be necessary to ascertain whether the products in question are spices or not. It is seen that there is no definition of the word spices in the said chapter. It is also seen that chapter heading note no. 3 to chapter 9 would govern the classification of the products in chapter sub-heading no. 0903. We may read the same:
Heading No.09.03 covers spices, a group of vegetable products (including seeds, etc.), rich in essential oils and aromatic principles, and which, because of their taste, are mainly used as condiments. These products may be whole or in crushed or powdered form. The addition of other substances to spices shall not affect their inclusion in this heading provided the resulting mixtures retain the essential character of spices included in this heading. The heading also includes products commonly known as masalas.
It can be noticed from the above reproduced chapter note that in order to get covered under chapter sub-heading no. 0903 the products in question has to have following important characteristics:
a. they have to be vegetable products with essential oils etc and because of their taste, mainly used as condiments, b. they may be in whole or in crushed form, c. they may be mixtures, with addition of other substances, despite which they retain the essential character of spices, and d. this heading also includes products commonly known as Masalas.
9. On careful perusal of the cartons of the products in question we find that these products are mixtures of spices along with other ingredients. The ingredients in the products in question are combination of the spices and some more ingredients. It is seen that in addition to spices, the ingredients include mainly asafoedita, rock salt, dry mango etc. It is the submission of the learned Jt CDR that by addition of these ingredients the essential character of the spices is not retained. We find that this proposition of the learned Jt.CDR is without any evidence. It is not brought on records that by addition of these ingredients the essential character of spices is not retained. It is seen that that the revenue has relied upon the report of the Dy chief chemist, which is in itself not very clear. We find that the respondent during the hearing and the proceedings before the adjudicating authority, has always mentioned that the products in question had various different spices in powder form up to 96% of the total ingredients and other ingredients formed only 4% to 5% of the total ingredients. We find that the revenue has not disputed these contentions with any contrary evidence and hence the submissions of the learned Jt CDR that the respondent has not submitted the percentages of the ingredients to arrive at the essential character of the products in question seems to be totally mis-placed. If the 96% of the total ingredients are spices then by mere addition of some quantity of other ingredients may not be sufficient to arrive at the conclusion, that by addition of these other ingredients the mixture of spices has not retained their essential character. We find that the reliance placed by the learned counsel on the CBEC circular no. 427/60/98 CX dated 30.10.98 is correct. CBEC in the said circular was concerned with the correct classification of compounded asafoedita, which contained 85% of other ingredients like wheat flour and edible gum, despite this, it was directed that compounded asafoedita will be asafoedita, as the essential character is of asafoedita and not wheat flour or edible gum. The analogy would apply in this case also as it is undisputed that 95% to 96% of the ingredients of the products in question are spices. Learned JT.CDR placed heavy reliance on the decision of the Honble Supreme Court in the case of A.P.Products (supra) to submit that grinding and mixing of various spices and condiments in certain proportion, the ingredients lose their identity/character and a new product separately known in the market emerges i.e. the products in question are mixed seasonings. We find that in the case A.P.Products (supra) the apex court was seized with a fact, which was totally different than the facts in this case. In that case the question before the apex court was whether the resultant product would get covered under a specific entry of the schedule to the AP Sales Tax Act. It is also seen that apex court was deciding the issue specifically as regards the inclusion in the schedule to the AP sales tax act. In our considered view the ratio laid down by the Honble Supreme Court was in respect of the facts and circumstances, of the case before them and may not be applicable in this case.
10. It is a settled law that in cases of classification chapter notes of HSN can be considered as guide for arriving at a correct classification. The chapter notes of chapter 9 of HSN read as under :
1. Mixtures of the products of headings Nos.09.04 to 09.10 are to be classified as follows:
(a) Mixtures of two or more of the products of the same heading are to be classified in that headings;
(b) Mixtures of two or more of the products of different headings are to be classified in heading No.09.10.
The addition of other substances to the products of headings Nos.09.04 to 09.10 (or to the mixtures referred to in paragraphs (a) or (b) above) shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those headings. Otherwise such mixtures are not classified in this Chapter; those constituting mixed condiments of mixed seasonings are classified in heading No. 21.03.
2. This Chapter does not cover Cubed pepper (Piper cubeba) or other products of heading no. 12.11.
It can be noticed that chapter note no. 3 of chapter 9 of CETA is almost same but for the inclusion of masala in the chapter heading no. 0903. This seems to be a marked deviation for the purposes of the classification in the Indian context. It is a common knowledge that the Indian cuisine includes mixtures of various spices that are commonly known as Masala. The inclusive portion would cover in its ambit the products in question in this case as there is no contrary evidence led by revenue.
11. We further find that the Central Board of Excise and Customs vide Circular No. 205/39/96-CX dt. 30.4.1996 were clearing doubts regarding the classification of Indian traditional convenience food mixes, masalas and condiments we may reproduced the same.
Board has received representations from Indian Food IndustriesAssociation and others seeking clarification as regards the classification of various Indian traditional convenience food mixes, masalas, spices and condiments such as puliyougare powder, vangibath mix, instant sambar mix, vangibath powder, sambar powder, instant bisibelebath, rasam powder, bisibelebath masala, mix spiced chutney powder, curry powder, pickle masala, garam masala etc.
2. From?the reports received from the Commissionerates, it is observed that while in some places the products in question are being classified as either spices of Chapter 9 of CET or as Mixed Condiments and mixed seasonings of Heading 21.03 of CET, in others the same products are being classified under Heading 2108.90 as edible preparations not elsewhere specified or included. In the latter case, Chapter Notes 9(b) & 9(c) of Chapter 21 are being relied upon for classifying these products under the sub-heading 2108.90. Trade interests have, however, argued that these products are merely additives for different food items and not readily consumable products through the simple processes of cooking, frying, boiling or adding with water, oil or milk. Hence it is claimed that the products in question cannot be classified under sub-heading 2108.90 of CET.
?3. The matter has been examined. Spices are specifically covered under Chapter 9 of Central Excise Tariff and mixed condiments and mixed seasonings under Heading 21.03 of Central Excise Tariff. Heading 21.08 of CET on the other hand is a residuary entry which refers to edible preparations not elsewhere specified or included. While there are no definitions available for spices and mixed condiments and mixed seasonings in the Central Excise Tariff, the Explanatory Notes to the HSN give the following description of these products.
Spices Spices i.e. a group of vegatable products (including seeds etc.), rich in essential oils and aromatic principles and which because of their characteristic taste are mainly used as condiments. Spices (including mixed spices) containing added substances of other Chapters, but themselves having flavouring or seasoning properties, remain in this Chapter provided the added quantity does not affect the essential character of the mixture as a spice, (Vol.1 Page 61).
Condiments /Seasonings Mixed condiments and mixed seasonings containing spices differ from spices and mixed spices of Headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter-9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter-9 (Vol. 1 Page 158).
?3.2 While the Explanatory Notes in HSN distinguish between spices on the one hand and mixed condiments and mixed seasonings on the other, the English Dictionary meanings and statutory bodies dealing in quality specifications of spices, condiments and seasonings often use these words interchangeably. What is however emphasised in the literature on the subject is that the essential character of these substances is in their function, viz., to add flavour, aroma and pungency to various food preparations.
?3.3 Chapter Notes 9(b) and 9(c) of Chapter 21 of CET no doubt give an indication of the type of preparations which are intended to be included in Heading 21.08 of CET. However, it must be remembered that Heading 21.08 is a residuary entry in Chapter 21 and the Rules for the interpretation of the Schedule require that the heading which provides the most specific description shall be preferred to headings providing a more general description. Further, Heading 21 in HSN excludes spices of Chapter 9.
?4. Consequently,products which are predominantly mixtures of spices/condiments/seasonings and which are used as such or in the making of food preparations mainly for their aromatic, flavouring or seasoning properties would merit classification under the specific entry of spices in Chapter 9 or Heading 21.03 of CET. However, products which in addition to spices, flavouring and seasoning substances also contain, other foodstuffs in such quantity that the products as such or after processing are capable of being used as food preparations for human consumption in their own right will go out of Chapter 9 or Heading 21.03 of CET and merit classification in the residuary Heading 21.08 provided they are not covered or included in any other heading of CET.
?4.2 Viewed in the context, products like sambar powder, rasam powder, puliyogare mix or powder, vanghibhath mix or powder consisting or mainly spices and required to be added to cooked dal or cooked rice mainly for spicing, flavouring or seasoning would appear to merit classification as spices or mixed condiments and seasonings. On the other hand, products like instant sambar mix, instant rasam mix, instant spiced bhath mix (Bisibelebath) or instant Kharabhath mix consisting of dal or rice flakes or sooji along with spices and other substances and which can be made up into food preparations by simply mixing and boiling/cooking in water would merit classification as miscellaneous edible preparations of Heading 2108 of Central Excise Tariff.
?5. In view of the above, Board desires that classification of each product be decided on merit having regard to discussions hereinabove.
It can be noticed from the above reproduced Circular of CBEC and more specifically Paragraph 4 & 5 that the classification of the spices would fall under Chapter 9 . Even the understanding of the Central Board of Excise & Customs is that addition of any other ingredients to said mixture of spices should be such, a quantity, as such or after processing, are capable of being used as food preparation for human consumption, in their own right will go out of Chapter 9 and merit classification in the residuary heading 21.089. It is to be noted that in the case before us, the products in question there is no evidence that, these products are capable of being used as food preparation for human consumption in their own right. It is well settled law that if Revenue wants to reclassify the products, then it has to lead evidence. Assessee cannot be asked to prove the negative.
12. We find that the Tribunal in the case of Commissioner of Central Excise Commissioner of Central Ex. & Cus., Guntur Vs. Crane Betel Nut Powder Works, as reported at 2007 (208) E.L.T.3767 (Tri.Bang.) was seized with an identical issue of classification whether Mouth freshner will get covered under Chapter Heading No.09.03 of Central Excise Tariff or under Chapter 21 of the Central Excise Tariff Act. The Bench held as under:-
We have carefully considered the submissions and have perused both the orders. The finding given by the Commissioner is very exhaustive. He has analyzed every aspect of the matter and also in the light of the HSN Explanatory notes. The Revenue wants the product to be classified under Chapter Heading 21.03, which description deals only with sauces and ketchups. The item does not fit into the said items described in Chapter Heading 21. The learned JDR relied on the judgment rendered in the case of MTR Food Products v. CCE, Bangalore - 2000 (118) E.L.T. 392 (T), which deals with Sambhar mix/Rasam mix, which has been held to be classifiable under Chapter Heading 21.04. These items are not consumed directly. They are required to be used for cooking purposes, as in the case of items falling under Chapter Heading 21.04. Therefore, this judgment is clearly distinguishable. Even in terms of the Apex Court judgment rendered in the case of Shree Baidyanath (supra), the classification has to be done in the manner in which the goods are understood in the market and popularly known as. In that light, the item has to be considered only as Spices as held by the noted Boards Circular referred to by the Commissioner.
13. It is settled law that the classification of a product is decided on the question of market understanding of the product. The respondents herein had lead evidences before the lower authorities as regards the market understanding of the product. The respondents had produced before the lower authority, certificates given by reputed consumers of that products and of Institute of Hotel Management, Catering Technology & Applied Nutrition, so as to indicate that the masalas manufactured by the respondents, are of best quality spices and given the flavor of the spices it gives a perfect fragrant and taste to the food. This evidences are not rebutted by the Revenue even today. We find that this provisions of law is now squarely covered by the decision of the Honble Supreme Court in the case of Union of India Vs. Garware Nylons Ltd. (S.C.) wherein their Lordships were concerned with the classification of goods. Their Lordships held as under:-
In our view, the conclusion reached by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the first adjudicating authority. Especially in a case as this, where the claim of the assessee is borne out by the trade inquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence. Unfortunately, no such attempt was made. As stated, the evidence led in this case conclusively goes to show that Nylon Twine manufactured by the assessee has been treated as a kind of Nylon Yarn. Hence, it is to be classified under Item 18 of the Act. The Revenue has failed to establish the contrary. We would do well to remember the guidelines laid down by this Court in Dunlop India Ltd. Vs.Union of India [1983 (13) E.L.T. 1566 (SC) = (AIR 1977 SC 597 at page 607], institution, wherein it was stated:-
when an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. (Emphasis supplied)
14. It is also to be noted that the Revenues Endeavour in this case is to seek classification of the products in question under Chapter heading No. 21.03/21.08. The main plank of arguments of the Revenue is that these are all mixed condiments and mixed seasoning. In the matter of taxability of the product under the Central Excise Tariff Act, the act being same all over India, uniformity in classification is a must. The departments understanding of the product in question is clearly borne out from Circular dt. 30.4.1996 (as reproduced at Paragraph II hereinabove the understanding of the department in the current case also seems to be an identical as of the Board. Our attention was drawn by the Ld. Counsel, to the classification of the product in question in various Commissionerates. The respondents under the RTI Act, sought information of the identical products, as is manufactured by them, from various Commissionerates. We find that the various Commissionerates spread all over India, had clearly spelt out, that the products in question are classified under Chapter 09 and in some of the Commissionerates, the assesses had not taken out the Central Excise registration certificate also. We find from the chart produced by the Ld. Counsel, the ingredients of the products in question are identical to the products which are manufactured by other assessee situated in different Commissionerates. The question of uniformity taxation is of prime importance. We find that the Honble Supreme Court in the case of Damodar J. Malpani Vs. Collector of Central Excise as reported at [2002 (146) E.L.T. 483 (S.C.)] It appears from the records that several letters were written by the appellants to the Excise Authorities requesting that a sample of the appellants product may be chemically analysed at the appellants cost for the purpose of determining whether the appellants product or process in any way differed from the product and process of M/s. Chandulal K. Patel and Company. However, the Excise Authorities decided against the appellants without heeding such request. On 4-8-88 a decision was taken by the Assistant Collector to classify the appellants product under Tariff Heading 24.04. On 11-8-88 a sample of the appellants product was taken by the respondents but returned within one week without testing on the ground that the issue was being finalised by the Assistant Collector. In the appeal preferred to the Collector, the appellants again raised the issue specifically that the process followed by and the product of the appellants were identical with that of M/s. Chandulal K.P. Patel and Company and that the appellants product should be similarly classified under Heading 24.01. While upholding the decision of the Assistant Collector, the Collector did not consider this aspect of the matter at all. The point was again taken specifically in the appellants appeal before the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal however dismissed the appeal and said :
The appellants have stated that some of the manufacturers who were producing similar goods, were not paying any excise duty on their production. These matters are not before us and it is neither possible nor desirable for us to deal with these matters. Suffice it to say that each and very case has to be examined in the light of our above observations, and it is for the competent Central Excise Officers to come to correct decisions in consonance with the principles of uniformity, equity and justice.
It is? difficult to understand the reasoning of the Tribunal. The least that the Tribunal could have done in the interest of uniformity was to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and that of M/s. Chandulal K. Patel without subjecting the appellants product to any chemical analysis.
In their? appeal from the decision of the Tribunal before us the appellants have again raised the issue that the Tribunal should have considered the fact that the appellants and Chandulal K. Patel & Cos products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under Tariff Heading 24.04, the appellants should get the same benefit.
We also find that, Tribunal in the case of Thermosystems Vs. Commissioner of Central Excise, Hyderabad as reported at [2004(178) ELT 402 (Tri.Del.)] held as under:-
The issue raised in this appeal is the correct classification for Central Excise duty of three varities of industrial heaters :
?(1) Immersion Heaters ?(2) In-line Heaters ?(3) Outflow Heaters Manufactured by the appellant. The impugned order has ordered classification of these heaters under Chapter 85.16 while the appellant contended that the goods are correctly classifiable under Chapter 84.19. One of the grounds raised by the appellant is that in other Commissionerates same goods are being classified under Chapter 84.19, as claimed by the appellants. They have mentioned Assistant Commissioner, Central Excise, Belapur Division-1, III Floor, CGO Complex, Belapur, Mumbai - Unit : M/s. Rare Chem. Industries, W-7, MIDC Sheds, Village Pawne, Off: Thane Belapur Road, Nawi Mumbai-400 705 as such a case. However, neither Revenue nor the appellant has made available copies of orders.
2. Classification decisions are of continued application.? Uniformity in classification is also of significance. Different classification practice can lead to same goods being taxed at different rates, adversely affecting competitiveness of units. This case is, therefore, remitted to the original authority for passing a fresh order of classification after ascertaining the factual position about assessment practice in other jurisdictions, particularly at Belapur as mentioned by the appellant.
It can be seen from the above reproduced ratios of the decisions of the Apex Court as well as Tribunal, uniformity in classification is to be maintained in respect of the products. Since the assesses had produced evidence, that identical products of their competitors are either not taxable or reported as exempted falling under chapter 09, in various Commissionerates, the question of classifying the products in question under Chapter 21, as excisable, would give rise to dichotomas situation.
15. We find from the records that one of the product manufactured by the respondents i.e. Jiralu is a product which does not find mention in any of the competitors products nor the adjudicating authority has considered the issue from various angles. In view of this, we are of the considered opinion as regards the classification of this product, the issue needs to be re-considered by the adjudicating authority.
16. As regards the other products like Rasam Powder, Chaat Masala, Tea Masala, we find that the reasoning given by us in respect of all other products in question as indicated in the above paragraphs would apply squarely. Ld. Jt. CDR submitted that classification of Rasam Powder would be covered by the decision of Tribunal in the case of MTR Food Products (2000(118) ELT 392 (Tri.)]. We find that the products in question in this case is different than the product in the case of MTR Food Products (Supra). In the case MTR Foods the products was Rasam Mix itself which was to be just added to boiling water, vehicle in the case before us the Rasam Powder is to be added to complete to complete prepared Rasam. Hence we are of the considered view that the decision of the Tribunal in the case of MTR Products (supra) may not apply to the facts and circumstances of the case before us. Accordingly, we are of the considered opinion that the impugned order of the adjudicating authority is correct and does not suffer from any infirmity in respect of the classification of the products except for jiralu.
17. The impugned order is upheld to the extent of all other products and as regards classification of product Jiralu we remand the matter back to the adjudicating authority for limited purpose of considering the evidences and then arriving at a conclusion. Both the appeals are disposed off accordingly.
(Pronounced in court on) (K.K.Agarwal) `Member (Technical) (M. V. Ravindran) Member (Judicial) Sm 26