Custom, Excise & Service Tax Tribunal
Dry Tech Processors (I) Pvt. Ltd vs Cce, Bhopal on 24 December, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
COURT-III
Excise Appeal No.E/305 /2010 -EX[DB]
[Arising out of Order in Appeal No.608/BPL/2009 dated 19.10.2009 passed by the Commissioner (Appeals), Customs, Excise & Service Tax, Bhopal]
Excise Appeal No.E/2893 /2010-EX[DB]-
[Arising out of Order in Appeal No.81/BPL/2010 dated 07.06.2010 passed by the Commissioner (Appeals), Customs, Excise & Service Tax, Bhopal]
Excise Appeal No.E/2895 /2010-EX[DB]-
[Arising out of Order in Appeal No.82/BPL/2010 dated 07.06.2010 passed by the Commissioner (Appeals), Customs, Excise & Service Tax, Bhopal]
Excise Appeal No.E/2962 /2012-EX[DB]-
[Arising out of Order in Appeal No.121/BPL/2012 dated 28.06.2012 passed by the Commissioner (Appeals), Customs, Excise & Service Tax, Bhopal]
Excise Appeal No.E/57485/2013-EX[DB]-
[Arising out of Order-in-Appeal No.41-42/BPL/2013 dated 07.02.2013 passed by the Commissioner (Appeals), Customs, Excise & Service Tax, Bhopal]
For approval and signature:
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
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?
__________________________________________________
Dry Tech Processors (I) Pvt. Ltd. Appellant
Vs.
CCE, Bhopal Respondent
Present for the Appellant : Shri.Neerav R. Mainkar, Advocate
Present for the Respondent: Shri.M.S. Negi, DR
Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing/Decision: 24/12/2014
FINAL ORDER NO. 54994-54998/2014
PER: S.K. MOHANTY
These appeals are directed against the impugned order dated 29.10.2009, 07.06.2010, 07.06.2010, 28.06.2012 and 07.12.2013 passed by the Commissioner (Appeals), Bhopal, wherein it has been held that the product "Fresubin" is classifiable as 'food supplement', as against the claim of appellant as 'instant food mix', and thus, the said product is not entitled for the benefit of exemption provided under Notification No. 3/2006 - CE dated 01.03.2006, as amended by Notification No. 3/2007 - CE dated 01.03.2007.
2. The brief facts of the case are that the appellant is a manufacturer of Spray Dried Gum Powder, Edible Preparation etc., falling under Chapter Heading 13 and 21 of the Central Excise Tariff Act, 1985 (for short, the CETA). During the disputed period, the appellant had availed exemption under Notification No. 3/2007-C.E. dated 01.03.2007 in respect of the products manufactured by them, namely "Fresubin-Vanilla", Fresubin-DM" and "Fresubin-Hifibre", treating them as 'instant food mix', falling under Chapter sub-heading 2106.90 of the CETA. However, the view point of the appellant with regard to classification of the said products was negated by the Central Excise department in the adjudication proceedings, on the ground that the composition of products as mentioned in the packing pouches and the documents submitted by the appellant reveal that the same was fit for use as general food supplements and the same was not known as food product/food mix in the common parlance. Such view taken by the department has resulted in confirmation of duty demands totaling Rs. 11,993,964/- and imposition of equal amount of penalty in five adjudication orders passed by Jurisdictional Assistant Commissioner. Appeals filed against the said orders were rejected by the Commissioner (Appeals) vide impugned orders dated 29.10.2009, 07.06.2010, 07.06.2010, 28.06.2012 and 07.12.2013 against which these appeals have been preferred before this Tribunal.
3. The learned Advocate Shri Neerav R. Mainkar appearing for the appellant inter alia, submitted that "Fresubin" is made from the basic food ingredients namely, corn starch, sucrose, milk protein and vegetable oil of required level/percentage, with the addition of minerals and vitamins for food enrichment; that the said food ingredients are mixed, cooked and dried into powder and that the said powder can be consumed by mixing with water and that the product Fresubin is therefore instant food mix. The learned Advocate further submitted that in compliance of the requirement of food laws and for innovative marketing of the product "Fresubin", the appellant provide additional information in the packets/pouches regarding its possible use for hospitalized patients, which does not defeat or change the core and fundamental definition of "Instant Food Mix"; and thus, the same cannot be classified other than under Chapter heading 210690 of CETA, which attracts 'NIL' rate of duty. The learned Advocate also submitted a certificate dated 16.05.2007 issued by the Institute of Chemical Technology, University of Mumbai, before this Tribunal, wherein it has been certified that "Fresubin" is made from food ingredients such as maltodextrin, casein, sugar, vegitable oil etc., which are to be used as a liquid food/diet by just adding water, and as such, the same can be called as 'Instant Food Mix'. It has further been certified therein that "Fresubin" range of products are manufactured under food laws and labeled as per PFA (Amendment) Act, 2006. To substantiate the above stand, the learned Advocate for the appellant has cited the decision of Mumbai Bench of Tribunal in the case of Sankalp Food Products - Vrs. - Commissioner of Central Excise, Mumbai, reported in 2003 (155) ELT 166 (Tri.-Mumbai).
4. Per contra, the Ld. A.R. Shri.M.S. Negi appearing for the respondent-Revenue has reiterated the findings recorded in the impugned order and further relied on the Circular No. 841/18/2006-CX, dated 06.12.2006 issued by the CBEC to vindicate the stand that the product "Fresubin" should not be eligible for exemption from payment of duty under Notification dated 01.03.2007 (supra).
5. We have heard the learned counsel for both the sides and perused the records. The issue involved in the present case for consideration by this Tribunal is as to whether the goods i.e. "Fresubin" manufactured by the appellant merit classification as 'instant food mix', as claimed by the appellant for the purpose of duty exemption under Notification dated 01.03.2007; or, should be classified under the category of 'food supplement', as asserted by the Revenue, for which no exemption has been provided from payment of duty.
6. Chapter Heading 2106 under the CETA, relevant for the present dispute, is extracted herein below for ease of reference:-
2106 Food preparations not elsewhere specified or included 2106 10 00 -
Protein concentrates and textured protein substances Kg.
16% 2106 90 --
Other:
Soft drink concentrates:
2106 90 11-- Sharbat Kg.
16% 21069019--
Other Kg.
16% 21069020-- Pan Masala Kg.
37.5% 21069030---
Betel nut product known as supari Kg.
16% 21069040---
Sugar-syrups containing added flavouring or colouring matter , not elsewhere specified or included; lactose syrup; glucose syrup and malto dextrin syrup Kg.
16% 21069050---
Compound preparations for making non-alcoholic beverages Kg.
16% 21069060---
Food flavoring material Kg.
16% 21069070---
Churna for pan Kg.
16% 21069080---
Custard powder Kg.
16% Other 21069091---
Diabitic foods Kg.
16% 21069092---
Sterilized or pasteurized miltone Kg.
Nil 21069099---
Other Kg.
16%
7. Supplementary Note No. 5 appended to Chapter 21 of CETA vide clause (b) provides that Heading 2106, inter alia, includes preparation for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption. Fresubin made from hydrolysed corn starch (45-50%), Sugar (15-20%), Milk Protein (15-20%), vegetable Oil (15-20%), multivitamins, can be consumed simply by adding water to it and hence, it is covered by heading 2106. Since, it is a food preparations of other than protein concentrates/ textured protein it is covered by 210690 and since it is not covered by sub heading 21069011 and 21069092, it is covered by sub heading 21069099. Even the impugned order holds that the goods, in question, are classifiable under sub heading 21069099. The dispute is only on the point whether it is covered by Sl. No. 30A of notification No. 3/06-CE which covers all kind of food mixes including instant food mixtures.
8. Notification No. 3/2006-C.E., dated 01.03.2006 vide entry Sl. No. 30A appended thereto covers the excisable goods i.e. "All kind of food mixes, including instant food mixes" falling under Tariff item 2106 90 and prescribed the effective rate of duty as 'Nil'. According to the Department, the goods, in question, are not basic food product but are food supplements used for patient and other persons having deficiency of protein, vitamins, mineral, due to illness and hence the same cannot be considered as instant food mix and are not covered by the S. No. 30A of the exemption notification No. 3/06-CE.
9. We find from the letter dated 23.05.2007 addressed to the jurisdictional Range Superintendent of Central Excise, that the appellant had categorically stated that "Fresubin" is made from, or mixture of the basic food ingredients namely, corn starch, sucrose, milk protein and vegetable oil of required level/percentage, with the addition of minerals and vitamins for food enrichment. It has also been stated that the said food ingredients are mixed, cooked and dried into powder and that when the said powder is mixed with water, a ready to consume food/diet is made, which is known in the commercial dialect as "Instant Food Mix". The said submissions of the appellant before the departmental officers have also been endorsed by the authority on the subject i.e. The Institute of Chemical Technology, University of Mumbai, vide certificate dated 16.05.2007, wherein while mentioning the food ingredients contained in "Fresubin", it has been certified that since the said product is to be used as liquid food/diet by just adding water, the same should be termed as 'Instant Food Mix'.
10. The above submissions of the appellant have not been considered favorably by the authorities below and the grounds assigned for disagreement are that the packing pouches of the product has recommended to follow physicians or dieticians directions in respect of use of the product and the goods are marketed/sold as 'meal replacement/supplement'. According to the impugned order, a product can only be treated as "food mix", only if it is regarded as basic food and not a substitute food and it must be known as food product/food mix in the common parlance. We find from the impugned order that the above stated submissions of the appellant regarding mixture of various basic food ingredients for preparation of "Fresubin" has not been specifically discussed. Further, the submissions of the appellant that affixation of additional information in the pouches regarding its possible use for hospitalized patients cannot change the basic characteristic of "Instant Food Mix" being a statutory requirement under the food laws, have been completely ignored in the impugned order. We also find that no conceivable substantiation has been brought on record to negate the stand of appellant, which is duly endorsed by the expert on the concerned field i.e. the Institute of Chemical Technology, University of Mumbai, vide certificate dated 16.05.2007. The reason assigned in the impugned order for non-consideration of the said certificate are that there is no mention of drawl of samples from the disputed goods, and that there is no disclosure regarding the name or authority on whose initiative the same had been issued. We are of the opinion that the competency of the said institute in furnishing the certificate cannot be questioned by the revenue, especially in absence of a contrary certificate being obtained from a recognized agency of repute. Moreover, when the lower authorities have accepted the classification of Fresubin under sub heading 21069099 of heading 2106, as food preparations not elsewhere specified and the goods, in question, can be consumed simply by mixing with water, the same have to be treated the food mixes including instant food mixes fo the purpose of notification No. 3/06-CE and even if, Fresubin is used by patients recovering from illness, it will not cease to be a food mix. Where S. No. 30A covers all kind of food mixes including instant food mixes of sub heading 210690, for the purpose of this entry, no distinction can be made between food mixes specially designed for sick people and the food mixes for others and there would be no justification for treating the same as not covered by this entry.
11. We find that the decision of the Mumbai Bench of this Tribunal in the case of Sankalp Food Products (supra) is squarely applicable to the facts of the present case, wherein while opposing the views of department for denial of exemption to protein concentrate appearing in entry under Sl. No. 7 of the table annexed to Notification No. 5/98, it has been held that the said entry is very wide in its scope and that there is no exclusion to the said disputed goods, as long as the same are capable of being consumed after mixing it with water.
12. Reliance placed by Revenue on the CBEC Circular dated 06.12.2006 has no application to the facts of the present case, in as much as, the clarification furnished by Board was in context with leviability of duty on ready to eat packaged food; whereas, in the case in hand, the issue relates to classification of the disputed goods under the category of food mixes, to which our views have been recorded in the preceding paragraphs affirmatively.
13. In view of the foregoing discussions, the impugned orders are set aside and the appeals are allowed in favour of the appellant.
[Pronounced in the open Court].
(S.K.MOHANTY) (RAKESH KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) Neha 0 2