Custom, Excise & Service Tax Tribunal
Urmin Products Pvt Ltd vs Ahmedabad-Ii on 3 January, 2019
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No. E/152/2010-DB
[Arising out of OIA-48/2010-AHD-II-CE/CMC/COMMR-A-/AHD/S/09-AHD-II-/10 dated 18.01.2010
Commissioner of Central Excise-AHMEDABAD-II]
Appeal No. E/703, 704, 1542/2009-DB
[Arising out of OIA-25-26/2009-AHD-II/CE/ID/COMMR-A-/AHD dated 22.01.2009 passed by
Commissioner of Central Excise-AHMEDABAD-II]
[Arising out of OIA-240/2009-AHD-II-CE/CMC/COMMR-A-/AHD/S/15-A-II-/09 dated 07.08.2009
passed by Commissioner of Central Excise-AHMEDABAD-II]
M/s Urmin Products Pvt. Ltd Appellant
Vs
C.C.E.,- Ahmedabad-ii Respondent
Represented by:
For Appellant: Shri S.J. Vyas (Advocate) For Respondent: Shri S. N. Gohil (AR) CORAM:
HON'BLE SHRI RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 06.09.2018 Date of Decision: 03.01.2019 Final Order No. _A/ 10035-10038__/2019 Per: Ramesh Nair The brief facts of the case are that the appellant are engaged in manufacture of Chewing Tobacco, Jaljira and Pan Sughandh falling under chapter sub heading 2403 9910, 2106 9050 and 2008 9999 respectively of the First Schedule to the Central Excise Tariff Act, 1985 and cleared them under 'Bilas" Brand Pan Sughandh by classifying them under Chapter sub-heading 2008 9999 at nil rate of duty by availing the exemption under Notification No. 03/2006-CE dated 01/03/2006. The department during the scrutiny of records noticed that the ingredients namely Semar Musra, Amla, Bel Pulp, Mulethi, Mixed Spices, Natural and Artificial Flavours and Flavouring Substances and Menthol have been used in their finished goods. All the ingredients were cleaned, grinded, blended and then packed and no other process is being adopted. The department termed their product as 'Churan for Pan' classifiable under Tariff Heading 2106 9070 attracting excise duty @ 16% as it was a preparation of fruits and vegetables used as refreshing pan flavouring
2|Page E/152/2010 & E/703,704,1542/2009-DB material as mentioned on the packing materials and therefore, should be assessed as per Section 4A of the Central Excise Act, 1944 under serial No. 24 of Notification No. 02/2006-CE (NT) dated 01.03.2006 with abatement at the rate of 40%. The department issued three SCNs dated 13.05.2007 covering period of September 2006 to February 2007, SCN dated 10.12.2007 covering period of March 2007 to October 2007 and SCN dated 11.09.2008 covering period of November 2007 to March 2008 to the appellant proposing to classify their product under 21069070 proposing to assess their product as per the provisions of Section 4A of the Central Excise Act, 1944 and proposing the recovery of Rs. 70,248/-, Rs. 41,369/- and Rs. 10963/- respectively short paid during the said period under section 11A along with interest under Section 11AB and penalty under Rule 25 read with Section 11AC. The said SCNs were adjudicated vide the Orders-in-Original wherein the Assistant Commissioner classified their product under Chapter heading 2106 9070;
ordered to assess the duty as per provisions of Section 4A; confirmed the duty as Rs. 70,248/-, Rs. 41,369/- and Rs. 10,963/- along with interest as also imposed penalty under Rule 25 read with Section 11AC. Being aggrieved by the orders-in-original appellant filed appeals before Commissioner (Appeals) who rejected the appellant appeals and upheld that order-in-originals. Therefore, the present appeals filed by the appellant.
2. Sh. S.J. Vyas Ld. Counsel appearing on behalf of the appellant submits that product is in the form of ready to consume edible mixture of fruits, nuts and other edible parts of the plant prepared. Contain sugar, artificial flavour of menthol; therefore, it is not a pan masala. He further submits that the observation of the department is based on the chemical examiner report, which is referred in the SCN wherein the chemical examiner has opined that the product is end product for flavouring of pan
3|Page E/152/2010 & E/703,704,1542/2009-DB is classifiable under the heading 2106. He submits that the chemical examiner has no authority to give end use for classification. The product is consumed as such and not with pan or any other specific substance. The observation of the Appellate Commissioner is that the appellant has not contested that the product is used to provide flavour and taste to pan is incorrect. The appellant has specifically contended that the product is not pan masala. He further submits that the heading 2008 does not include mixture of different spices of pan and that essential character of individual ingredients is lost. The observation is also incorrect as the heading only excludes mixtures of different spices if they are not consumed as such but are of kind use of making herbal infusion or herbal tea, therefore the grounds is incorrect. The heading 2106 is for food preparation, there is nothing on record to show that the product is foods preparation though this edible does not make food preparation. Heading 2106 is also a residuary heading and unless classification under specific is ruled out, residuary heading cannot be applied. He submits that the penalty under section 11AC was imposed whereas issue involved is of interpretation of classification of goods before the manufacture, intimation with classification intimated to the department under letter dated 08.09.2006, therefore, there is no suppression of fact or mis- declaration on the part of the appellant. Therefore, penalty under Section 11AC should also not have been imposed.
3. Sh. S.N. Gohil, Ld. Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the records, we find that the issue to be decided in the present case is classification of the product namely, „Bilas‟ Pan Sughandh. The department has termed the product as Churan for Pan
4|Page E/152/2010 & E/703,704,1542/2009-DB classifiable under tariff heading 2106 9070, whereas the appellant claimed under 2008 9999. Both the tariff entries are reproduced below:
Chapter 21: Miscellaneous Edible Preparations Tariff Item Description of goods Unit Rate of Duty 2106 Food Preparation 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% 2106 90 19 -Other............................................................................ kg 16% 2106 90 20 -Pan masala............................................................... kg 37.5% 2106 90 30 -Betel nut product known as "Supari".................... kg 16% 2106 90 40 -Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included, lactose syrup, glucose syrup and malto dextrin syrup... kg 16% 2106 90 50 -Compound preparations for making non-alcoholic beverages......................................................................... kg 16% 2106 90 60 -Food flavouring material.............................................. kg 16% 2106 90 70 -Churna for pan................................................................ kg 16% 2106 90 80 -Custard powder.............................................................. kg 16%
-Other 2106 90 91 -Diabetic foods................................................................. kg 16% 2106 90 92 -Sterilized or pasteurized miltone................................ kg Nil 2106 90 99 -Other................................................................................. kg 16% Chapter 20: Preparations of Vegetables, Fruits, Nuts, etc. Tariff Item Description of goods Unit Rate of Duty 2008 -Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included
-Nuts, ground-nuts and other seeds, whether or not mixed together:
2008 11 00 -Ground-nuts.................................................................. kg 16%
2008 19 -Other, including mixtures:
2008 19 10 -Cashew nut, roasted, salted or roasted and
salted........................................................................... Kg 16%
2008 19 20 -Other roasted nuts and seeds.................................... kg 16%
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2008 19 30 -Other buts, otherwise prepared or preserved.........kg 16%
2008 19 40 -Other roasted and fried vegetable products............kg 16%
2008 20 90 -Other...............................................................................kg 16%
2008 20 00 -Pineapples..................................................................... kg 16%
2008 30 -Citurs fruit:
2008 30 10 -Orange............................................................................kg 16%
2008 30 90 -Other...............................................................................kg 16%
2008 40 00 -Pears...............................................................................kg 16%
2008 50 00 -Apricots...........................................................................kg 16%
2008 60 00 -Cherries..........................................................................kg 16%
2008 70 00 -Peaches, including nectarines........................... kg. 16%
2008 80 00 -Strawberries......................................................... kg. 16%
2008 91 00 -Other, including mistures other than those of sub-heading 2008
19.................................................................... kg. 16%
2008 92 -Plam hearts............................................................ kg. 16%
2008 99 -Mixtures.................................................................. kg. 16%
-Other :
-Squash:
2008 99 11 -Mango........................................................................ kg. 16%
2008 99 12 -Lemon....................................................................... kg. 16%
2008 99 13 -Orange....................................................................... kg. 16%
2008 99 14 -Pineapple................................................................... Kg. 16%
2008 99 19 -Other .......................................................................... kg. 16%
-Other
2008 99 91 -Fruit cocktail.............................................................. kg. 16%
2008 99 92 -Grapes......................................................................... Kg. 16%
2008 99 93 -Apples.......................................................................... kg. 16%
2008 99 94 -Guava.............................................................................kg. 16%
2008 99 99 -Other............................................................................. kg. 16%
5. From the above tariff entries, it is observed that the product namely, Churan pan is specifically provided under tariff item 2106 9070. The product is manufactured with ingredients listed below:
Semar Musra Amla Bel Pulp Mulethi Mixed Spices
6|Page E/152/2010 & E/703,704,1542/2009-DB Natural & artificial flavour & flavouring substances Saccharin Sodium Sugar & Menthol The above ingredients are cleaned, grinding and blended and then packed and no other process is adopted. This product is used to give flavour and taste to the pan. The appellant sell these goods in the name of „Bilas‟ pan sugandh, on the packing of the product also, the appellant are declaring pan flavour material. In these facts, in the trade parlance the product is known as „Pan Flavour Material‟. It is settled law that classification of goods is based on more of product known in trade parlance then on the basis of its ingredients in the market. Product is sold and purchased with the clear description as Pan Flavour Material. Under chapter heading 2106 9070, there is specific tariff entry in the name of churan pan, therefore, in our considered view the product is pre-dominantly classifiable under 2106 9070 as „churan for pan‟ and not under 2008 9999. Ld. Adjudicating authority as well as Commissioner (Appeals) has given detailed findings that how the product is classifiable under Chapter heading 2106 9070. The finding of the Ld. Commissioner (Appeals) is reproduced below:
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6. As regard penalty, we find that it is admitted by the Ld. Commissioner (Appeals) that there is no allegation of suppression of fact or fraud in the SCN despite that the penalty under Rule 25 which is equal to the duty was upheld. The penalty under Rule 25 is subject to section 11AC, since there is no charge of suppression or fraud or mis-declaration, penalty under Rule 25 can also not be imposed. Moreover, in the present case issue involved is interpretation of classification of goods for this reason also penalty is not imposable. Accordingly, we set aside the penalty imposed by the lower authority.
7. As per our above discussion, the impugned orders are modified to the effect that the demand of duty and classification ordered by the lower
9|Page E/152/2010 & E/703,704,1542/2009-DB authorities are upheld and penalty imposed under section 11AC/ 25 is set aside. The appeals are partly allowed in above terms.
(Pronounced in the open court on 03.01.2019) (Raju) (Ramesh Nair) Member (Technical) Member (Judicial) Seema