Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S. Shivraj Tobacco Co. Pvt.Ltd on 5 February, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Excise Appeals Nos.5456-5458 of 2004-Excise Branch
[Arising out of common Order-in-Appeal No.50-55-CE/APPL/KNP/2004 dated 24.02.2004 passed by the Commissioner of Central Excise (Appeals), Kanpur]
Date of Hearing/ Decision:05.02.09
For approval and signature:
Honble Mr. M. Veeraiyan, Member (Technical)
Hon'ble Mr. P.K. Das, Member (Judicial)
,,,,,
1. Whether Press Reporters may be allowed to see
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? Appellants
Appellants [Rep. by Shri D.N. Malhotra, Advocate] Appellants
CCE, Kanpur Appellants
[Rep. by Shri A.K. Rastogi, DR]
Vs.
M/s. Shivraj Tobacco Co. Pvt.Ltd. Respondent
[Rep. by Shri K.K. Anand, Advocate with Anurag Mishra, Advocate] CORAM: Honble Mr. M. Veeraiyan, Member (Technical) Honble Mr. P.K. Das, Member (Judicial) Order No/Dated:05.02.2009 Per P.K. Das:
These appeals are arising out of common order and, therefore, all are being taken up together for disposal.
2. The dispute relates to classification of Chaman Bahar Powder and Pono Cream both under sub-heading no.2107.91 without benefit of Notification No.2/94-CE dated 1.3.94 as proposed by Revenue and confirmed by Original Authority. The respondents claimed both under sub-heading no.2001.10 eligible for exemption notification no.2/94-CE and allowed by Commissioner (Appeals), who set aside the Adjudication Orders and allowed the appeals filed by the respondents. Hence, the Revenue filed these appeals.
3. Ld. DR on behalf of the Revenue reiterates the grounds of Appeals. He submits that Heading 20.01 indicates preparation of vegetables, fruits, nuts and other parts of plants. He submits that the product Chaman Bahar Powder is processed out of 48 ingredients and only 2 items namely Bel and Amla are fruits and vegetables. He further submits that the other items - Ponocream is composed of Kusum Powder, Mulethi Powder, Menthol, Aniced Oil, Camphor, etc. and other perfumery items. He also submits that both the products are in the nature of Pan flavouring material/khusboo exclusively meant to be taken with pan. He submits that these items cannot be said to be preparation of vegetables, fruits or parts of plants. He also submits that the respondents used Betel nuts in both products prior to issue of exemption notification and in order to avail the exemption benefit, they have changed the composition of the product. He relied upon the decision of the Tribunal in the case of Mukh Shudhi Foods Pvt. Ltd. Vs. CCE, Indore reported in 2003 (152) ELT 355 (Tribunal-Delhi). He submits that the Original Authority rightly denied the exemption benefit and classified under Chapter 21 as the items are nothing but in the nature of pan masala.
4. Ld. Advocate on behalf of the respondents reiterates the findings of the Commissioner (Appeals). He drew the attention of the Bench to the relevant portion of the reply to the show cause notice. He submits that the products are preparation of vegetables, fruits and kind of plants. He also submits that they have not used lime, katha or supari in the said products and, therefore, it cannot be in the nature of pan masala. He also submits that the Commissioner (Appeals) passed the order following the decision of the Tribunal. It is submitted that the Commissioner (Appeals) also took reliance of the Order dated 24.2.2000 passed by the Dy. Commissioner, Division-II, Noida in the case of D.S.M. Foods Ltd. where Mouth Freshener classified in sub-heading No.2001.10 and excluded from sub-heading no.2108.99. He submits that the Revenue filed appeal before the Commissioner (Appeals) against the order of the Dy. Commissioner in the case of DSM Fruits Ltd., which was rejected. Again, Revenue filed appeals before the Tribunal, which was rejected by the Tribunal by Final Order NO.851-853-08EX dated 3.11.2008 in the case of CCE, Noida Vs. D.S.M. Fruits Ltd.
5. After hearing both the sides and on perusal of the records, we find that the respondent manufactured and cleared Chaman Bahar Powder, Chaman Gulab Katri and Pono Cream. The Original Authority accepted Chaman Gulab Katri in sub-heading no.2001.10 but other products held sub-heading no.2108.99. The composition of the three products are given below:-
(a) Chaman Bahar Powder Powder of fruit and vegetable containing Harr, Bel Pulp, Amla, Mulethi, Semar Musra, Maida-Lakri, Menthol, Saccharine, Artificial Flavours and perfumes etc. all in powder from but not containing Lime, Katha or Supari. Put up in unit containers.
(b) Chaman Gulab Katri Preparations of vegetable, fruits, nuts or other parts of plants containing Dry Dates, Menthol, Saccharine, Mulethi, etc. but not containing lime, Katha or Supari sold in unit containers.
( c) Ponocream Containing Kusum powder, Mulethi Powder, Menthol besides other ingredients in paste from sold in tubes. It does not contain Supari, Lime or Katha.
6. The respondent claimed the products under heading No.20.01, preparation of vegetables, fruit, nuts or other parts of plant, including jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes, fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter. Revenue proposed to classify under heading no.21.08 Edible preparations, not elsewhere specified or included, as it stood during the period 1995-96.
7. On perusal of the Order-in-Original dated 31.10.2001, it is seen that the main raw material in Chaman Bahar Powder and Pono Cream is Kirana Masala. On a query from the Bench, Ld. Advocate drew the attention of the Bench, to the composition of the Kirana Masala from the said order as under:-
Harr (Fruit & Vegetable) Mulethi Ram Dana Dal Chini Kesia Sacchrine (about 200 Kgs.) Amla (Fruit & Vegetable) Belgiri (Fruit & Vegetable) Semar Musra Maida Lakdi Tejpatra
8. The origin of the above ingredients as mentioned in the Adjudication Order are reproduced below:-
(i) Harah It is fruit of tree. It is digestive (Page 360 of Vanaushidhi Nirdeshika).
Harah of different varieties have different uses on account of different properties (pages 96 to 99 of shaligram Nighattu Bhushan) Harah, Bahira & Aonla mixed together is called Trifala which means 3 fruits.
(ii) Ram Dana It is a fruit. It is used during religious fasting & called Phalahar meaning thereby fruit meal.
(iii) Tejpatra Leaves & bark of a tree. 78% Eugenal & Terpene. Good for stomach. It is digestive & sweet smelling.
(pages 173-174 of vanaushidhi. It is mouth and mind freshener (page 59 of Shaligram Nighattu Bhushan).
(iv) Dal Chini It is bark of a tree. It is tasty, sweet smelling, mouth freshner & thirst killer. (pages 58 & 59 of Shaldigram Nighattu Bhushan).
(v) Mulethi It is of 2 kinds. One grows in water and the other in land. The roots and stems are taken in use. It is sweet in taste. It improves voice. It is flavorous and thirst killer (Pages 171 to 173 of Shaligram Nighattu Bhusan). It has 5% to 10% of Glycyrrbizin, 5% to 10% Sucrose & Dextrose, 30% Starach, Protein and 10% Aspirin (pages 284 to 292 of Vanausshidhi Nirdeshika).
(vi) Maida Lakrhi It is inner bark of self grown tree. It processes saliva. It is sweet smelling. (Page 292 & 293 of Vanaushidhi Nirdeshika).\
(vii) Semar Musra It was root of self grown tree. It generates saliva (Mucilaginous) (Pages 350 351 of Vanaushidhi NIrdeshika).
9. The Original Authority observed that for the purpose of classification, the term vegetable refers to a plant, the edible part, of which is used as table vegetable. Similarly, definition of Fruits as a plant part used chiefly in a desert or sweet course appears to be most appropriate. Therefore, the ld. DR contended that only Bel and Amla are fruits and vegetables and use of other items would not be taken into account of preparation of fruits and vegetables. So, the items are classifiable under Chapter 21 under miscellaneous edible preparations.
10. On perusal of the description of Heading No.20.01, we find that it covers preparations of vegetables, fruit, nuts or other parts of plants. There is no dispute that all the items are vegetable and fruit used in the manufacture of finished goods. So, we are unable to accept the finding of the Original Authority. In our view, if the wordings of heading are clear enough to understand the issue, there is no need to look into other material. It is not proper to change the classification of product by way of restricting the scope of heading.
11. In this connection, we reproduce the findings of the Commissioner (Appeals) as under:-
It is pleaded before me on behalf of the appellants that it is established from the un-controverted authentic literature and trade opinions that except for different varieties of perfumes and menthol which evaporate and do not add their weight and sweetening materials used for flavour and taste, all the products predominantly contain various parts of plants. It is also pleaded before me that the products come in the description of preparation which word has been interpreted in their favour by the Supreme Court in U.O.I. Vs. Pesticides Mfg. & Formulation Association of India reported at 2002 (146) ELT 19 and order of the Tribunal in C.C. Ex Sukhjit Starch & Chemical Ltd. reported at 194 (72) ELT 753 & in C.C.Ex Vs. Mazda Industrial Chemicals Pvt. Ltd. reported at 2000 (124) ELT 475, which are also cited in para B-1 of the defence brief. I have also examined legality of classifying these products on sub-heading no.2107.91 and later in sub-heading no.2108.99. I agree with the submission of the appellants that Chapter 20 & Sub-heading No.2001.10 is a specific entry for Preparation of vegetables; fruits, nuts or other parts of plants and classification in this sub-heading is not excluded if they are not vegetables and fruits in the common parlance provided they are prepared from parts of plants. On the other hand Heading 21.07 and later Heading Nod.21.08 is a residual entry described as Edible Preparations not elsewhere specified. I also agree that according to Rule 3 of Interpretation Rule & judgements of the Supreme Court in Speed Work Rubber Co. Vs. C.C.Ex and Dunlop India Ltd. Vs. U.O.I. reported at 2002 (143) ELT 78 & 1983 (13) ELT 1566 respectively that for the purpose of classification in the tariff schedule a specific entry will prevail over general or residual entry.
12. We find that the Tribunal in the case of M/s. D.S.M. Fruits Ltd. (supra) while dealing with the classification of Mouth Freshener manufactured by the respondent, upheld the classification under sub-heading no.2001.10 as held by the Commissioner (Appeals). It is seen that the said product manufactured out of raw materials using dry dates, fennel (saunf), natural herbs, melon seeds, cardamom seeds, coriander seeds, coconut, catechu, lime, saffron, sweetener, mishri, decorative sugar balls, perfumes, essential oils and allied products and flavours & essence. The findings of the Tribunal is reproduced below:-
6. We have carefully considered the submissions of both sides. We find that the chapter 21 deals with the product like extracts, essence, roasted chicory, baking powder etc. Chapter 20 .01 reads as follows:
Preparations of vegetables, fruit, nuts or other parts of plants including jams, fruit, jellies, marmalades, fruit or nut puree and fruit or nut pastes, fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter.
From the reading of the Chapter 20.01, it is seen that it covers preparation of vegetables, fruit, nuts and other edible parts of plants . It also covers preparation which may contain added sugar or other sweetening matter. Preparation of fruits, nuts etc. naturally will contain certain added ingredients. It is not mere collection of all different types of fruits, nuts or other parts of plants. Addition of material like saffron has not been shown to change the characteristic of preparation substantially or significantly. We find that the product manufactured by them can be consumed as such as submitted by the learned Advocate. Preparation falling under Chapter 20 as well as preparations falling Chapter 21 are both edible in nature . Going by the common products mentioned in Chapter 21, we are of the rightly considered as preparation of fruits, nuts or other parts of plants. When the product is covered under the description of the Chapter 20, the need to go to the Chapter 21 which is residuary in nature does not arise. Therefore, we do not find any justification to interfere with the classification as upheld by the Commissioner (Appeals) in the proceeding dealt with in Appeal No.E/4518/04. Consequently, Commissioners (Appeals) orders in quashing the demands confirmed by the original authority in the proceedings dealt with in Appeal Nos.E/3026 & 3027/04 are also justified.
13. We find that in the present case, the use of fruits, vegetables and kinds of plants used by the respondents had not disputed and it can be consumed as such. However, the Revenue while classifying the product under Chapter 21 had taken into consideration only Bel and Amla. In our view, such classification ignoring the other items of vegetables and fruits is beyond the scope of the description of the Heading No.2001. It is seen that the respondents is mixing all vegetables and fruits to compose Kirana Masala. Therefore, it would be treated as preparation of vegetables, fruits and other parts of plants. The perfumery added with the preparation of vegetables did not affect the characteristics of the product.
14. In view of the above discussion, we do not find any reasons to interfere the order of the Commissioner (Appeals). Accordingly, the appeals filed by the Revenue are rejected.
Order dictated & pronounced in open court on 5.2.2009.
( M. Veeraiyan ) Member (Technical) ( P.K. Das ) Member (Judicial) Ckp.
\