Customs, Excise and Gold Tribunal - Delhi
Joyco India Pvt. Ltd. vs Commissioner Of C. Ex., Chandigarh on 2 April, 2002
Equivalent citations: 2002ECR337(TRI.-DELHI), 2002(143)ELT593(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal filed by M/s. Joyco India Pvt. Ltd. is whether the Bubble Gum manufactured by them is classifiable under sub-heading 1704.90 as claimed by them or under sub-heading 1704.10 of the Schedule to the Central Excise Tariff Act as confirmed by the Commissioner (Appeals) under the impugned Order.
2. Though the matter is posted today for hearing the stay application, we take up the appeal itself for hearing as the issue involved has already been settled by the Supreme Court. Accordingly, we grant the stay of the entire amount of duty and penalty.
3. Shri S. Madhavan, learned Chartered Accountant, submitted that the appellants manufacture Bubble Gum which was classified by them under sub-heading 1704.90; that the period involved in the present matter is from 23-7-97 to 31-5-98; that the Appellate Tribunal in the case of Gum Products (P) Ltd. v. CCE, Madras [1987 (27) E.L.T. 360] has held that the Bubble Gum is different from Chewing Gum and is not classifiable under Tariff Item 1A(1) of the Erstwhile Central Excise Tariff as Chewing Gum, and is classifiable under Tariff Item 68; that the Supreme Court rejected the appeal filed by CCE, Madras as reported in - 1997 (91) E.L.T. 249 (S.C.) holding that the view taken by the Tribunal is plausible view. Learned Chartered Accountant, further, submitted that the Appellate Tribunal in the case of CCE, New Delhi v. Prefetti India Ltd. has held vide Final Order No. 713/99-D, dated 20-10-99 that Bubble Gum is an item commercially different from Chewing Gum. He also mentioned that the Commissioner (Appeals) in the impugned Order has classified the impugned product under sub-heading 1704.10 by referring to the Explanatory Notes of HSN; that a perusal of the relevant Explanatory Notes would clarify that these goods are with regard to the main Heading 17.04 and not with regard to sub-heading 1704.10; that the Explanatory Note reads as follows:
"This Heading covers most of sugar preparations and includes, inter alia gums containing sugar (including sweetened Chewing Gum and the like)";
that this Explanatory Note supports the classification of Bubble Gum under sub-heading 1704.90; that Bubble Gum which is undoubtedly a gum containing sugar, but which is equally, undoubtedly not a Chewing Gum under subheading 1704.10 which Heading is relevant for Chewing Gum alone; that the Supreme Court in the Gum Products decision has already held that the Bubble Gum is commercially known as different item in the market and is not the same as Chewing Gum and, therefore, no reliance could be placed on the Dictionary Meaning of Chewing Gum. He also placed reliance on the decision in the case of BPL Pharmaceutical Ltd. v. CCE, Vadodara - 1995 (77) E.L.T. 485 (S.C.) wherein it was held that classification of goods depends on true nature of the product and the fact that there is some difference in old and new Tariff Entries would not change the character of the product.
4. Countering the arguments Shri Hitesh Shah, learned JDR submitted that the decision in the case of Prefetti India is not applicable to the facts of the present matter as rival Headings in dispute in that matter were 17.04 and 21.08 of the Central Excise Tariff. There was no dispute about the product within 1704 itself. He further, submitted that the Tribunals' decision in Gum Products case was based on the ISI specifications for Chewing Gum and Bubble Gum, according to which there are difference in the proportion in which ingredients are required to be present in two types of gums; that on the basis of different specifications, the Tribunal came to the decision that both the products are commercially different products; that the Supreme Court also treated them as commercially different product on account of different ISI specifications; that the Bubble Gum is also being chewed and the only difference is that bubbles can be produced by blowing which is not the case with Chewing Gum. The learned JDR thus, contended that the term Chewing Gum used in sub-heading 1704.10 will cover Bubble Gum also as it is like Chewing Gum only.
5. We have considered the submissions of both the sides. Heading 17.04 of the Central Excise Tariff at the relevant time reads as under :
"17.04 Sugar confectionery (including white chocolate), not containing cocoa 1704.10 - Chewing gum, whether or not sugar coated 1704.90 - Other"
5.1 Under the old Central Excise Tariff, Tariff Item 1A(1) was applicable to Chewing Gums. The interpretation of this Tariff item came up for consideration of the Tribunal in the case of Gums Products Pvt. Ltd. where the Revenue's case was that since the Bubble Gum is also required to be chewed and is a gum it is nothing but Chewing Gum. The Tribunal did not find substance in the submissions of the Revenue and held that Chewing Gum cannot be used to produce bubbles by blowing while Bubble Gum has that use. This is the essential and characteristic difference between the two gums; apart from the difference in the proportion in which different ingredients exists in the two gums. The Tribunal also observed that by using the plural words Chewing Gums under Tariff Item 1A(1) different kinds of Chewing Gums would be covered by the said entry but Bubble Gum is not the same thing as Chewing Gum and it cannot be considered to be covered by the said entry. -The Supreme Court on appeal, in the case of CCE, Madras v. Gum Products Pvt. Ltd. confirmed the decision of the Tribunal by observing as under :
"The Revenue contended that Bubble Gum. was a gum like Chewing Gum and would, therefore, fall within Item 1A(1) of the Schedule. This contention was negatived by the Tribunal firstly because it is not included in Item-1A(1) and is commercially known as a different item altogether and is not the same thing as Chewing Gum. We see no reason why we should take a different view as the view taken by the Tribunal is a plausible view."
The words used in sub-heading 1704.10 are Chewing Gums, whether or not sugar coated Chewing Gum in the sub-heading cannot be interpreted to include Bubble Gum also particularly in view of the decision of the Tribunal and Supreme Court holding both the products as different products altogether. We find substance in the submissions of the learned Chartered Accountant that the Explanatory Notes of HSN referred to the entire Heading 1704 and not to any sub-heading specifically. Further, the Tribunal in the case of Prefetti India rejected the appeal filed by the Department against the Order-in-Appeal No. 305-CE/DLH/98, dated 25-6-98 passed by the Commissioner (Appeals), New Delhi. In the said Order, the Commissioner has held that Bubble Gum was a type of gum, which is commercially different item than Chewing Gum and classified the same under sub-heading 1704.90. The Tribunal while rejecting the appeal filed by the Revenue did take note of the fact that the said Order-in-appeal was passed following the decision of the Supreme Court in Cum Products case and following the ratio it upheld the order passed by the Commissioner (Appeals) and dismissed the appeal filed by the Revenue. The learned Chartered Accountant has also mentioned that with effect from 1-6-98 subheading 1704,10 has been substituted which reads as under :-
"Gums, whether or not sugar coated (including Chewing Gum, Bubble Gum and the like)."
He has submitted that even now the Legislature treats Bubble Gum as different from Chewing Gum as both of them have now been mentioned in the Tariff Heading separately.
6. Following the ratio of the Tribunal's decision and Supreme Court decision in the case of Gum Products we hold that bubble gum manufactured by the appellants at the relevant time was classifiable under sub-heading 1704.90. Accordingly, the appeal is allowed.