Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs M/S.Capital Foods Ltd on 21 January, 2009
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II Excise Appeal No.E/2814-2815/2003-Mum (Arising out of Order-in-Appeal No.CEX.XI/JMJ/156/916/NSK/APPEAL/2003 dated 25.06.2003 and No.CEX.XI/JMJ/207/916/NSK/APPEAL/2003 dated 26.06.2003 passed by the Commissioner of Central Excise & Customs (Appeals), Nashik) For approval and signature: Honble Mr.P.G.Chacko, Member (Judicial) Honble Mr.K.K.Agarwal, Member (Technical) ====================================================
1. Whether Press Reporters may be allowed to see No 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 Seen of the Order?
4. Whether Order is to be circulated to the Departmental Yes authorities?
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Commissioner of Central Excise & Customs, Nashik Appellants
Vs.
M/s.Capital Foods Ltd. Respondents
Appearance:
Shri Kishori Lal, SDR for the Appellants
Shri V.R.Kelkar, Consultant for the Respondents
CORAM:
Honble Mr.P.G.Chacko, Member (Judicial)
Honble Mr.K.K.Agarwal, Member (Technical)
Date of hearing: 21.01.2009
Date of decision: 21.01.2009
O R D E R No:..
Per: Mr.P.G.Chacko, Member (Judicial)
The respondents in these appeals of the Revenue were engaged in the manufacture of food items such as Soups, Noodles, Spices etc. during the material period. During the period from April, 1996 to February, 1997, they had paid duty at the rate of 8% on their product Chilli Vinegar classified under heading 20.01 ( sub heading 2001.00) of the Schedule to the Central Excise Tariff Act. In a show cause notice dated 23.2.1998, the department alleged that the above goods had been misclassified with intent to evade payment of correct duty as applicable to heading 22.03 (sub heading 2203.00) of the said Schedule. On this basis, the party was asked to pay differential duty of Rs.95,391/- on Chilli Vinegar under Section 11A of the Central Excise Act, 1944 with interest thereon under Section 11AB of the Act. The show cause notice also proposed penalties. The demands were contested by the party. In adjudication of the dispute, the original authority confirmed classification of the goods under sub heading 2203.00 and demand of differential duty of Rs.95,391/- against the assessee. It also demanded interest on duty and imposed penalty. In an appeal filed by the party against that decision of the original authority, the Commissioner (Appeals) rejected the above classification of the goods and accepted the assessees claim for classifying the goods under sub heading 2001.00. In the present appeal filed against the appellate Commissioners order, the departments prayer is limited to classification of Chilli Vinegar. The prayer reads thus: the OIA.No.CEX/XI/JMJ/156/916/2003 dated 25.06.2003, passed by the Commissioner (Appeals) may be set aside to the extent of relief given in classification dispute.
2. We heard the learned SDR for the appellants and the learned Consultant for the Respondents. The learned SDR submitted that even the assessee intended to sell the goods as vinegar only as evidenced by the manner in which the goods was described on its label. Chilli Vinegar was prepared by mixing Acetic Acid with water and adding thereto one green chilli. Dilute Acetic Acid was a substitute for vinegar. The green chilli was added as flavouring agent only. On these facts, according to the learned SDR, HSN Explanatory Notes under heading 22.03 would support classification as claimed by the Revenue. The learned SDR also relied on Rule 3(b) of the Rules for the Interpretation of the CETA Schedule. On the other hand, the learned Consultant reiterated the reasoning of the lower appellate authority.
3. After giving careful consideration to the submissions, we find that Preparations of vegetables, fruit, nuts or other parts of plants, whether or not containing added sugar or other sweetening matter were classifiable under heading 20.01 and sub heading 2001.00 during the material period. Vinegar and substitutes for Vinegar obtained from acetic acid were classified under heading 22.03 and sub heading 2203.00. The subject goods were prepared by adding one green chilli to dilute acetic acid (4 grams acetic acid per 100 ml water). The argument of the assessee is that, with the addition of green chilli, the liquid lost its character of vinegar and became a distinctly different product classifiable under heading 20.01. On the other hand, the case of the appellant is that addition of green chilli did not alter the essential character of vinegar and therefore the product should appropriately be classified under heading 22.03 as per Interpretative Rule 3(b). This Rule reads as follows:
3. When by application of sub-rule (b) of rule 2 or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a)
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable.
(c)
4. We are inclined to accept the argument of the learned SDR inasmuch as (a) aqueous acetic acid dilution is undisputedly a substitute for vinegar and (b) its essential character is not lost on account of adding one green chilli. It is also found that the assessee themselves intended to market the product as vinegar. The HSN Explanatory Notes indicate that vinegar flavoured with spices would remain classified under heading 22.03. Moreover, the respondent has failed to show that their product which was marketed as chilli vinegar could be classified as a preparation of green chilli.
5. In the result, the classification ordered by the lower appellate authority in respect of chilli vinegar is set aside and the product is held to be classifiable under heading 20.01 as decided by the original authority. The Revenues appeal stands allowed to this extent in terms of prayer (i) set out in the memo of appeal.
(pronounced in the court)
(K.K.Agarwal) (P.G.Chacko)
Member(Technical) Member(Judicial)
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