Custom, Excise & Service Tax Tribunal
Raptakos Brett & Co. Ltd vs Raigad on 19 March, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEALS NOS: (i) E/1176 & 1177/2008
(ii) E/1321 & 1322/2010
(iii) E/88684 to 88686/2013
[Arising out of Orders-in-Original Nos:
(i) 15-16/SLM(15-16)COMMR/RGD/08-09 dated 29/08/2008;
(ii) 22-23/SR(22-23)COMMR/RGD/09-10 dated 30/03/2010; and
(iii) 10-12/MAK(10-12)COMMR/RGD/13-14 dated 31/05/2013
passed by the Commissioner of Central Excise, Customs & Service Tax, Raigad.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, 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?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Raptakos Brett & Co. Ltd.
Appellant
Vs
Commissioner of Central Excise
Raigad
Respondent
Appearance:
Shri V.S. Nankani, Advocate for the appellant Shri Shobha Ram, Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 19/03/2014 Date of decision: 19/03/2014 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
There are seven appeals arising out of Orders-in-Original Nos: (i) 15-16/SLM(15-16)COMMR/RGD/08-09 dated 29/08/2008; (ii) 22-23/SR(22-23)COMMR/ RGD/09-10 dated 30/03/2010; and (iii) 10-12/MAK(10-12)COMMR/RGD/13-14 dated 31/05/2013 passed by the Commissioner of Central Excise, Customs & Service Tax, Raigad Commissionerate. In all these appeals, a common issue is involved and, therefore, they are being taken up together for consideration and disposal.
2. The appellant, M/s. Raptakos Brett & Co. Ltd., Raigad are manufacturers of Threptin and Prorich diskettes. Threptin diskettes are described as high calorie protein supplement fortified with B vitamins. Prorich diskettes are described as whey protein enriched. The department sought to classify these products under CETH 2106 10 00 as protein concentrates and textured protein substances. The appellant sought to classify the same as falling under 2106 90 99 as food preparations not elsewhere specified or included and claimed the benefit of concessional excise duty under Notification No. 3/2006-CE dated 01/03/2006 as ready to eat packaged food. Accordingly, show cause notices were issued to the appellant demanding differential duty vide notices dated 05/11/2008 for the period March 2006 to September 2007; dated 16/04/2010 for the period April 2009 to December 2009; and dated 16/12/2010 for the period January 2010 to June 2010. These notices were adjudicated vide the impugned orders and the product was classified under CETH 2106 10 00 as protein concentrates and textured protein substances and the duty demands were confirmed along with interest thereon and also by imposing penalties. Aggrieved of the same, the appellant is before us.
3. The learned counsel for the appellant submits that as per the manufacturing process undertaken, the goods are manufactured from casein, extruded rice, Bengal gram, soylecithin, malt extract, edible hydrogenated vegetable fat, sugar and water; these products are mixed together and the wet material formed is granulated. Wet granules are dried in a tray drier at 800C for 3= hours. Permitted natural colour and artificial flavor are used as flavouring materials. The granules after flavouring are compressed into diskettes in a pressing machine. The diskettes so produced are baked in an oven for one hour and then packed. In the case of Prorich, the manufacturing process is similar except that whey protein concentrates are also added at the time of mixing of the goods. The Threptin diskettes so manufactured contains 1.50 gms. of protein, 2.4 gms. Carbohydrate, 0.7 gms. of fat and the balance, other substances, in a diskette weighing 5 gms. approximately. Thus, the protein content is only 30%. In the case of Prorich diskettes, which weighs 5 gms. protein content is 1.5 gms, carbohydrates account for 2.9 gms, fat account for 0.2 gms. and other ingredients, the balance. Thus, in the case of Prorich diskettes also the protein content is only 30%. Therefore, it cannot be said that the product manufactured by them is a protein concentrate as protein accounts for only of 30% of the weight of the product and carbohydrates is predominant.
3.1. The appellant also obtained expert opinions from two experts; Professor S.S. Lele, Professor of Biochemical Engineering, Food Engineering & Technology Department of the Institute of Chemical Technology, University of Mumbai. Vide certificate dated 04-05 August, 2008, after analyzing the samples of the product and going through the extensive literature available on the subject, Prof. Lele has concluded that Threptin and Prorich cannot be classified as protein concentrates or textured protein. As per the scientific literature available on the subject on which he has relied upon, it has been stated that protein concentrate should have at least 70% protein by weight. Similarly, he has concluded that the product cannot be considered as textured protein inasmuch as the product has been formulated by simply mixing/blending and the procedure does not involve any texture development that is usually carried out to stimulate meat. Similarly, Professor Dr. Jagadish Sarvotham Pai, who is a retired Professor and Head of the Department of Food & Fermentation Technology, University Institute of Chemical Technology, Mumbai, in his expert opinion dated 25/07/2008 has stated that the protein content of concentrate is normally over 65% and almost up to 90%. Further, protein concentrate and textured protein are always used in preparing food materials and never consumed as such. Since Threptin and Prorich diskettes are consumed as such and the percentage of protein is only 30%, he has opined that they do not qualify to be called as protein concentrates or textured protein.
3.2. The learned counsel has also relied on technical literature, namely, Soy Protein and Human Nutrition, published by Academic Press, 1979, wherein it is stated that the term concentrate applies to those products which contain more than 70% protein. Similarly, in the Encyclopedia of Food Technology published by The AVI Publishing Company Inc., it is stated that soybean protein products containing a minimum of 70% of the protein are termed as protein concentrates. As regards textured protein products, the encyclopedia says that texture may be imparted by utilising the physical and chemical properties of the vegetable protein or developing texture by processes such as wet spinning and extrusion techniques. In the present case, the appellant does not adopt any of these processes and, therefore, the product cannot be considered as textured protein products.
3.3. The learned counsel further submits that even as per the HSN Explanatory Notes, protein concentrates are obtained by elimination of certain constituents of defatted soyabean flour used for protein enrichment of food preparations; soyabean flour and other protein substances textured; however, the heading excludes non-textured defatted soyabean flour whether or not fit for human consumption and protein isolates. From the manufacturing processes undertaken by the appellant, it can be seen that, they have been mixing various products as mentioned above and they have not undertaken elimination of any constituents of defatted soyabean flour and therefore, even as per the HSN Explanatory Notes, the products manufactured by them do not satisfy the definition of protein concentrates or textured protein substances. In spite of these submissions made by the appellant, the adjudicating authority has not considered the submissions nor has he rebutted the expert opinion by adducing opinions of other experts on the subject matter. The adjudicating authority has classified the product on the basis of the information available on the labels of the impugned products and came to the conclusion that the product predominantly contains protein as a major constituent and are used as protein supplements and, therefore, the product has to be classified as a protein concentrate. The adjudicating authority has concluded that the heading providing a specific description has to be preferred over the heading which gives a general description and, therefore, following this principles, the product manufactured by the appellant would merit classification under heading 2106 10 00. The adjudicating authority has also held that to become a protein concentrate the tariff does not lay down any percentage of protein and, therefore a product with a protein content of 30% would also qualify as a protein concentrate. However, there is no scientific or technical basis for arriving at these conclusions.
3.4. In view of the above the learned counsel pleads that the impugned orders are not sustainable in law and accordingly merits to be set aside.
4. The learned Additional Commissioner (AR) appearing for the Revenue, reiterates the findings of the lower authority. He submits that the goods have been marketed as protein supplements and, therefore, merits classification as a protein concentrate. It is also his contention that the essential character of the product emerges from the high protein content and, therefore, the products, even if classified considering the essential character, would merit classification as a protein concentrate and not as other edible preparations. Accordingly, he pleads for upholding the impugned order.
5. We have carefully considered the submissions made by both the sides.
5.1. From the labels of the product it is seen that the products are marketed as a protein supplement and contains 30% of protein by weight. Bulk of the product is made up of carbohydrates, which accounts for 48 to 58% of the weight of the product. Therefore, it cannot be said that protein is predominant by weight over other substances. If a product has to be considered as a protein concentrate the minimum concentration that is required would be at least 50% of the weight of the product so that protein predominates over other materials. That is not the fact obtaining in the present case.
5.2. Secondly, as per the expert opinion obtained and produced by the appellant, discussed in para 3.1 above, and also from the technical literature available on the subject matter, it is seen that, to constitute protein concentrate, at least 70% of protein is required, both, in respect of soya protein products as also milk protein products. In the present case, the protein content is only 30% and nowhere near to 70% as mentioned in the technical literature. The expert opinion and the technical literature relied upon by the appellant has not been rebutted in a meaningful way by the Revenue nor any contrary opinion has been produced by the Revenue in support of their contention. As per the technical literature available, even skimmed milk powder contains 33% to 37% of protein and full cream milk powder contains 23% to 27% of proteins, but we do not classify milk powder as a protein concentrate.
5.3. As regards textured protein products, textured food is based on spun proteins in which inexpensive vegetable proteins can be made to stimulate meat. The process adopted to obtain such textured product is spinning and extruding. In the present case, from the manufacturing process adopted by the appellant, these processes are not undertaken and, therefore, it cannot be said that the impugned goods are textured protein substances.
5.4. It is a settled position in law, that it is for the Revenue to lead evidence in classification matters and not for the appellant. In Vicco Laboratories case [2005 (179) ELT 17 (SC)] the honble Apex Court held that the burden of proof that a product is classifiable under a particular tariff head is on Revenue and must be discharged by proving that it is so understood by consumers of product or in common parlance. In the present case, the Revenue has completely failed in this regard. On the contrary, the appellant has led evidences by way of expert opinion and technical literature to show that the products manufactured by them did not come within the category of protein concentrates or textured protein substances. The appellants products are consumed as such by people who are recuperating from illness and, therefore, it is a ready to eat packaged product. Consequently, the product merit classification under CETH 2106 90 99 and the appellant is rightly entitled to the benefit of Notification 03/2006 dated 01/03/2006. In Wockhardt Life Sciences Ltd [2012 (277) ELT 299 (SC)], the honble Apex Court held that in classification of goods functional utility and pre-dominant usage of the commodity must be taken into account apart from understanding in common parlance. If we apply this ratio to the facts of the present case, the classification under CETH 2106 90 99 is more appropriate.
6. In view of the above factual analysis, the appeals succeed. Accordingly, we allow the appeals with consequential relief, if any, in accordance with law.
(Operative Part Pronounced in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 11