Custom, Excise & Service Tax Tribunal
Magnum Chocolatier vs Ahmedabad on 27 September, 2019
Customs, Excise & Service Tax Appellate Tribunal,
West Zonal Bench : Ahmedabad
REGIONAL BENCH - COURT NO. 3
Customs Appeal No. 11667 of 2017
[Arising out of Order-in-Appeal No OIA-AHD-CUSTM-000-APP-031-17-18 passed by
Commissioner (Appeals) Commissioner of Central Excise, Customs and Service Tax-
AHMEDABAD]
M/s Magnum Chocolatier .... Appellant
No. 3/1, Evk Sampath Road Tejashwi Complex, 2nd Floor Veperi,
Chennai, Tamil Nadu-600007.
VERSUS
C.C. Ahmedabad .... Respondent
Custom House, Near All India Radio Navrangpura, Ahmedabad, Gujarat APPEARANCE :
Sh. W. Christian, Advocate for the Appellant Sh. Sameer Chitkara (AR) for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) FINAL ORDER NO. A/__11830 /2019 DATE OF HEARING : 09.07.2019 DATE OF DECISION:27.09.2019 RAMESH NAIR The present appeal has been filed against Order-in-appeal No. AHD-CUSTM-000-APP-031-17-18 dt. 20.06.2017 passed by Commissioner (Appeals), Custom Ahmedabad. The facts of the case are that the Appellant are importers of Nata De Coco, Jelly, puddings and Yogo ice from Malaysia under brand name 'COCON' and has classified the same under Customs Tariff sub heading 17049090. They were availing benefit of exemption notification No. 46/2011 - Cus dt. 01.06.2011. They were issued show cause notice dt. 04.03.2015 alleging that the goods are classifiable under chapter sub heading 21069099 and the exemption has been wrongly claimed. A differential duty of Rs. 21,42,792/- was demanded from them alongwith interest and to impose penalty. The demands were set aside by upholding the classification by the Additional Commissioner of Customs. The revenue filed appeal against the said order before Commissioner (Appeals),
2|Page C/11667/2017-DB Custom, Ahmedabad who set aside the order and allowed the appeal filed by the revenue. Aggrieved the Appellant has filed the present appeal.
2. Shri Willingdon Christian, Ld. Counsel for Appellant submits that the ingredients of products are as under :
I. Ingredients of NATA DE COCO JELLY (118 G. Cup x 6 Packing).
Water, Sugar, Nata De Coco (19.80%), Seaweed Extract, Citric Acid (Acidity Regulator), Artificial Flavouring, Contains added Artificial flavouring substances (Apple/ Lychee) II. Ingredients of NATA DE COCO JELLY (80 G. Cup x 6 Packing).
Water, Sugar, Nata De Coco (17.25%), Fruit Juice Extract (5%), Milk Powder (1.15%), Seaweed Extract, Citric Acid (Acidity Regulator), Artificial Flavouring & Colouring, Permitted Synthetic Food Colour (E 102, E 124), Contains added Artificial flavouring substances (Pineapple/Lychee/Orange/Strawberry/Mango) III. Ingredients of NATA DE COCO JELLY (80 G. Cup x 3 Packing).
Water, Sugar, Nata De Coco (17.25%), Fruit Juice Extract (5%), Milk Powder (1.15%), Seaweed Extract, Citric Acid (Acidity Regulator), Artificial Flavouring & Colouring, Permitted Synthetic Food Colour (E 102, E 124), Contains added Artificial flavouring substances (Pineapple/Lychee/Orange/Strawberry/Mango) IV. Ingredients of NATA DE COCO KONNYAKU JELLY (15 G. Cup x 100 Packing) and 15 G. CUP X 20 Packing).
Water, Sugar, Nata De Coco (9.80%), Konnayaku Powder (0.39%), Seaweed Extract, Citric Acid (Acidity Regulator), Artificial Flavouring Contains added Artificial flavouring substance (Lychee).
2.1 He submits that heading 17.04 covers Sugar confectionary not containing Cocoa. Some items specified therein are Chewing gum, Jelly
3|Page C/11667/2017-DB Confectionary, Boiled Sweets, Toffees, Caramel and Similar Sweets. Consequentially the Jelly Puddings in question which are sweet meats prepared by confection will also be covered under heading 17.04. He also takes us through HSN Explanatory Note under chapter 17.04. he submits that as per Rule 3 of General Rules for interpretation of the First Schedule to the Customs Tariff Act, 1975, the heading which provides the most specific description shall be preferred. The 17049010 is more specific rather than 21.06 which is applicable to food preparation. That the contention of the revenue that supplementary note 5 to chapter 21 (miscellaneous edible preparations) specifically stipulates that the sub-heading 21.06 interalia includes "jelly and similar preparations whether or not sweetened" does not flow from the correct reading of said supplementary note. The said supplementary note includes powders for jellies and similar preparations. That the adjudicating authority in its order has relied upon the Malaysian Customs GST and they have indicated the product code H.S Code to be 1704.90 and Tariff code 17049099. The adjudicating authority has gone through the NIDB data and found that the disputed products are being cleared under CTH 17.04 and the findings has remained unchallenged. He takes us through the Bill of Entries of the same. He also relies upon Tribunal judgment in case of Indchemie Health Specialities Pvt. Ltd. Vs. CCE 2013 (295) ELT 699 (TRI) and Campco Chocolate Factory 2007 (220) ELT 290 (TRI). He submits that there is no reasoning has been given by the Appellate Authority as to why the goods would not fall under CTH 17.04 and thus the findings are fallacious.
3. Shri Sameer Chitkarra, Ld. Additional Commissioner (AR) appearing on behalf of the revenue reiterates the findings given in the impugned order.
4. Heard both the sides and perused the case records. We find that the Appellate authority has held that HSN Explanatory Notes of CTH 17.04 excludes "Sweetened Food Preparations such as vegetable, fruit, fruit peel. Etc preserved by sugar (heading 20.06) and jams, fruit jellies, etc. (heading20.07)". That the impugned goods contains various ingredients other than sugar such as Nata De coco having percentage from 9.80% to 17.25% alongwith fruit extracts with 5%. The explanatory notes indicate that sweetened food preparation preserved
4|Page C/11667/2017-DB by sugar and jams, fruit jellies are not covered under chapter 17.04 but under chapter 20.06 or 20.07 and further since the impugned goods are not sweetened preparations of vegetables, fruits preserved by sugar, therefore the same are excluded from the purview of the heading 20.06/ 20.07 and consequentially such goods are classifiable under the residual heading on 21.06 which covers food preparations not elsewhere specified.
5. We find that Chapter sub heading 1704 covers "Sugar Confectionary (including white Chocolate) not containing cocoa. Sub heading 1704 90 10 covers Jelly Confectionary. Against this the chapter 21 is for "Miscellaneous edible preparations". CTSH covers "Food preparations not elsewhere specified or included and 21069099 covers
- Others. Chapter 17 of the HSN excludes Sweetened food preparations of chapter 19,20,21 or 22. Its 1704 also excludes ( c) Sweetened food preparations such as vegetables, fruit, fruit peel, etc preserved by sugar (heading 20.06) and jams, fruit jellies, etc (20.07). The HSN chapter 21 excludes "Powders for table creams, jellies, ice creams or similar preparations, whether or not sweetened".
6. From the above we find that heading 1704 90 10 covers Jelly confectionary. What is being imported by the Appellant is Coco Jelly. It is not sweetened food preparation viz. Vegetables, fruit, fruit peel preserved by sugar and jams, peel etc so as to exclude the same from 1704. Therefore by taking recourse to such exclusion, it cannot be said that the impugned products would merit classification under chapter 2106. Under CTH 21.06 only those food preparation will be included which are "Not elsewhere specified or included". The Appellate authority has not given reason to exclude the goods from 1704 and straightway taken recourse to exclusion clause of HSN in 1704 which is not applicable as the goods nowhere fall under the excluded category. In case of Campco Chocolate factory 2007 (220) ELT 290 (TRI), the CESTAT in Para 5 held as under :
"5. We have gone through the records of the case carefully. After going through the information furnished with regard to the impugned product 'FUNDA' and also Glucose D, we find that both the product contain sucrose/sugar nearly 99%. We also find that the Board's Circular cited by the learned Advocate
5|Page C/11667/2017-DB classifies Glucose D under Chapter 17. Therefore, there is no reason as to why the impugned product, which is very similar to Glucose D, should be classified under Chapter 21. This point has not been examined by the lower authorities. Further, Chapter Heading 21.06 is a residuary heading. It should be resorted to if the impugned products cannot be classified elsewhere. Further, on going through Note 6 of Chapter 21, which gives the examples of the products included in 21.06, it is evident that the impugned product FUNDA cannot come within the category of Misthans, Mithai, Namkeens, Mixtures, Bhujia, Chabena, etc. In other words, by applying the Principle of ejusdem generis, we hold that the impugned product cannot come under Chapter heading 21.06. In the result, we allow the appeal with consequential relief."
7. Clearly the impugned goods cannot be classified under CTSH 2106 90 99 and would merit classification under CTSH 1704 90 90 only. We also find from the Bill of Entries filed by other importers that the Pudding and Jelly are being classified under CTSH 1704 90 90 and there is no objection from the revenue. Even the Food Safety and Standards Authority of India has classified the goods as Pudding or jelly as the case may be. Moreover in case of Indchemie Health Specialities Pvt. Ltd. 2013 (295) ELT 699 (TRI) the Tribunal held as under :
"3. We find that the issue involved in this case is regarding mis-classification of the final product i.e. Jelly Confectionary. The appellant was classifying the said product under Chapter Heading No. 1704 and subsequently they changed the classification as falling under Chapter 30 as an Ayurvedic medicine. The Show Cause Notice was issued which was adjudicated and the adjudicating authority confirmed the demand of differential duty by not agreeing with the application of the appellant as product falling under Chapter 30 and also demanding interest and imposed equal amount of penalty. On an appeal filed before first appellate authority, the first appellate authority upheld the said classification and sustained the order of demand of duty along with the interest and also imposed penalty.
5. After considering the submissions by the ld. SDR, we find that the issue involved in this case is of classification of the product from Chapter 17 to Chapter 30. Both the lower authorities have held that the said classification of the product is under Chapter 17 only and correctly demanded the duty and interest thereof. We do not find any merit in the appeal filed by the Revenue on this point and accordingly we uphold the classification confirmed by the lower authorities and uphold the demand of penalty and interest, which stand deposited during the proceedings."
8. Thus in view of above facts and judgments, we hold that the impugned goods would merit classification under Chapter sub heading
6|Page C/11667/2017-DB 17049090. Resultantly we set aside the impugned Order and allow the appeal with consequential relief to the Appellant.
(Pronounced in the open court on 27.09.2019) (Ramesh Nair) Member (Judicial) (Raju) Member (Technical) Neha