ORDER
C.N.B. Nair, Member (T)
1. The main issue raised in these appeals is the classification of two items manufactured by the appellant in their factory at Moga, Punjab. These items are “Nescafe 3-in-1” and “Nescafe Pre-mix”. The appellants claimed classification under subheading 21.08 of the Central Excise Tariff. The impugned order rejected that claim and confirmed classification under heading 2101.10. The present appeal challenges that order of classification. The heading in question read as under:
21.01 Extracts essences and concentrates, of coffee or tea, and preparations with a basis of these products or with a basis of coffee or tea; roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof
2101.10 Extracts, essences and concentrates, of coffee, and preparations with a basis of these extracts, essences or concentrates or with a basis of coffee.
21.08 Edible preparations. Not elsewhere specified or included
(emphasis supplied).
2. The impugned order in appeal has noted that heading 21.01 specifically covers coffee products while 21.08 is a residuary entry covering edible preparations. The Commissioner also has noted that 2101.10 specifically covers preparations with a basis of coffee extract and coffee extract is the ingredient, which gave the items their character, and commercial identity. Other ingredients like sucrose, partly skimmed milk powder, and maltodextrine being subsidiary items. The order also went the fact that both the products are used for preparing coffee. Regarding the appellants claim that the goods would be specifically covered as “preparations consisting of tea or coffee and milk powder, sugar and any other added ingredients mentioned as falling under chapter heading 21.08 in note 9(b)(g) of chapter 21 of the Central Excise tariff, the Commissioner has noted that that note related to preparations consisting of coffee, and not of coffee extract or essence as in the case of the present item.
3. The impugned order has further noted that in the appellant’s own case reported in 1994 (71) ELT 850 this Tribunal has held that the correct classification of a similar product, namely instant coffee chicory blend was under sub heading 2101.10 and that classification have been upheld by the Apex Court [reported in 1995 (76) ELT 1233 (SC)].
4. The contention raised by the appellant before us are the ones taken before the Commissioner (Appeals). It was canvassed that the sub heading 21.08 cannot be treated as a mere residuary heading since note 9(b)(g) specifically mentioned preparations consisting of tea, coffee or milk powder, sugar and any other ingredients as covered under the heading. The learned Counsel also pointed out that according to rules of interpretation of the tariff, headings have to be decided taking into account section and chapter notes and when heading 21.08 is read along with the aforesaid note, it would be clear that the items in question specifically fall under that heading.
5. The appeal also has raised the submission that even if the classification approved by the Revenue is accepted, the correct duty amount should be determined after allowing Modvat credit and marking correct duty calculation on cum-duty basis or based on the provisions under Section 4A. It was also submitted that penalty, interest etc were justified since dispute is one merely relating to classification and no contumacious, conduct is involved.
6. The SDR has pointed out that the present appeal on classification has no merit at all since the classification order of the lower authorities is in conformity with the ratio of the earlier decision of the Tribunal in the appellant’s own case and that decision had been confirmed by the Apex Court. The learned SDR also emphasized that there could be no dispute that the items in question are coffee preparation made from coffee extract and these are specifically covered by sub-heading 2101.10. She also pointed out that note 9(b)(g) under chapter 21 did not change the residuary character of heading 21.08. The learned DR has also referred to the decision of this Tribunal in the case of Asia Tea Enterprises v. CCE, Coimbatore 2001 ELT 366 : 2001 (97) ECR 531 (T) wherein the Tribunal held that the classification of instant tea would be under heading 2101.20..
7. We have perused the records and considered the submissions made by both sides. There could be hardly any doubt about the commercial identity of the goods in question. They are coffee. The method of manufacture also makes it clear. The appellant brings the coffee extract from another factory of theirs at Nanjancad and manufacturers these items by adding other items to the coffee extract. The other items like milk, sucrose, partly skimmed milk powder, soluble maltodextrine are subsidiary. The scheme of chapter 21 is to specifically cover preparations of coffee extract under heading 21.01 and edible preparations not elsewhere specified or included under heading 21.08. The heading 21.08 does not cease to be a residuary heading merely because a chapter note mentions some of the items covered by that residuary heading. The heading itself states “not elsewhere specifies or included. It is well settled that a product is to be classified under a residuary heading only if it is exhaustively shown that no specific entry would cover it. In its Judgment in the case of Indian Metals and Ferro Alloys Ltd. v. Collector of Central Excise wherein the HonTDle Supreme Court held as under:
16. One more aspect of the issue should be adverted to before we conclude. The assessee is relying upon a specific entry in the tariff Schedule while the department seeks to bring the goods to charge under the residuary item No. 68. It is a settled principal that unless the department can establish that the goods in question can, by no conceivable process of reasoning, be bought under any of the specific items mentioned in the tariff, resort cannot be had to the residuary item: see the Bharat Forge case (Supra)….
In the present case the specific entry exist as preparations consisting of coffee extract under 2101.10. The classification ordered by the lower revenue authorities is in conformity with the tariff scheme. The order is also based on this Tribunal’s earlier order of classification of a similar product chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof. That order has become final, upon the Apex Court dismissing the assessee’s appeal. In these circumstances, we find no merit in the appellant’s submission on classification. They are rejected and the classification ordered by the lower authorities is confirmed.
8. There is however merit in the other submissions of the appellant. The item should be correctly valued treating the price as cum-duty for the period to their being specified under Section 4A and thereafter under Section 4A of the Central Excise Act. Similarly, adjustment towards credit on inputs should also be allowed. The duty demand should, thus, be recomputed and the amount intimated to the appellants so that they can make payment of the correct amount of duty. The present is a dispute in the open. That too a purely legal one. There is no case for penalty or interest claim in such a case. Therefore they are set aside.
9. The appeal is disposed of in the above terms.
[Order Pronounced on 24.5.2004].