ORDER
P.S. Bajaj, Member (J)
1. This appeal has been preferred by the Revenue against the impugned Order-in-Appeal dated 24-7-2001 passed by the Commissioner (Appeals) vide which he had affirmed the Order-in-Original dated 27-10-99 of the A.C. regarding the classification of the
products in question, as detailed in the order itself.
2. The facts are not much in dispute. The respondents are engaged in the manufacture of edible preparations not elsewhere specified or included, with brand names as (1) Monginis namkeen snack foods, (2) Peppy namkeen snack foods, (3) Rompa chompa golmol namkeen, (4) Hello namkeen snack foods and (5) Piknik fried namkeen snack foods.
3. The issue in the present appeal relates to the classification of these products. According to the Revenue, these products are classifiable under Heading 19.04, while the plea taken up by the respondents is that these are classifiable only under Heading 2108.99. The Assistant Commissioner accepted the classification as propounded by the respondents, through the Order-in-Original dated 27-10-99 and his said order had been confirmed by the Commissioner (Appeals) through the impugned order.
4. The Revenue has come up in appeal for questioning the validity of the order of the Commissioner (Appeals) and for seeking classification of the above referred products under Heading 19.04.
5. Heading 19.04 of the Central Excise Tariff reads as follows :-
“Prepared foods obtained by the selling or roasting of cereals or cereal products (for example, corn flakes); cereals [other than maize (corn)], in grain form or in the form of flakes or other worked grains (except flour and meal), precooked, or otherwise prepared, not elsewhere specified or included.”
The heading, as is evident from its bare perusal, consists of two parts. The basic requirements for the application of the first part, are that the products must be (i) prepared foods, (ii) such food must be obtained by swelling or roasting and (iii) it should be obtained by swelling or roasting of cereals or cereal product.
6. The second part of this heading 19.04, specifies exclusion. It excludes the products prepared from corn, flour and meal.
7. The contention raised by the learned SDR is that the products in question fall within the ambit of Heading 19.04. But if we examine the ingredients of these products which had been disclosed by the respondents on the packing, they do not satisfy the requirements of either of the two parts of this Heading 19.04 of the CETA.
8. The first product Monginis Namkeen Snack foods, is of two types. One is known as Monginis krooma kroom namkeen and the other as Potato shell namkeen. The ingredients of the first product as displayed on the container by the respondents, are rice meal, gram meal, corn meal, potato powder, edible oil, salt, spices and condiments with added flour. While the ingredients of the second product, are potato granules, corn grits, vegetable oil, spices, salt and sugar. Obviously, in both of these products, the ingredients are not confined to cereals or cereal products. They contain pulses meal and vegetable powder apart from oils, etc. Secondly, they are not obtained by swelling or roasting. The ingredients of both these products are subjected to dehydration only by air heating to remove extra moisture, and no further heating is done in an oven or by open fire, for the purpose of roasting, as is evident from the record. These products cannot be said to had been obtained by swelling or roasting. Moreover, there is nothing on the record to suggest if these are known in the market as roasted products like corn flakes. Rather
they are sold in the market as Namkeen snacks ready to eat. Therefore, apparently, they do not satisfy the requirement of Heading 19.04 of the CETA.
9. Similarly, second product Peppy Namkeen Snack Foods consists of two types. One is known as Peppy Trio and the other as Peppy cheese balls namkeen. The product Peppy Trio is prepared from corn grits, corn flour, starch, salt, vegetable oil and added flours, while Peppy cheese ball namkeen contains corn, grit, refined vegetable oil, cheese flour and anti-oxidants, and is prepared by the same process which is used in preparation of product Monginis. Moreover, both the products Peppy cheese balls and peppy namkeen are not obtained by swelling or roasting. Therefore, they do not fall within the ambit of Heading 19.04 of the CETA.
10. The ingredients of third product Rompa chompa tomato gol mol namkeen, as brought on record, by the respondents, are corn grits, refined vegetable oil, tomato, flour, salt and spices. The product also contains added flavours. This product is not also obtained by swelling or roasting and as such, falls apparently out of Heading No. 19.04.
11. The process of preparation of fourth product Hello Namkeen snack food as detailed by the respondents and not disputed by the department, is similar to that of product No. 1 i.e. Monginis and is close to Cheese ball namkeen product, it is also not obtained by swelling or roasting and as such, does not fall under Heading 19.04 of the CETA.
12. The fifth product Piknik fried namkeen snack foods, is prepared from flours of rice/wheat and potato, refined vegetable oil, salt, added flours and anti-oxidants as detailed by the respondents and not disputed by the department. This product cannot be brought under Heading 19.04 of the CETA for two reasons. Firstly, it contains potato flour also apart from refined vegetable oil, etc. and is not made from cereal or cereal products alone. Secondly, it is a fried product and is not obtained by selling or roasting. Moreover for bringing the product under this heading, the product must have been obtained by swelling or roasting and that too of cereal or cereal products exclusively. Explanatory Notes to Heading 19.04 of HSN also corroborates this position. No doubt, these notes permit addition of salt, sugar, molasses, malt extracts, fruit or cocoa, but do not cover prepared foods obtained by swelling or roasting of products other than cereals or cereal products and further also do not admit any food obtained by processes other than swelling or roasting under this heading. This very view had been taken by the Tribunal also in TTK Pharma Ltd. v. CCE – 1993 (63) E.L.T. 446 and CCE, Coimbatore v. Nektar Food Products – 1996 (88) E.L.T. 421. In the latter decision, it has been made quite clear that where several processes are involved and the prepared food is not obtained by swelling or roasting only, it goes out of Heading 19.04 of the CETA and would be covered by Heading 2107.91 (corresponding to Heading 2108.09 of the present tariff). This very view has been followed by both the authorities below i.e. Assistant Commissioner as well as Commissioner (Appeals) for not classifying any of the products in dispute under heading 19.04 of the CETA. The department has placed much reliance on the Board’s Circular No. 4/91-CX.1, dated 20-2-1991 but the same pertains to the classification of product ‘Cheetos’ which is obtained by swelling or roasting, of the corn paste, as is evident from Paras 2 & 3 of the circular. The Board, for that reason, directed the classification of this product under Heading 19.04 of
the CETA. But this circular is of no avail to the department in the present case, as none of the products in question satisfy the ingredients of any of the two parts of this heading, referred to above.
13. Coming to Heading 21.08 under which the products in dispute had been classified by both the authorities below, it is an omnibus heading covering all kinds of edible preparations, not elsewhere specified or included. Note 9 to Chapter 21 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. The products mentioned in Note 9 are illustrative only and do not restrict the scope of this heading. The products in dispute of the respondents squarely fall under Heading 2108.99. The general exemption under this heading extends exemption from duty to sweet meats, namkeen, Bhujia, Mixture, Chabena and similar edible preparations ready for consumption form and Papad.
14. Note 10 to this Chapter 21 specifically provides that subheading Nos. 2108.91 and 2108.99 include products commonly known as Namkeen mixtures, Bhujia, Chabena or by any other name and such products will remain classified in these sub-headings irrespective of the nature of their ingredients. This Chapter Note 10 was added on 1-4-98. But even earlier to that, the scope of Heading 2108 was the same and included namkeens within its ambit.
15. It remains undisputed that during the period of 1992 to 1994, the respondents submitted eleven classification lists, in respect of all the products in question, and all those were accepted after due verification. No objection was ever raised by the department that the declaration made in those classification lists were factually incorrect. In those classification lists, the classification claimed by the respondents was under Headings 2107.91 & 21C7.99, (corresponding to Heading 2108.99). The department approved those classification lists without any objection. It also remains undisputed that the respondents even paid central excise duty on all the disputed products during the period 2-6-98 to 16-7-98 under Chapter Heading 210S.99, when the duty was levied in the Budget vide Notification No. 5/98-C.E., dated 2-6-98 at the rate of 8% adv. They also filed classification declaration with effect from 1-6-98 which was valid up to 16-7-98. Thereafter, when all the goods under this sub-heading were exempted from duty vide Notification No. 17/98, dated 17-7-98, the respondents again filed fresh declaration effective from 17-7-98. The description of the products in the classification lists filed during the years 92 to 94 and in the classification declarations filed w.e.f. 1-6-98 and 17-7-98 respectively, remained the same i.e. Namkeen ready to eat snack foods. When there had been no change in the description and ingredients of the products of the respondents, the classification of which the department for several years accepted and approved under Heading 2108 (sub-headings 2108.91 and 2108.99), no sufficient cause has been shown as to why now the department wants to seek classification of those very products under Heading 19.04 of the CETA. Moreover, the products in question had been tested by the Deputy Chief Chemist, Central Excise Laboratory, Mumbai, who reported the same as Namkeen and ready to eat snack food. Therefore, the plea of the department for classification of the products under Heading 19.04 has been rightly not accepted by the authorities below, being
without any basis and erroneous.
16. Both the authorities below had recorded detailed reasons for not
allowing change in the classification of the products in question from Head
ings 2108 to 19.04 of the CETA. They have discussed in details the scope of
both these headings and the material facts and circumstances including the
process of manufacture, ingredients of the products brought on record and
the ratio of law laid down in TTK Pharma Ltd. v. CCE, and CCE, Coimbatore v.
Nektar Food Products (Supra) by the Tribunal and thereafter recorded the con
current findings that the products in question merit classification only under
Heading 2108 of the CET. Keeping in view the facts, circumstances and the
discussions made above, we also do not find sufficient grounds to differ with
their findings, in any manner.
17. In view of the discussions made above, the impugned order of the Commissioner (Appeals) is upheld and the appeal of the Revenue is ordered to be dismissed being without merits.