2014(02)LCX0029

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri Pradip Kumar Das, Member (J) and Mathew John, Member (T)

Wrigley India Pvt. Ltd.

Versus

Commr. Of cus. (Seaport-import), Chennai

Misc. Order No. 40299/2014, dated 27-1-2014 in Application No. CIS/40915/2013 in Appeal No. C/41336/2013

Advocated By -

Shri R. Parthasarathy, Consultant, for the Appellant. Ms. Indira Sisupal, AC (AR),for the Respondent.

[Order per : Mathew John, Member (T)]. -

The applicant is a manufacturer of Chewing Gum. They have been importing a substance declared by them in Bills of Entry as "Sweet Pearl P. 200" and classifying it under Heading 2905 49 20 and paying customs duties as applicable, till March, 2011. In March, 2011, Revenue got a doubt that the goods were classifiable under Heading 2106 90 60 as "Food Flavouring Material" and assessed the consignments provisionally, after execution of bond. The samples of goods were sent for analysis to Central Food Research Laboratory (CFRL), Mysore and also to Export Inspection Agency (EIA). The report of the CFRL, Mysore reported that the substance was 'Maltitol' with purity of 99% as ascertained using NMR Spectroscopy. The report also stated that it is a food additive. The Export Inspection Agency did not identify the chemical substance but gave opinion as under :-
"The sample of Sweet Pearl 200 that comes under proprietary item is fit for use. However label declaration may be examined at your end."


2. Based on such test report, Revenue finalized provisional assessments classifying the product under Heading 2106 90 60. Further duty on goods cleared during the past from Sept.'07 was also demanded. On adjudication, there is a demand of Rs. 2,42,73,902/- confirmed against the applicant along with interest and penalty apart from redemption fine on provisionally released goods.


3. Aggrieved by the order, the applicant has filed this appeal along with application for waiver of pre-deposit for admission of appeal.


4. The learned Counsel for the applicant submits that as may be seen from the test report of CFRL, Mysore, the product in question was "Polyol" of 99% purity. He produced a write up from Wikipedia showing its production, use and properties. He submits that this item is used as sweetening agent in Chewing Gums. He points out that sweetening agents like Saccharine, Sorbitol and Glycol are specifically included in Chapter 29. He submits that various Tolyols' like 'Mannitol' and 'Glycerol' are specifically mentioned in Heading 29.05 and hence the present item which is similar to Mannitol also will be classifiable under the same heading. He produced extracts from Wikipedia reading as under :
"Maltitol is a sugar alcohol (a polyol) used as a sugar substitute. It has '75-90% of the sweetness of sucrose (table sugar) and nearly identical properties, except for browning. It is used to replace table sugar because it is half as caloric, does not promote tooth decay, and has a somewhat lesser effect on blood glucose. In chemical terms, maltitol is known as 4-O-a-glucopyranosyl-D-sorbitol. It is used in commercial products under trade names such as Lesys, Maltisweet and Sweet Pearl."


5. He submits that only food preparations containing more than one product will come under Chapter 21 and not separately defined chemical compounds. He relies on Chapter Note 1(a) of Chapter 29. Therefore, he submits that there is no merit in the case made out by Revenue and this appeal may be admitted without pre-deposit.


6. Opposing the prayer, the learned Authorized Representative for Revenue submits that the invoices produced by the applicants at the time of import did not indicate any classification. This gave rise to suspicion. Therefore, the goods were sent for test and test showed them to be 'food additives' and this is used as a binder in Chewing Gum. Therefore, she argues that as per Chapter Heading 2106 Note 9, the goods in question should be covered as 'edible preparations'. Further she points out subsequent to this adjudication the appellant are declaring the goods as "artificial sweetener".


7. We have considered the submissions of both sides. From the test report from CFRL, we find that the product in question is a separately defined chemical compound and based on the Chapter Notes under Chapter 29, prima facie, there is no scope for taking it out of Chapter 29 and classifying it under Chapter 21 especially because Heading 2106 is for "Food Preparations". A food additive per se need not be a food preparation. The test report shows it to be chemical compound of 99% purity and not a preparation made of many elements. Therefore, we grant waiver of pre-deposit for admission of appeal and further there shall be stay on collection of such dues during the pendency of the appeal.
(Dictated and pronounced in open Court)

Equivalent 2014 (304) ELT 0098 (Tri. - Chennai)