General Mills India Ltd. Versus Commissioner of Customs (Import), Nhava Sheva>2011(02)LCX0133

2011(02)LCX0133

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri P.G. Chacko, Member (J) and Sahab Singh, Member (T)

General Mills India Ltd.

Versus

Commissioner of Customs (Import), Nhava Sheva

Final Order No. A/81/2011-WZB/C-I/(CSTB), dated 17-2-2011 in Appeal No. C/894/2006

Advocated By -

Shri V. Sridharan along with T. Viswanathan, Advocates, for the Appellant.
Shri S.S. Katiyar, SDR, for the Respondent.

[Order per : P.G. Chacko, Member (J)]. -

A classification dispute is involved in this case. The commodity under classification is what was declared "GRAN BAR OATS" in the relevant Bill of Entry dated 8-12-2005. Different varieties of the product were described as 'GRAN BAR ALMOND, GRAN BAR BANANA, etc. depending on the flavouring ingredient used in the product. All these were classified under SH 1905 90 90 by the appellant (importer), but the Revenue wanted to classify the items under SH 1905 31 00 of the First Schedule to the Customs Tariff Act. This dispute resulted in an order of the Assistant Commissioner of Customs (Imports) classifying the goods under SH 1905 31 00 and holding the same chargeable to duties of customs accordingly. The adjudicating authority was of the view that the goods imported by the appellant could be appropriately considered as "Sweet Biscuits", defined under HSN Explanatory Notes to Heading 1905. Accordingly, it decided the classification of the item. In an appeal filed by the assessee, the Commissioner (Appeals) adopted verbatim the findings of the lower authority. In the result, the goods imported by the appellant stand classified in the manner required by the Revenue. The present appeal is directed against the appellate Commissioner's order.

2. After hearing both sides, we find that both are relying on the HSN Notes. According to these notes 'sweet biscuits' should conform to the following specifications.

"Sweet Biscuits, which are fine bakers waves with long-keeping qualities and a base of flour, sugar or other sweetening matter and fat (these ingredients constituting at least 50% of the product by weight), whether or not containing added salt, almonds, hazelnuts, flavouring, chocolate, coffee, etc. The water content of the finished product must be 12% or less by weight and the maximum fat content 35% by weight (filling and coatings are not to be taken into consideration in determining these contents). Commercial biscuits are not usually filled, but they may sometimes contain a solid or other filling (sugar, vegetable fat, chocolate, etc.). They are almost always industrially manufactured products."

3. The learned counsel has submitted that, for the goods in question to be classified as 'sweet biscuits', it should have been manufactured with a base of flour, sugar or other sweetening matter and fat, and these ingredients should constitute at least 50% of the product by weight. It is submitted that the goods in question, though a packed product, is not based on flour of the cereal (oats) and that it is based on whole grain oats rolled, with other ingredients like sugar, fat, etc. added, and ultimately cast in the form of bars in the process of baking. The learned counsel submits that this aspect was not considered by the lower authorities. He has also referred to the expression "fine" used to qualify "bakers' wares" in the above Explanatory Notes to HSN heading 1905. It is submitted that the bars with a base of whole grain oats cannot be said to be "fine" bakers' wares, Flour of oats should have been used to make the product "fine bakers' ware". In this connection, he has also invited our attention to the literal meaning of the word "flour" in the Chambers Dictionary, which gives the following meanings :

(a) the finely-ground meal of wheat, or any other grain;
(b) the fine soft powder of any substance.

The counsel has also submitted that the appellant has not presented the goods to be 'biscuits' in the Indian market inasmuch as, had they done so, they would have invited penal action under the Prevention of Food Adulteration Act, 1954. It is submitted, that as per the relevant entry under the Prevention of Food Adulteration Rules, 1955, biscuits shall be made from maida, vanaspati or refined edible oil or table butter or deshi butter or margarine or ghee or their mixture. As none of the said ingredients formed the base of the imported commodity, it did not qualify to be 'biscuits' for the purpose of PFA Rules. In his endeavour to establish that the imported item cannot be called 'biscuits', the counsel has also referred to the chapter captioned "FLOUR AND BAKED GOODS" in the Book, "Food Industries Manual" (21st Edition) published with the authority of British Food Manufacturing Industries Research Association (BFMIRA). This book, inter alia, states that the individual characteristics of various biscuits arose according to the type of flour used, the proportion of sugar and fat used, the condition of those ingredients when added to the mix, e.g. crystal size, method of mixing, e.g. batch, continuous, creaming, all-in, the treatment of the dough and the method of baking. The chapter further says that most types of sweet biscuits call for a low protein flour with an extensible gluten. It also says that, in the UK, these flours are obtained almost entirely from British wheats. Therefore, according to the gleamed counsel, the item imported by the appellant is not 'biscuits', let alone 'sweet biscuits' be classified under SH 1905 31 00.

4. The learned SDR, apart from reiterating the findings of the original authority, submits that the burden was on the assessee to establish that flour of oats rather than full grains thereof, was used as base for the product. His apprehension is that, during the course of processing of oats, at least a part of the grains might have been converted into fine powder (flour) and, therefore, it cannot be correct for the appellant to say that the product is absolutely free from flour of oats. In other words, according to the learned SDR, the appellant cannot be said to have established their claim for classification of the commodity under SH 1905 90 90.

5. After considering the submissions, we are unable to accept the objections now raised by the learned SDR. Classification of goods is essentially a departmental function. The original authority could have discharged this function after obtaining the necessary information, data or literature on the product from the importer, if necessary, especially when that authority was confronted with the aforesaid HSN Explanatory Note. It is not in dispute that the HSN Note has to be relied on in this case. According to the explanation of the term 'sweet biscuits' given in the above Note, sweet biscuits are fine bakers', wares with long-keeping qualities and base of flour, sugar and other sweetening matter and fat, and these ingredients should constitute at least 50% of the product by weight. The appellant has admitted that i the oats alone contained in the imported commodity is 53%. However, this by itself would not make the item 'sweet biscuits'. For the item to be considered as 'sweet biscuits', it should be found to be fine bakers' ware with a base of flour, sugar or other sweetening matter and fat. The appellant has consistently claimed that the item is based on whole grain oats, sugar and other ingredients. The product label shown to us also indicates the ingredients in the same manner. We have also examined the sample produced by the counsel. Whole grain oats are physically visible on these samples. Apparently, this item was not manufactured with a base of flour of oats. It appears to have been manufactured with a base of whole grain oats plus other ingredients. Therefore, the goods under classification cannot be considered as "fine" bakers' ware. In other words, it is not 'sweet biscuits'. The literature produced by the counsel today also indicates that biscuits are manufactured by using flour rather than whole grain cereals. Thus, the appellant has been able to establish a good case for classification of the item under SH 1905 90 90, the ultimate residuary entry under Heading 1905. The sub-heading canvassed by the Revenue (1905 31 00) is dedicated to 'sweet biscuits'. We have already held that the commodity in question is not 'sweet biscuits' and hence the classification proposed by the Revenue is ruled out. No other sub-heading between the above two has been proposed. In the result, the classification of the goods under SH 1905 90 90 stands upheld. The reliance placed by the counsel on a provision of the PFA Rules has also been examined, but we are not impressed with the same. This is because the learned counsel has not been able to give us a cogent answer to our query as to whether the appellant would have projected the product in the Indian market as 'sweet biscuits' without inviting any penal action under the PFA Rules, had oats flour been used as a base in the bakers' ware. Further, as HSN Explanatory Notes themselves have played a decisive role in the present classification dispute, it is not necessary to press into service anything contained in the PFA or the Rules made thereunder.

6. The impugned order is set aside and this appeal is allowed with consequential relief to the appellant.

(Dictated in Court)

Equivalent 2011 (268) ELT 0390 (Tri. - Mumbai)