S.K. Enterprises Versus COMMR. OF CUS. (MULUND CFS & GENERAL), MUMBAI>2014(09)LCX0270

2014(09)LCX0270

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. II]

S/Shri P.R. Chandrasekharan, Member (T) and Ramesh Nair, Member (J)

S.K. Enterprises

Versus

COMMR. OF CUS. (MULUND CFS & GENERAL), MUMBAI

Stay Order No. S/1028-1030/2014-WZB/C-KCSTB), dated 16-9-2014 in Application Nos. C/Stay/99151'-9915872013-Mum & 92505/2014-Mum in Appeal Nos. C/89394-89395/2013-Mum & C/85233/2014-Mum

Advocated By -

Shri T. Vishwanathan, Advocate, for the Appellant.
Shri Ahibaran, Addl. Comm. (AR), for the Respondent

[Order per : P.R. Chandrasekharan, Member (T)]. -

The appeals and stay petitions are directed against Order-in-Original CAO NO. 114/2013/CAC/CC (G)/PKA-CFS(M)(I), dated 31-8-2013 passed by the Commissioner of Customs (General & CFS, Mulund), Mumbai. Vide the impugned order, the adjudicating authority has confirmed a Customs Duty demand of Rs. 1,24,53,904/- along with interest thereon on the appellant, M/s. Abbott Healthcare Pvt. Ltd. by classifying the products called "Mama's Best India Chocolate" under CTH 2106 90 99 as against the appellant's claim of classification under CTH 1901 90 90. He has also imposed an equivalent amount of penalty under Section 114A apart from a penalty of Rs. 50 lakhs under Section 14AA. A penalty of Rs. 15 lakhs has been imposed on M/s. S.K. Enterprises, the CHA under the provisions of Section 112(b) and Section 114AA of the Customs Act, 1962. Ag-grieved of the same, the appellants are before us.

2. The learned Counsel for the appellants submits that the products consists of skim milk powder (64.7%), Lactose (15.2%), Sucrose (12%), Coco powder (2.5%), oligofructose (FOS)(2.2%), minerals and vitamins. The product is described as a nutritional powder for balanced nutrition during pregnancy and lactation. The learned Counsel submits that since the bulk of the ingredients, almost 2/3rd, consists of skim milk powder, the product merits classification under CTH 1901 90 90 as food preparation of goods Heading 0401 to 0404, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included. The learned Counsel further points out that for the product fall under Chapter 21, especially under 2106, the food preparations should not have been to be specified or included elsewhere. In the present case, it is his contention that the food preparation based on milk or milk powder are specifically covered by CTH 1901 and therefore, the question of classification under CTH 2106 as held by the department is clearly unsustainable. He further submits that the product is Singapore origin and therefore, even if the product is held to be falling under CTH 2106, the appellant would have been eligible for benefit of Notification No. 75/2005-Cus., dated 22-7-2005 in respect of Basic Customs Duty which provides for a concessional basic Customs duty of 50% of the normal duty specified. Further, since the product is consumed by mixing with milk, the product is entitled for the benefit of Excise duty Notification No. 2/2011-C.E., dated 1-3-2011 which provides for a concessional duty of 5% ad valorem. If these benefits are extended, even if the classification is held under CTH 2106, the appellant is not liable to pay any duty in excess of what they have discharged and in fact the appellant would be eligible for a refund of Rs. 32,59,595/-. He also submits the extended period of time has been invoked in the present case and the invocation of extended time is clearly unwarranted as the goods have passed through the Customs. Further all the ingredients of the food preparations were clearly declared on the packages containing the preparation and therefore, there cannot be any misdeclaration on the part of the appellant. Accordingly, he pleads for granting of stay.

3. The learned AR appearing for the Revenue, on the other hand, reiterates the findings of the adjudicating authority. He submits that the consignments have been cleared under RMS and therefore, the goods were not subjected to any examination. It is his contention that the appellant has misdeclared the product as falling under CTH 1901 whereas the correct classification should have been under CTH 2106. Accordingly, he pleads that the appellant should be put to terms.

4. We have carefully considered the submissions made by both the sides.

4.1 We notice that as per the constitution of the impugned goods, 2/3rd of the product consists skim milk powder. Therefore, prima facie, there is merit in the contention of the appellant that it is a food preparation based on the Headings of 0401 to 0404 the cocoa contents being less than 5% by weight. Thus, it appears that CTH 1901 is more specific to the goods under importation compared to CTH 2106 which is a residuary entry for food preparations not elsewhere specified or included. We further notice even if the product is held to be falling under CTH 2106, the appellant would be eligible for the benefit of Notification No. 75/2005-Cus. and 2/2011-C.E., since the product is of Singapore origin and is a food mix. Therefore, the benefit of these notifications would be available. If the benefit is extended, then it can be seen that the appellants have discharged excess duty liability than what is due. In these circumstances, the appellant has made out a strong case for waiver of pre-deposit. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. Since the order against the main appellant itself has been stayed, the same would apply in respect of the co-appellant, M/s. S.K. Enterprises, the CHA and the pre-deposit is waived in respect of CHA also.

(Dictated in Court)

Equivalent 2015 (326) ELT 0371 (Tri. - Mumbai)