By TIOL News Service

MUMBAI, NOV 09, 2016: THE issue involved is classification of "Kulfi" manufactured by the appellant.

Appellant's case is that the said product falls under Chapter Heading 0404.00 while the case of the Revenue is that the said product merits classification under Chapter Heading No. 2105.00 of CETA, 1985 during the period 2003-04.

Both the lower authorities held that "Kulfi" merits classification under C.H. 2105 as "Ice Cream" and hence not eligible for small scale exemption.

It is the case of the appellant that "Kulfi" is nothing but a product of milk which is heated till it reduces to a volume of 50%; flavor and sugar and various other ingredients are added to it and the same is frozen. It is also the submission that once the classification of the product "Kulfi" falls under 0404.00, the rate of duty is "NIL", hence there would be no need for claiming SSI exemption.

The department contends that "Kulfi" is classifiable as "Ice Cream" as ice cream is also product of milk and covered under Prevention of Food Adulteration Rules and Act; ice cream is obtained from cow/buffalo milk and combination thereof with or without addition of other various ingredients sugar, crushed almonds, pistachio etc.

The Bench noted that the Tribunal was considering similar issue in the case of Nestle (I) Ltd. [Final Order No.- 84/2001-D In Appeal No.- E/2682/94-D dated March 21, 2001] wherein the Tribunal was considering the classification of Nestle Milkmaid Kesar Kulfi Mix, whether falls under Chapter Heading 0404 or Chapter sub-heading 2108.90 and after considering the entire gamut and also the ingredients in the product Nestle Milkmaid Kesar Kulfi mix; after considering the Explanatory Note to HSN held that Nestle Milkmaid KesarKulfi would fall under Ch. 04.04.

It was, therefore, observed –

"In our considered view, if the Kulfi mix which is a dry powder merits classification under CTH 0404, then "Kulfi" manufactured by appellant which is ready to consume would definitely merit classification under 0404."

Holding that the classification of the product "Kulfi" manufactured by appellant is under Chapter Heading 0404, the impugned order was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-2910-CESTAT-MUM)