JUDGMENT:

KAPADIA, J.

Civil Appeal Nos. 8595-8596/2001:

These civil appeals are filed by the assessee under section 35L of the Central Excise Act, 1944 against decision dated 10.9.2001 passed by CEGAT. The short question which arises for determination is the classification of roasted peanuts and moongfali masala mazedar under the Schedule to the Central Excise Tariff Act and consequential demand for duty of excise. The Appellant-assessee manufactures namkeens like aloo bhujia, chholey masala, roasted peanuts and moongfali masala mazedar. Appellant claims that all the four items fall under Heading 21.08 as Namkeen. The Appellant claims that accordingly all the four items are exempted vide Notification No. 4/97-C.E. dated 1.3.1997. In that declaration/classification with effect from 1.3.1997, they declared all the above items as namkeens. They relied upon Heading 21.08 which refers to namkeens such as bhujia and chabena. The Appellant started production of two out of four items abovementioned, namely, roasted peanuts and moongfali masala mazedar only in July and September, 1997 respectively. Prior to the above dates, they were in the business of manufacturing chholey masala and aloo bhujia. At this stage, we may clarify that the Department has accepted the claim of the appellant that chholey masala and aloo bhujia fell under Heading namkeen under 21.08. The appellant has been given exemption benefit accordingly. Therefore, in the present civil appeals there is no dispute regarding chholey masala and aloo bhujia. It is the case of the Department that roasted peanuts and moongfali masala mazedar are the two items which do not fall under Heading 21.08. It is the case of the Department that Chapter 21 deals with Miscellaneous Edible Preparations. It is the case of the Department that chholey masala and aloo bhujia fall under Chapter 21, but not roasted peanuts and moongfali masala mazedar. According to the Department,

roasted peanuts and moongfali masala mazedar are the two items which will fall under Heading 20.01 in Chapter 20. According to the Department, Chapter 20.01 deals with Preparations of Vegetables, Fruit, Nuts and Other Edible Parts of Plants. According to the Department, in the case of roasted peanuts, the character of a nut remains intact. According to the Department, in the present case, the assessee applies salt on the peanuts, thereafter, the assessee roasts peanuts which are then put in a container. Therefore, according to the Department, in the process of roasting the character of a nut remains intact. According to the Department, a roasted peanut is a preparation from the peanut. Accordingly, the Department sought to classify roasted peanuts under Heading No. 20.01.As regards moongfali masala mazedar, the same test is sought to be applied by the Department saying that an essential character of moongfali is not lost even when it is salted and fried, therefore, according to the Department, roasted peanuts and moongfali masala mazedar are the items classifiable under Heading 20.01.Having gone through the records and having examined the process undertaken by the assessee, we are in agreement with the view expressed by the Tribunal ("CEGAT") regarding classification of roasted peanuts under Heading 20.01. The Tribunal had adopted a correct test when it says that the essential structure of the peanut is not changed by the process of roasting. The assessee merely applies salt to roasted peanuts which does not obliterate the essential character. Moreover, roasting is a process. That process has not been excluded in Note 1 to Chapter 20. Therefore, roasted peanuts are covered by Chapter 20. Even according to the Explanatory notes of HSN under Heading 20.08 ground-nuts, almonds, peanuts etc. which are dry-roasted, fat-roasted whether or not containing vegetable oil are the items which all would stand covered by the said Heading 20.08. According to the appellant-assessee, roasted peanuts would fall under Chapter 21 Miscellaneo