Per P. S. Bajaj :

The above captioned appeals have been directed against the common Order-in-Appeal dated 28.9.2001 of the Commissioner (Appeals) vide which he has affirmed the Order-in-Original of the Deputy Commissioner of Central Excise dated 5.3.2001 who confirmed the duty demand and imposed penalty as detailed therein, for the period November 99 to March 2000, on the appellants.

2. The appellants are engaged in the manufacture of various items viz. Potato chips, masala balls, cheetos wheels and lehar kurkure. The dispute relates to classification of the items namely cheetos wheels and lehar kurkure. The appellants filed declaration wherein they declared these items classifiable under Heading 2108 of the CETA as namkeen and claimed exemption under Notification 5/99 from payment of duty. But the Revenue did not accept that classification and issued show cause notice to the appellants alleging that these items were classifiable under Sub-heading 1904.10 of the CETA attracting duty @16% adv. In that show cause notice, the duty demand for the period November 1999 to March 2000 was raised and penalty was also proposed to be imposed. The Deputy Commissioner through Order-in-Original did not accept the classification suggested by the appellants and held that the items in question were classifiable under Sub-heading 1904.10 and confirmed the duty demand along with penalty as detailed in his Order-in-Original. The Commissioner (appeals) has affirmed that order through the impugned order.

3. We have heard both the sides.

4. The issue in the present appeals relates to classification of items viz. Cheetos wheels and lehar kurkure. According to the appellants, these items are classifiable only under Sub-heading 2108.99, whereas the stand taken by the Revenue is that these items fell under sub-heading 1904.10 of the CETA. If the version of the Revenue is accepted, in that event, the appellants are liable to pay duty. But if the items are held to be classifiable under Sub-heading 2108.99 of the CETA, in that event, the appellants are entitled to the benefit of exemption Notification No. 5/99.

5. In order to appreciate the controversy involved in the present appeals, it would be beneficial and convenient to reproduce heading 19.04 of the CETA. Heading 19.04 reads as under :

"Prepared foods obtained by the shelling or roasting of cereals or cereal products (for example, corn flakes), cereals (other than maize (corn) in grain form or in the form of flakes or other worked grains (except flour and meal), precooked or otherwise prepared, not elsewhere specified or included."

The Heading, as is evident from its bare perusal, consists of two parts. The basic requirements for the application of the first part, are that the products must be (I) prepared foods, (ii) such food must be obtained by swelling or roasting and (iii) it should be obtained by swelling or roasting of cereals or cereal products.

The second part of this Heading 19.04, specifies exclusion. It excludes the products prepared from corn, flour and meal.

The contention raised by the learned SDR is that the products in question fall within the ambit of Heading 19.04. But if we examine the ingredients of these products in question which had been disclosed by the appellants, they do not satisfy the requirements of either of the two parts of this Heading 19.04 of the CETA.

6. The item cheetos wheels namkeen is prepared from raw pallets mades of wheat flour, tapioca starch, common salt, sodium bicarbonate and wheat fibre and they are loaded into a feed hopper. These raw pallets are then dried and fried in edible oil and thereafter applied with seasoning and the product is packed in unit packs.

7. The second item, lehar kurkure is prepared from raw materials such as rice meal, corn meal and gram meal after blending in mixture. Water is added to the aforesaid material to bring up the moisture content. The mixture is then passed through an extruder, wherein the mixture of corn meal, rice meal i