Custom, Excise & Service Tax Tribunal
M/S. Innovision Foods Pvt. Ltd vs The Commissioner Of Central Excise on 9 February, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/470 -471/2007-DB [Arising out of Order-in-Original No. 14 17/2007 dated 26.3.2007 & Order-in-Original No.13/2007 dated 24.3.2007 passed by Commissioner of Central Excise, Bangalore-I Commissionerate, Bangalore.] M/s. Innovision Foods Pvt. Ltd. No.221/298, Singasandra Hosur Road Bangalore 560 100. Appellant(s) Versus The Commissioner of Central Excise Bangalore-I Commissionerate CR BUILDINGS, Queens Road Bangalore 560 001. Respondent(s)
Appearance:
Mr. B. V. Kumar, Advocate For the appellant Mr. Parashiva Murthy, AR For the respondent Date of Hearing: 03/02/2017 Date of Decision: 09/02/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI V. PADMANABHAN , TECHNICAL MEMBER Final Order No. 20227 - 20228 / 2017 Per : V. PADMANABHAN The appellants are manufacturers of excisable goods viz., Navarathan kuruma, Mixed Vegetable Curry, Alu Mutter, Dal Makhani, etc., amongst others, under the brand names Aashirvaad and Kitchens of India belonging to ITC Ltd., and were classifying the same under CSH 2108.99 of CETA, 1985, as Ready to Eat Food Products. These products were being cleared by the appellants claiming the benefit of Nil rate of duty under Notification No.6/2002-CE dated 1.3.2002, vide Sl. No.14 as amended from time to time. The appellants were issued a show-cause notice dated 8.3.2005 by the Commissioner alleging that the impugned products manufactured and cleared by the appellants, though classifiable under CSH 2108.99 of CETA, 1985, were not entitled to the benefit of Notification No.6/2002-CE dated 1.3.2002, vide Sl. No.14, inasmuch as the impugned products are not similar to the products viz., Mithais, Misthans, Namkeens, Bhujia, Mixture, etc., for which the exemption was made available under the said Notification and therefore, the said exemption claimed by the appellants is irregular. On the basis of the above allegations, the appellants were directed vide show-cause notice dated 8.3.2005 as to why:
i. The various products listed under Ready to Eat Foods should not be denied the exemption specified at Sl. No.14 of Notification No.6/2002-CE, as amended.
ii. The Central Excise duty amounting to Rs.50,91,134/- and Education Cess of Rs.81,030/- should not be demanded and recovered from them on the products Ready to Eat Foods manufactured and cleared by the appellants during the period from 1.2.2004 to 31.1.2005 under Section 11A(2) of the Central Excise Act, 1944 and interest thereon should not be charged on them under Section 11AB ibid.
iii. A penalty should not be imposed on them under Rule 25 of Central Excise Rules, 2002.
For the subsequent period covering 1.2.2005 to 18.9.2005, four more show-cause notices were issued by the Department on the same lines as above. The initial show-cause notice dated 8.3.2005 was finalised vide the Order-in-Original No.25/2005 dated 14.9.2005 in which the learned Commissioner held that the appellant will not be entitled to the benefit of exemption under Notification No.6/2002 dated 1.3.2002 (Sl. No.14 as claimed by the appellants). Being aggrieved with the said order, an appeal was filed before the Honble CESTAT, Bangalore and Final Order No.1484/2006 dated 12.9.2006 was passed by remanding the case for de novo consideration with the following observations:
On a careful consideration, we are of the considered opinion that the Commissioner ought to have considered the alternative prayer for reclassification of the item under Chapter sub-heading 2001.10 and also should have considered the claim of benefit of Notification No.6/2002 dated 1.3.2002 vide Sl. No.9. The Commissioner has also not considered the aspect pertaining to treating the duty as cum duty. Therefore, we are of considered opinion that the impugned order is required to be set aside and the matter remanded for de novo on all points. In terms of the above said order of Honble Tribunal, de novo proceedings were held before the Commissioner on 7.3.2007. The appellants appeared before the said Commissioner and submitted their arguments and also filed written submissions. Thereafter the Commissioner of Central Excise Bangalore-I passed Order-in-Original No.13/2007 dated 24.3.2007. Being aggrieved with the said order, the appellants have filed the present appeal. The issue for the subsequent period was decided vide Order-in-Original No.14-17/2007 dated 26.3.2007. Vide the above Orders-in-Original, the Commissioner has decided as follows:
(i) The edible preparations of 13 different types were classifiable under Chapter Subheading 2001.10 during the period of demand and were eligible for full exemption under Sl. No.9 of Notification No.6/2002 dated 1.3.2002.
(ii) In respect of other edible preparations such as paneer darbari, basmathi rice and dal tadka, basmati and rajma masala were classifiable under subheading 21.08 (currently 2106 90 99) and were not entitled to the exemption specified at Sl. No.14 of Notification No.6/2002.
Against the impugned order No.13/2007 dated 24.3.2007, the appellant filed appeal No. E/471/2007. They also filed appeal No. E/470/2007 against the Order-in-Original No.14-17/2007 dated 26.3.2007. Since the issue involved in both these appeals are the same, therefore both the appeals are decided by this common order.
2. With the above background, we heard Shri B. V. Kumar, learned advocate for the appellant and Shri Parasivamurthy, learned AR for the Revenue.
3. The learned advocate reiterated the grounds of appeal which are summarised below:
(i) The product paneer darbari is predominantly a preparation of vegetables with some percentage of paneer and other substances. He relied upon a copy of the composition certificate issued by the appellants own laboratory to the effect that the composition of the product paneer darbari is as follows:
58.69% - Vegetables 3.40% - Water and 37.01% - Others He argued that since this product is predominantly made up of vegetables, it is rightly classifiable under tariff heading 2001.10 as per the Rules of Interpretation of Central Excise Tariff. He relied upon the Rule 3(b) and submitted that since the composition is predominantly of vegetables, the product should be classified as though it is made up of vegetables. This would classify the product under 2001.10.
(ii) With reference to the two products basmati rice and dal tadka and basmati and rajma masala, the learned advocate submitted that these are in the nature of combo packs consisting of two separately packed products which are further packed into a single pack and sold as such. He argued that since these combo packs consists of two different products classifiable under two different chapter subheadings, these should be classified under their respective chapter headings and have to be assessed independently in terms of Rule 3(b) of the Interpretative Rules.
On the above basis, he submitted that basmati rice would be classifiable under 2106 90 99 as ready-to-eat product which is liable to duty and rajma masala/dal tadka are classifiable under subheading 2001.10 and are eligible for nil rate of duty under Notification No.6/2002 dated 1.3.2002.
(iii) The learned advocate further argued that the valuation for the purposes of charging duty on the basis of MRP should also be done differently. His submission is that within the combo packs, the packet of dal tadka and rajma masala are of normal weight of 285 grams which are sold by the appellants at an MRP of Rs.35/-. Since the combo pack has MRP of Rs.45/-, he submitted that the packet of basmati rice should be assessed by taking MRP as Rs.10/- (Rs.45/- minus Rs.35/-). In this connection, he relied upon the decision of the Tribunal in the case of G.S. Enterprises vs. CCE: 2002 (145) ELT 387 (Tri.-Del.).
(iv) Learned advocate, however, submitted that they are not pursuing the issue of classification of the following products.
(a) Pongal, (b) Basmati rice and kadi pakodi, and
(c) kadi pakodi.
4. Learned AR supported the orders passed by the adjudicating authority.
5. First, we consider the classification of the product paneer darbari. The main thrust of the argument advanced by the appellant is that on the basis of the certificate of composition, vegetables predominate in the product. This certificate has been issued by the appellants own laboratory. The product is a preparation making use of tomatoes, water, paneer, fresh cream, tomato puree, white butter, spices, salt, sugar, etc. The predominant composition is as follows:
58.69% - Vegetables 3.40% - Water and 37.01% - Others 5.1 In terms of Rule 2(b) classification of goods consisting of more than one material or substance shall be in accordance with the principles contained in Rule 3. Rule 3(b) concerns with mixtures and composite goods consisting of different materials and reads as follows:
mixtures, composite goods consisting of different materials or made up of different components, and goods put up in the sets for retail sale, which cannot be classified by reference to (a) shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
5.2 Since paneer darbari is a product of different materials and predominantly of vegetables (58.69%), the same is liable to be classifiable under CSH 2001.10 of Central Excise Tariff Act, 1985, in terms of Rule 2(b) read with Rule 3(b) of the Interpretation Rules of the Tariff.
5.3 Consequently, the product paneer darbari will be eligible for the benefit of exemption at Sl. No.9 of the Notification 6/2002-CE dated 1.3.2002.
6. Next, we turn to the other products under dispute i.e., basmati rice and dal tadka and basmati rice and rajma masala. These products are cleared in the form of combo packs which consists of two separately packed products, which are in turn packed and sold in a single packet, for which a single MRP is affixed. The appellant has claimed that the two products are required to be classified under respective chapter headings and assessed independently on merits. The combo pack consists of two entirely different products which are put up as a set for use together. In terms of Rule 3(b) of the Interpretative Rules, classification of set has to be made in accordance with that attribute which, the components taken together, can be regarded as conferring the set as a whole its essential character. We note that basmati rice is packed either with dal tadka or rajma masala with an intention of consuming the two together as a meal. Since the essential character of the meal arises out of basmati rice (the subji is eaten along with the rice), we are of the view that the combo pack has to be classified under Heading 21.08 (2106 90 99 for subsequent period). It has already been held in the impugned order that such products will not be eligible for the benefit of exemption under Notification No.6/2002 dated 1.3.2002 (Sl. No.14). Consequently, these combo packs will be liable to duty during the relevant period.
6.1 Appellant has also submitted that the combined MRP of the combo pack at Rs.45/- should be split into MRP of Rs.35/- for dal tadka/rajma masala and the balance Rs.10/- apportioned towards the pack of basmati rice. We do not think this is the right way to determine the valuation of combo pack. The pack as a whole has MRP of Rs.45/- and is meant for sale as a single unit. We have already taken the view that the combo pack is liable to be classified under 21.08. We are also of the view that the goods should be assessed to duty under Section 4A on the basis of the MRP of the combo pack.
The appellant has taken the support of the Tribunals decision in the case of G.S. Enterprises (supra) to argue that the MRP of the combo pack should be split. We have gone through the cited decision. We are of the view that the cited decision is not applicable to the present facts of the case which are different.
7. In view of the above discussions, we order as follows:
(a) The product namely paneer darbari would be classifiable under 2001.10 and hence eligible for the benefit of Notification No.6/2002 (Sl. No.9 at nil date of duty).
(b) The combo packs of basmati rice with rajma masala/dal tadka are rightly classifiable under 21.08 as held in the impugned order. They will not be entitled to the benefit of exemption under Sl. No.14 of the Notification ibid.
(c) Duty will be payable on the combo packs on the basis of the MRP endorsed therein for the combo pack as a whole.
(d) No orders are passed in respect of products, pongal; kadi pakodi; and basmati rice and kadi pakodi; since the appellant is not pursuing the appeal.
7.1 The impugned order is modified to the above extent. The original adjudicating authority is directed to re-quantify the demand covered in both the impugned order in line with the above discussions. However, no penalty will be leviable on the appellant, since this is a classification dispute.
(Order is pronounced in Open Court on 09/02/2017.) V. PADMANABHAN TECHNICAL MEMBER S.S GARG JUDICIAL MEMBER rv