Customs, Excise and Gold Tribunal - Mumbai
Hindustan Lever Ltd. vs Commissioner Of Central Excise on 30 March, 2006
ORDER
Jyoti Balasundaram, Vice President
1. The applications for waiver of pre-deposit of total duty of Rs. 2,84,17,905.92 (Rupees two crores eighty-four lakhs seventeen thousand nine hundred five and ninety-two paise) and equal amount of penalty arise out of separate orders passed by the Commissioner of Central Excise (details of the amounts involved in each appeal are to be found in annexure A to this order). The demand arises as a result of classification of 40 products manufactured by the applicants herein, essentially covering four classes of goods and denial of exemption in terms of serial Nos. 9, 10 & 11 of the table to notification 6/2002-CE dated 1.3.2002 to three classes of products, viz. sauces, soups/broths and beverage powders. The fourth class of products is spices and out of the demand of Rs. 5,42,223.44 on this class of products, the applicants have already paid a little over Rs. 3 lakhs towards duty. The list of products, the classification of which is involved in these appeals, is set out as annexure B to this order.
2. We have heard both sides.
3. As regards the first class of products, the main ingredients are tomato paste, garlic paste, ginger, cheese powder, salt, spices etc. The applicants' claim for classification of this class of products under CET subheading 2103.10 which covers "Sauces, Ketchup and the like and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard", has been accepted; however, the claim that it is sauces or ketchup and the like and preparations therefor eligible to exemption in terms of serial No. 10 which covers such products has been disallowed on the ground that the products are mixed condiments and mixed seasonings not covered by the exemption under the notification. The grounds for arriving at the conclusion that the first class of products are not sauces or ketchup but mixed condiments and mixed seasonings are that they are not used as sauces in the conventional sense but as spread for burgers, curry base or dip and have also been shown as examples of mixed condiments and mixed seasonings in HSN Explanatory Notes to Chapter Heading 21.03. However, we see prima facie force in the submission of the learned Counsel for the applicants that their use as spreads or dips or curry base cannot detract from their being sauces or ketchups, particularly when HSN Explanatory Notes to Heading 21.03 sets out examples of "sauces and preparations therefor; mixed condiments and mixed seasonings; mayonnaise, salad dressings, soya sauces, tomato ketchup and other tomato sauces etc." Prima facie the Commissioner has misread the HSN Explanatory Notes to Heading 21.03 to hold that tomato ketchup and tomato sauces etc, are examples of mixed condiments and mixed seasonings, and not examples of sauces and preparations therefor. Further, in the case of the same assessee, vide stay order No. S/346/WZB/06/C-II/EB dated 6.3.2006, the Tribunal has granted waiver of pre-deposit of duty demand on Kissan Sauce Tom Tom tomato Ketchup on the ground that the product is eligible to exemption as sauce or ketchup under notification 6/2002-CE dated 1.3.2002 whereas the Commissioner had denied the benefit of the notification on the ground that the product was mixed condiments and mixed seasonings.
4. For the above reasons, we hold that the applicants have made out a strong prima facie case for waiver on merits.
5. Coming to the next class of products, viz. soups/broths, prima facie the Commissioner has erred in application of Note 2 to Chapter 21 to read in the requirement of such products being put up for retail sale, which is not required in the case of soups and broths and preparations therefor covered under Chapter Heading 21.04, but requirements only if the products under Chapter Heading 21.04 are "Homogenized composite food preparations". He has not given any independent reason as to why the products in question, viz. Knorr Instant Tomato Soup Powder, Knorr Instant Sweet Cora Veg Soup Powder and Knorr Instant Chicken Soup Powder and Knorr Chicken Broth Powder containing salt, sugar, tomato solids (in the case of tomato soup powder), dehydrated chicken pieces (in the case of chicken soup powder) and sweet corn kernels, dehydrated vegetables (in the case of Knorr Sweet Corn Veg. Soup Powder) cannot be considered as soups or broths. Going by the ingredients of these products and the fact that they are ready to drink by dissolving in hot water, prima facie the contention of the applicants that they are soups and eligible to exemption in terms of serial No. 11 of notification 6/2002 is required to be accepted.
6. The applicants have already paid over 50% of the duty demand on the third class of products, viz. spices, and therefore we do not call upon them to make any further deposit towards duty confirmed on this class of products.
7. There are two products in the last class of products, viz. Kissan Fruit Kick Orange Fruit Beverages Powder and Kissan Mr. Fruit Orange Juicy Bits. Both products contain sugar, orange juice powder, citric acid, minerals, vitamins, xantham gum, permitted fruit colours and added flavours. Prima facie they are fruit juices falling for classification under Chapter Heading 20.01 as claimed by the assessees and since Chapter Heading 20.01 specifically covers "Preparations of vegetables fruits...., fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter", they cannot move to Chapter 21 which is a residuary heading and to CET sub-heading 2108.99 which is where the Commissioner has classified them as "Edible preparations" not elsewhere specified or included. As these goods are prima facie classifiable under Chapter Heading 20.01, exemption in terms of serial No. 9 of the table to notification 6/2002 which covers all goods falling under Heading 2001.10, will be available to them.
8. In the result, we hold that prima facie the first class of products are sauces and falling under CET sub-heading 2103.10, that the second class of products are soups under CET sub-heading 2104.10, that the fourth class of products are fruit juices falling under CET sub-heading 2001.10 and all three classes are prima facie eligible to exemption as per serial Nos. 10, 11 and 9 respectively of the table to notification 6/2002 and we, therefore, grant waiver of pre-deposit of the duties and penalties confirmed on these three classes of products and as regards the third class of products, since more than 50% of the duty amount stands already paid, we waive the requirement of pre-deposit of balance duty and penalty and stay recovery thereof pending the appeals.
(Pronounced in Court)