Custom, Excise & Service Tax Tribunal
Thane - Ii vs Herbie Foods on 14 October, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO: E/411/2003 APPLICATION NOS: E/MA(Ors.)-766/2008 & 1784/2010 [Arising out of Order-in-Appeal No: PKA/446/M.III/2002 dated 31/10/2002 passed by the Commissioner of Central Excise (Appeals), Mumbai.] For approval and signature: Hon'ble Shri P.G. Chacko, Member (Judicial) and Hon'ble Shri M. Veeraiyan, Member (Technical) ==================================================
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3. Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4. Whether Order is to be circulated to the Departmental authorities?
:
Yes ================================================== Commissioner of Central Excise Thane - II ...Appellant Vs Herbie Foods ...Respondent Appearance:
Shri H.B. Negi, Authorised Representative (SDR) for the appellant Shri Prakash Shah, Advocate for the respondent CORAM:
Hon'ble Shri P.G. Chacko, Member (Judicial) and Hon'ble Shri M. Veeraiyan, Member (Technical) Date of decision: 14/10/2010 ORDER NO: ____________________________ Per: P.G. Chacko:
Miscellaneous Application No. E/MA(Ors.)-766/2008 is dismissed as not pressed. Another Miscellaneous Application No. E/MA(Ors.)-1784/2010, filed by the respondent, of late, is also found on record. Though it does not figure in today's cause list, with the consent of both sides, we take up this application also for consideration.
2. This application filed by the respondent seeks to bring on record two documents as additional evidence against certain grounds raised in the Revenue's appeal. One of these documents is a copy of partnership deed dated 01/01/2000 between Mr. Jaydeep Ashok Thaker and Mr. Pranav Ashok Thaker, who constituted the partnership firm, namely, "M/s. Jay Pranav Ayurvedic Pharmaceuticals". The second document is a copy of an application dated 23/05/2000 submitted by the above partnership firm to the Registrar of Trademarks under the Trade and Merchandise Marks Act, 1958. The learned counsel for the respondent submits that these documents are crucial to the brand name issue involved in this case. It is submitted that, in the relevant show-cause notice, the department proposed to deny SSI benefit to the respondent-assessee on the ground that the latter had used another person's brand name "BODY plus", on their goods and hence SSI benefit was barred by para 4 of Notification No. 8/2001 dated 01/03/2001. It is submitted that the said brand name, in fact, belonged to the proprietor of the respondent, who was also a partner of the aforesaid firm, namely, "Jay Pranav Ayurvedic Pharmaceuticals". It is submitted that the proprietor of the respondent was also a party to the application of the firm to the Registrar of Trademarks for registration of the above brand name in the name of the firm. It is submitted that these facts could not be placed before the adjudicating authority as the respondent was confident of establishing that their claim for SSI benefit was not affected by anything contained in para 4 of the Notification. According to the learned counsel, both the above documents are crucial to the determination of the brand name-related issue and, therefore, the present application is liable to be allowed under Rule 23 of the CESTAT (Procedure) Rules.
3. Learned SDR has opposed this prayer. He submits that both the documents were in existence even when the show-cause notice was issued, but the assessee never chose to refer to or rely on any of them. The respondent never wanted to rely on these documents at any stage before. The present application is highly belated and is liable to be rejected, according to the learned SDR.
4. After giving careful consideration to the submissions, we have found a valid reason to allow this application. Two show-cause notices were issued to the respondent, one for re-classification of the subject-goods and the other for denying the benefit of the aforesaid Notification to the respondent. The original authority passed a common order in adjudication of both the notices and that order went against the assessee on both the issues. Aggrieved, the assessee preferred an appeal to the Commissioner (Appeals) and the latter allowed the appeal. In the present appeal filed by the Revenue, one of the grounds relates to brand name. This ground reads as follows:
"Further, brand name of M/s. Jay Pranav Ayurvedic Pharmaceuticals is being used in this case. M/s. Jay Pranav Ayurvedic Pharmaceuticals are engaged in the manufacture of body plus capsules which is in fact similar goods as that of assessee but for difference in form. The issue stands clarified by Trade Mark Registry's letter dt. 27/12/2001 stating inter alia that, 'the question whether two brands are similar or identical has to be decided keeping in view the facts, circumstances of case viz. nature of marks, the particular goods in respect of which registration is sought for, the trade channels etc. It includes deceptive similar marks also. The brand of M/s. Jay Pranav Ayurvedic Pharmaceuticals deals with the similar goods in capsule form whereas the assessee is clearing it under powdered form'."
The respondent, admittedly, never pleaded before that the brand name belonged to them. The show-cause notices alleged that the brand name did not belong to the assessee. Who owned the brand name during the material period is a question of fact raised before the Tribunal. The documents, which are sought to be brought on record by the respondent, are crucial for a decision on this question of fact. Any such a decision will have direct bearing on the next question whether the respondent was entitled to the benefit of Notification No. 8/2001 in respect of their branded product during the material period. Where a manufacturer claims the benefit of an exemption Notification, it is for him to establish that he is entitled to the benefit. If any exception is carved out of the exemption, it is for the manufacturer to show that he is not within the scope of the exception. The respondent is liable to establish, in the present case, that they are not affected by anything contained in para 4 of the Notification. An opportunity for discharging this burden of proof cannot be denied to them. Therefore, we are inclined to allow the present application by receiving both the documents as the respondent's evidence against the aforementioned ground of the Revenue's appeal. However, we would not proceed to take a final view on the respondent's claim under Notification No. 8/2001 inasmuch as this fundamental function needs to be discharged by the original authority. For the present, the Miscellaneous Application stands allowed.
5. Two issues arise out of the submissions made by both sides:
(a) Whether the goods in question is classifiable under SH 1901.92 of the CETA Schedule as 'Food preparation' as claimed by the Revenue or under SH 2108.99 as 'Edible preparation not elsewhere specified or included' as claimed by the assessee.
(b) Whether the respondent's claim for SSI benefit under Notification No. 8/2001 ibid is hit by para 4 thereof.
6. We have heard both sides on the first issue. Learned SDR has submitted that the goods in question is nothing but "food preparation of flour, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included". He submits that the Chemical Examiner's report on the sample has been improperly relied upon by the learned Commissioner (Appeals). It is submitted that the Chemical Examiner's report would not conclusively establish the assessee's claim for classification under SH 2108.99. Learned SDR has also adverted to certain HSN Explanatory Notes. On the other hand, learned counsel for the respondent has argued in support of the findings recorded by the Commissioner (Appeals). He has also shown us samples of the product. Learned SDR has not raised any dispute about these samples and, therefore, we would like to examine the composition of the goods from the product label. The label describes the goods as "Nutrition Supplement for Diet, Energy and Muscle Building". The label also conspicuously describes the product as "NATURAL HEALTH SUPPLEMENT". It shows the following composition.
"Protein 35 gms Fat 2 gms Zinc 13 mg Vitamin - A 4000 I.U Vitamin - B1 5 mg Vitamin - C 75 mg Vitamin - E 100 mg Vitamin - D 1200 I.U. Calcium Tricalcium 250 mg Phosphate 250 mg Niacinamide 20 mg Iron 25mg"
According to the learned counsel, the findings of the Commissioner (Appeals) are quite firm and the same have not been successfully rebutted in the present appeal. It is submitted that the product of the aforesaid composition can, by no stretch of imagination, be used as a food preparation. It can be, and is actually, used only as a food supplement as evidenced by the dosage prescribed on the product label, which indicates that two teaspoonful of the preparation can be taken twice daily with milk or water.
7. We have considered the submissions. On a perusal of the impugned order, we note that the learned Commissioner (Appeals) has elaborately discussed the composition, use, etc. of the product in question. He has considered the meaning of the terms 'flour' and 'meal' used in the tariff description of the goods and has held that it cannot be classified under heading 19.01 as a 'food preparation'. The appellate authority further relied on the test report to hold that the sample which was composed of proteinous matter, fatty matter, together with smaller amounts of mixture of various vitamins, flavouring agent and sweetening agent could rightly be classified under Heading 21.08 as food supplement. We have not found any reason to interfere with this decision of the learned Commissioner (Appeals), nor is there any strong ground in the present appeal for interfering with his decision. The appellant has just contended that Heading 21.08 is a residuary entry covering goods not elsewhere specified or included whereas Heading 19.01 is a specific heading read with Explanatory Notes. The Explanatory Notes referred to by the appellant reads thus:
"Food preparation of flour, meal, starch or malt extract not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis."
The product label indicates that it contains ingredients sourced from cocoa. Revenue has not asked for any assay of the percentage by weight of cocoa calculated on a defatted basis. Their query to the department's laboratory was how to classify the goods under the Tariff. Therefore, the claim of the Revenue for classifying the goods under Heading 19.01 as 'food preparation of flour, meal, starch or malt extract not containing cocoa or containing less than 40% by weight of cocoa calculated on a defatted basis' is yet to be substantiated. We have not found any pertinent ground against classification of the item under Heading 21.08. The appeal, therefore, fails on the classification issue. The classification of the goods under Heading SH 2108.99 will, therefore, stand sustained.
8. Coming to the brand name-related issue, we have already noted that this issue has to be reconsidered by the original authority on the basis of fresh appreciation of evidence including the two documents which we have received from the respondent. Therefore, on the question whether the respondent is eligible for SSI benefit in respect of the branded goods for the period of dispute, we set aside the decision of the lower authorities and remand the issue to the original authority for de novo consideration and decision in accordance with law. Needless to say that the assessee should be given a reasonable opportunity of being heard.
9. The appeal is disposed of in the above terms. Both the Miscellaneous Applications also stand disposed of.
(Dictated in Court) (M. Veeraiyan) Member (Technical) (P.G. Chacko) Member (Judicial) */as 10 7