Customs, Excise and Gold Tribunal - Mumbai
Dr. Writers Food Products Ltd. vs Commissioner Of Cen. Excise, Pune Ii on 22 November, 2001
Equivalent citations: 2002ECR1039(TRI.-MUMBAI), 2002(144)ELT428(TRI-MUMBAI)
JUDGMENT J.H. Joglekar, Member (T)
1. These two appeals have same facts and arise out of the same order of the Commissioner of Central Excise (Appeals), Pune. These are, therefore, dealt with vide this common order.
2. The appellants manufacture chocolates on job work basis for M/s. Cadbury India Ltd. M/s. Cadbury India Ltd. purchased cocoa beans which were sent to the present appellants. The appellants manufactured cocoa liquor therefrom after roasting the beans and grinding them in a mill. This liquor was sent back to M/s. Cadbury India Ltd. who made milk crumb therefrom. This milk crumb again came back to the present appellants for manufacture of chocolate. The present proceedings involved the quantum of duty payable on cocoa liquor. In their classification declaration, the appellants had declared the same as falling under heading 1804.00 as "
other food preparation containing cocoa". The assessable value was determined in terms of Rule 6(b)(ii) of the Valuation Rules duly certified by the Chartered Accountant. Six show cause notices were issued alleging that in the compilation of the assessable value certain elements such as manufacturing overhead/conversion charges etc, had not been added. After hearing the assessee, the Asstt. Commissioner in separate orders confirmed total demand of Rs. 65,15,400.59 and imposed total penalty of Rs. 17,000/-. Against these two orders, the appellants filed two appeals before the Commissioner. The appellants contended before the Commissioner that the cocoa liquor was not excisable and in fact it was not covered under any entry in the Central Excise Tariff Act, 1985. It was claimed that being a point of law, it could be raised at the appellate stage also. The second claim made was that the liquor as emerged was a pasty mass with harsh oily acrid taste and a very high fat content and it is also unsweetened. It could not qualify for the phrase "food preparation". It was claimed that this could not be marketable. In this respect, attention was invited to an expert opinion filed before the Commissioner. Before the Commissioner, it was accepted that the items of cost referred to in the show cause notices were not added but that the incremental increase in the cost would be marginal and not as much as alleged in the show cause notices. The Commissioner in his findings did not deal with the question of excisability at all. As regards the coverage of heading 1804.00, he held that for falling under this item, the articles need not be directly edible. As regards the marketability, he held that the fact that it was sent to M/s. Cadbury India Ltd. would clearly show that it is marketable. He agreed with the assessee that the increase proposed in the show cause notice may not be correct and remanded the proceedings back to the Asstt. Commissioner for re-determination of the assessable value. Hence, these appeals.
3. In his arguments, Shri Baxi once again highlighted the non excisability of the cocoa liquor. We have seen the HSN and also the Customs Tariff and have compared these two with the Central Excise Tariff. Whereas, the HSN and Customs Tariff cover cocoa paste (Heading 1804) as well as cocoa powder (heading 1805), cocoa liquor (paste) does not find place in the Central Excise Tariff. From the description in the sub note to heading 18.03 and from the description given by the expert in her opinion, we find that cocoa liquor and cocoa paste are synonymous terms. Since cocoa paste does not figure in the Chapter 18, the claim of Shri Baxi that the farmers of the Central Excise Tariff have chosen not to cover this item has merit.
4. Shri Jain arguing on behalf of the Revenue referred to Rule 4 of the Rules of Interpretation of the Tariff in claiming that heading 1804.00 being akin to the contested product, the excisability stands established. We have examined this claim. Heading 1804.00 covers "other food preparation containing cocoa." The very phrase indicates that the product falling thereunder must be a "preparation". This description is not attracted where cocoa is the only substance in the mass. We have also seen the sub notes to heading 18.06 in the HSN which was split into heading 1803 and heading 1804 in the Central Excise Tariff. The illustration given for the phrase "other food preparation containing cocoa" would cover sugar confectionary such as chocolate nougat, sweetened cocoa powder, spreads etc. The notes do not support Shri Jain's agreement.
5. Since we have held in favour of the appellants on the non excisability of the product, we are not going into the aspect of marketability of the product or in other issues.
6. In the result, the appeals succeed and are allowed.