Custom, Excise & Service Tax Tribunal
M/S Fun Foods Pvt. Ltd vs Cce, Jaipur-I on 8 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing: 10.8.2016
Date of Pronouncement: 8.9.2016
Appeal No. E/1874-1875/2008-Ex.(DB)
(Arising out of Order-in-Original No. 21-22/2008(CE) dated 3.7.2008 passed by the Commissioner of Central Excise, Jaipur)
M/s Fun Foods Pvt. Ltd. Appellant
Shri Rajiv Behl
Vs.
CCE, Jaipur-I Respondent
Appearance Shri B.L. Narasimhan, Advocate & - for the appellant Shri Rahul Tangri, CA Shri R.K. Manjhi, D.R. - for the respondent CORAM: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. Ashok K. Arya, Member (Technical) Final Order No. 53459-53460/2016 Per Ashok K. Arya :
1. Both sides have been heard in detail.
2. The impugned order No. 21-22/2008-CE dated 3.7.2008 passed by Commissioner, Central Excise, Jaipur-I decided two Show Cause Notice (SCNs) both dated 4.4.2007 issued to the noticee appellants. The total period involved is 2003-2004 to February, 2007.
3. There are following main issues which require consideration and decision by this Tribunal:
(i) Classification of Milk Shake Mixes.
(ii) Classification of flavoured syrups/fruit syrups/Squashes.
(iii) Goods sold without brand name - Eligibility to claim benefit of exemption Notification No. 3/2005-CE dated 24.2.2005 (Sr. No. 9) in respect of chocolate syrup, Butter Scotch, Blue curacao, Grenadine, Mint, Orange, Triple Seed, Caramel, Natural Caramel, Vanila, Lime (all falling under Chapter Heading 2108.91/21069040) on the ground that the same do not bear brand name of the assessee/appellant.
(iv) Goods sold without brand name- Eligibility of exemption benefit under Notification No. 3/2005-CE (supra) (Sr. No. 10) to the item Mixed Seasoning Chinese Flavour.
(v) Demand is time barred and penalty not imposable.
4. The appellants have been represented by the ld. Advocate, Shri B.L. Narasimhan and the Revenue has been represented by the ld. AR Shri R.K. Manjhi.
5. We have carefully considered full facts of the case and submissions of both the sides along with the case laws cited.
6. We shall take up the impugned issues for consideration and decision one by one below:
6.1 Classification of Milk Shake Mixes : The impugned order held that these products are classifiable under Chapter Heading 1901.90 90 of Central Excise Tariff and not under 0404 as claimed by the assessee appellant.
However, CESTAT Delhi in its decision in the case of Amrit Foods Vs. CCE, Meerut-I 2006 (202) ELT 545 (Tri.-Del.) held that such products are classifiable under Chapter Heading 0404.90. The above decision of CESTAT, Delhi has been endorsed by the Honble Apex Court in the case of CCE, Vs. Amrit Food 2015 (324) ELT 418 (SC). CESTAT, Delhi in the said decision in its para 11 inter alia observes as under:
11. ..We find that in the present case no other ingredients except permissible stabilizers have been added. Addition of stabilizers is essential to maintain the consistency and shelf life of the products. HSN Explanatory Note also qualifies the addition of stabilizers without changing its classification from Chapter 4 to 19. The ratio of the decisions relied upon by the Revenue has no relevance to the present dispute. We, therefore, classify the products SSM and MSM under sub-heading 0404.90 of the Central Excise Tariff. The other two products i.e. coffee creamer and cream packed are also classified under sub-heading 0404.904. There is no reason given in the impugned order for classifying the product under Chapter 19. This is not disputed by the Revenue. We, therefore, set aside the order of the Commissioner and classify the products under sub-heading 0404.90.
6.1.1 Considering above discussions and the CESTATs decision in case of Amrit Foods (supra) endorsed by Honble Apex Court we hold that the subject items, Milk Shake Mixes are rightly classifiable under Chapter Heading 0404 only.
6.2 Classification of Flavoured Syrups/Fruit Syrups: The Commissioner in the impugned order hold that subject goods- various kinds of Flavoured Syrups/Fruit Syrups are classifiable under Chapter Heading 21069040/2169050 and not under Chapter 20 of Central Excise Tariff, which is the claim of the assessee appellant.
6.2.1 In this regard, the assessee has inter alia submitted as follows:
(i) These are fruits syrups with high fruit content viz. above 25% in all cases.
(ii) The fruit content in the product is more than 25%, which cannot be brushed aside by the Deptt. without producing any evidence to the contrary.
6.2.2. The department in this regard mainly argues that mere submission of purchase invoices of Fruits etc. does not lead to the conclusion that the same were used in the manufacture of impugned syrups.
6.2.3 Appellant refers to CESTAT, Delhi decision in the case of Godrej Foods Ltd. Vs. CCE, Indore 2006 (202) ELT 473 (Tri.-Del.). We find in the case of Godrej Foods (supra) dispute is for classification between Chapter Heading 20.01 and Chapter 22.02 whereas in the present case rival Chapter Headings are 21.06 (Deptt.s stand) vs. Chapter 20 (party assessees stand). Therefore this case is not applicable to the present facts.
6.2.4 We have gone through the contents of Chapter 20 of Central Excise Tariff where Preparations of Vegetables, Fruits, Nuts and other parts of Plants are covered. This is the Chapter under which the appellant is claiming the classification for the subject goods. We have also gone through the contents of Chapter 21 of Central Excise Tariff where Miscellaneous Edible Preparations are covered. The main submission of the appellant is that subject goods have fruit juice content more than 25%; therefore, they have to be classified as preparations of fruits and be classified under Chapter 20 only. The Revenue submits that though the assessee submitted the purchase invoices of fruits that does not lead to the conclusion that the said fruits were used in the manufacture of subject goods viz. fruit syrups etc. as the assessee is also engaged in the manufacture of other fruits based products like Jam, Jelly, Chutney where fruits are basic ingredients.
6.2.5 From the case record and the evidences produced by the appellants, we are not persuaded to hold that the subject goods are entirely product and preparation of fruits, vegetables, nuts or other parts of the plant. The appellants have been claiming that the subject items are in the category of fruit juices. If it is so they would be specifically covered under Chapter Heading 2009 of Central Excise Tariff as fruit juices. The Explanatory Notes to HSN for Chapter Heading 2009 inter alia mentions that fruit and vegetable juices of this heading are generally obtained by pressing fresh, healthy and ripe fruit or vegetables, which may or may not be preceded either by crushing or grinding or by treatment with cold and hot water with steam. The Explanatory Notes to HSN for Chapter Heading 20.09 mentions that the item (fruit juices of this heading) retain their original character of fruit or vegetable juice and said items may contain other substances like sugar other sweetening agents preservatives and standardising agents. The Explanatory Notes to HSN for this Chapter Heading 2009 also makes a mention that if normal fruit juices are added with greater quantity of water, the resultant diluted products may have the character of beverages of Heading 22.02. The title given for Chapter 21.06 of Central Excise Tariff is Food preparations not elsewhere specified or included. This chapter also includes soft drinks concentrates, sugar syrups, containing added flouring or colouring matter, not elsewhere specified or included; and so on.
6.2.6 For the present purpose, the rival entries for classification are Chapter 20 (where the assessee wants classification) and Chapter Heading 2106 (where Revenue wants to classify the subject items). We find that the appellant has not given complete ingredients of the subject items; they have only conveyed that products have got more than 25% fruit contents. The Explanatory Notes to HSN for Chapter Heading 2009 inter alia mention that wherever greater quantity of water has been added, the resultant diluted product may have the character of the beverages of Heading 22.02, but the classification under Chapter 22.02 has not been argued by any side in the present proceedings i.e. either by the Revenue or by the assessee/appellant. The Revenue specifically pleads for classification under Chapter Heading 21069040 and 21069050, wherein descriptions given are as follows:
21069040 : Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included: lactose syrup: glucose syrup and malto dextrine syrup.
21069050: Compound preparations for making non-alcoholic beverages.
Consequently, from the records available and the submissions given by both sides, when no other alternative classification like Heading 22.02 etc. has been cited by either the appellant or the Revenue, and after considering the description given for the Chapter 2106 of Central Excise Tariff as well as the Explanatory Notes to HSN for Chapter 2106 mentioned above, we are of a considered view that the subject items are to be classified under Chapter Headings. 21069040/21069050.
6.3 Goods sold without brand name - Eligibility to claim benefit under exemption Notification No. 3/2005-CE dated 24.2.2005 (Sr. No. 9) in respect of item like flavoured syrup claimed to be sold without a brand name:
6.3.1 The appellant pleads that these items are unbranded, therefore, they are entitled to the benefit of Notification No. 3/2005-CE dated 24.3.2005 (Sr. No. 9). The conditions for claiming this Notification benefit (against Sr. No. 9) is that the said items are not in a unit container and do not bear any brand name; both these conditions have to be collectively fulfilled. The point of contention here is branding of the goods; the appellant claims that goods were unbranded whereas the Revenue says that there was no sufficient evidence produced by the appellant to prove that the goods were unbranded.
6.3.2 Considering facts and the submissions of both sides, we remand the case back to the original adjudicating authority for decision afresh on this issue within three months of receipt of this order, where the appellants would be given opportunity of hearing and production of evidence, if any, in respect of branding or unbranding of the goods.
6.4 Goods sold without brand name - Eligibility of exemption benefit under Notification No. 3/2005-CE (Sr. No. 10) for the items Mixed Seasoning Chinese Flavour:
6.4.1 The appellant says that both the conditions of Notification No. 3/2005 (supra), (Sr. No. 10) that goods be in other than unit container and be not bearing the brand name (for claiming the benefit of the Notification No. 3/2005), have been fulfilled. There is clear finding that goods are in unit container. The appellants say that the goods were in unit container up to 28.2.2005. Further from the facts on record for the period after 29.2.2005 it is not proved that the goods were not bearing the brand name. It means that the assessee/appellants in any case are not entitled to the benefit of the Notification No. 3/2005 for these goods up to 28.2.2005. Therefore, the demand of duty of Central Excise on all these goods for the period up to 28.2.2005 is hereby confirmed. However, for the period after 28.2.2005, the matter is remanded back to the original adjudicating authority to decide afresh within three months of receipt of this order.
6.5 Demand time barred and penalty not imposable:
6.5.1 The appellants have argued that the matter involves interpretation of the statutory provisions, therefore extended period of limitation is not invocable. From the facts on record, we find enough force in the submissions of the appellants and there is no material on record to prove wilful suppression or any mis-statement of facts with intention to evade payment of duty of Central Excise on the part of the appellants. Therefore, it is held that liability of duty of Central Excise can be fixed only for the period of one year from the relevant date. Consequently, demand beyond the period of one year from the relevant date is time barred as per the provisions of law of Central Excise.
6.5. 2 As there is no wilful suppression or mis-statement with intention to evade payment of duty of excise by the appellants, the penalties imposed of Rs.71,83,194/- on the appellant No. 1 under Section 11AC of Central Excise Act, 1944 and of Rs.2,00,000/- on appellant No. 2, Shri Rajiv Behl, Director under Rule 26 of Central Excise Rules, 2002 are hereby dropped.
7. The appeal of the appellant No. 1, M/s Fun Food (P) Ltd. in respect of penalty under Section 11AC of Central Excise Act is allowed; Milk Shake Mixes have been held to be classifiable under Chapter Heading 0404 and on classification of flavoured syrups/fruit syrups/squashes, the impugned order has been sustained; for remaining issues and for final computation of the liability of duty of Central Excise and the penalty, if any, against appellant No. 1 under the law of Central Excise, the matter is remanded back to the original adjudicating authority who shall give decision on these afresh in terms of the findings, observations and conclusions made above within three months of receipt of this order and after giving opportunity of personal haring to the appellant No. 1.
7.1 The penalty imposed on the appellant No. 2 Shri Rajiv Behl has been set aside; his appeal is hereby allowed.
8. The impugned order is set aside and appeals decided in above terms.
(Pronounced in Court on 8.9.2016) (Justice (Dr.) Satish Chandra) President (Ashok K. Arya) Member (Technical) RM 1