Custom, Excise & Service Tax Tribunal
M/S. Perfetti Van Melle India Pvt. Ltd vs Cce, Chennai on 3 May, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/322/2009
(Arising out of Order-in-Original No.8/2009 dated 31.3.2009passed by the Commissioner of Central Excise, Chennai)
For approval and signature:
HonbleShriP.K. Das, Judicial Member
HonbleShri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
M/s. Perfetti Van Melle India Pvt. Ltd. Appellant
Vs.
CCE, Chennai Respondent
Appearance Shri K.S. Venkatagiri, Advocate, for the Appellant Shri K.S.V.V. Prasad, Jt. Commr. (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing: 03.05.2013 Date of Decision: 03.05.2013 Final Order No. ____________ Per Mathew John The appellant are manufacturers of sugar confectionary not containing cocoa. Some of the products manufactured by them were (1) Mentos mint (2) Mentos strawberry (3) Mentos lime and lemon (4) Fruittella Orange (5) Fruittella Strawberry (6) Chocotella Mint (7) Marbels and (8) Sour Marbels. The appellants were classifying these products under sub-heading 1704.90 of Central Excise Tariff and claiming concessional rate of duty of 8% vide Sl. No. 247 of Notification No. 6/2002-CE dated 1.3.2002. However, after some investigation, Revenue was of the view that for manufacturing these products gaur gum was used and for that reason the product would be classifiable under sub-heading 1704.10 in which case they were to pay duty at the rate of 16% instead of 8% as paid by them. Based on such reasoning, a show-cause notice dated 13-02-2008 for demanding duty short-paid for the period March 2003 to February 2005 was issued and adjudicated. After adjudication and first appeal, an amount of Rs.5,47,94,432/- is confirmed against the appellant along with interest and imposed equal amount of penalty under Section 11AC of the Central Excise Act, 1944. In this appeal, the appellants are disputing the said order both on merits and time bar. For the sake of inconvenience the relevant entries in Central Excise Tariff are reproduced below:-
Heading No. Sub-heading No. Description of Goods Rate of Duty Basic Additional 17.04 Sugar confectionary (including white chocolate) not containing coca 1704.10
- Gums, whether or not sugar coated (including chewing gum, bubble gum and the like) 16% 1704.90
- Other 16%
2. The appellants contest that they used gaur gum only in very small quantities as a stabilizer and the products so manufactured cannot be considered as chewing gum and bubble gum and the like. They plead that only sugar confectionary similar to chewing gum and bubble gum will be classifiable under sub-heading 1704.10. They argue that the product is not known in the market as gums nor are they similar to chewing gum or bubble gum. They pointed out that gaur gum is used in the food industry as stabilizer and thickener to retard crystal formation as in ice cream (ice crystal) as thickener in sauces etc. They further argue that these confectionary items do not have chewable characteristics like chewing gum. They submit that in chewing gums the gum base is about 12% to 14% and the gum is not gum Arabic. (They submit that in their case the percentage of gum Arabic is only 1%.) The gum base in bubble gums cannot be swallowed and digested. After chewing, the gum portion of such items has to be thrown out whereas in the case of sugar confectionary manufactured using gaur gum there is no gum left in mouth after it is slowly dissolved in saliva. The full quantity is dissolved in mouth and enters the digestive system. They rely on the decision of the Tribunal in the case of Hari Chand Shri Gopal Vs. CCE, Meerut - 1996 (83) ELT 281 and emphasize that the expression and the like used in sub-heading 1704.10 restrict the coverage of the entry and the products which cannot be chewed resulting in residue of gum, will not be classifiable under 1704.10. They submit that in their case the percentage of gum Arabic was only 1%. They also argue that the demand issued on 13.2.2008 demanding duty for the period 1.3.2003 to 28.2.2005 is barred by limitation. The appellant submits that they have been filing declaration under Rule 173B regularly every year and the products manufactured by the appellant have been regularly mentioned in the market. The commodity manuals which was published by CBEC during the time when old Tariff was in force treated only chewing gums and bubble gums in the category of gums. Therefore, they were classifying the products based on established products and mentioning declaration based on bonafide belief before the Central Excise authorities.
3. They point out that as early as 1.9.2000, the appellant had filed declaration duly received by the Superintendent wherein the impugned product had been classified under sub-heading 1704.90 and the declaration also contained manufacturing process and list of materials used including gum Arabic. The same has been submitted as Annexure 16 to the appeal papers. Therefore, it is their contention that the Department was all along aware of use of about 1% of the gum Arabic in their product and no suppression can be alleged.
4. The counsel points out that after the period to which this case relates the issue has lost relevance because the rates of duty for both types of product have become the same.
5. The learned AR points out that use of gum in the product stands admitted by Shr. J. Sankaran, Quality Manager and by Shri.K. Subramanian ManagerFactory Accounts. He argues that sub-heading 1704.01 does not specify the percentage of gum that should be present in the product to merit classification in the heading. The description of the goods covered by this heading is amplified by the expression including chewing gum, bubble gum and the like. This cannot mean that the heading is restricted to goods like chewing gum and bubble gum only. He argues that the heading will cover all sugar confectionary containing gum like the impugned goods.
6. Further the learned AR points out that the products in question were marketed describing the products as Chewee Sweets, Cheweee Dragee etc. whereas applicants other products not containing gums were described by them as Plain Tofee. So he argues that gum was added in these products not just for stabilization property but to impart chewable property to the confectionary in question.
7. Regarding the contention of time bar the Ld. A. R. submits that from 01-03-2002 the procedure of filing classification list and getting it approved by the departmental officers was not in vague. The scheme of self-assessment was in force during the period for which demand is raised. So it was the responsibility of the appellant to disclose the presence of gum and the percentage of the gum present to the department and also to classify the product under the correct sub-heading and pay duty. Since the appellant had not discharged this responsibility duly, there was suppression on the part of the appellant and hence the extended period of time is correctly invoked for raising the demand.
8. We have considered arguments on both sides. While we see strong merit in the contention of the appellant that a small percentage of gum in sugar confectionary may not be sufficient to consider the product as gum, we find that the argument of the appellant on time bar is more decisively in their favor. So we are not examining the merits of the issue.
9. This is a case where the appellant were manufacturing the same product even during the period when the system of filing classification list and getting it approved was in vogue. Revenue has not brought out any change in manufacturing process or the contents used after self-assessment is introduced. No suppression of information during the earlier period is brought out much less any mis-declaration. In such a case, we find no justification to invoke extended period of five years provided in Section 11A for issuing demand notice. Therefore, we hold that the demand is tie-barred. So, accordingly, we set aside the impugned order and allow the appeal.
(Operative portion of the order was
pronounced in open court)
(Mathew John) (P.K. Das)
Technical Member Judicial Member
Rex
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