Custom, Excise & Service Tax Tribunal
M/S Varun Beverages Limited vs Cce, Jaipur Ii on 15 January, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 15/01/2016. DATE OF DECISION : 15/01/2016. Excise Appeal No. 853 of 2007 [Arising out of the Order-in-Appeal No. 721 (HSK) CE/JPR-II/ 2006 dated 05/01/2007 passed by The Commissioner of Central Excise (Appeals-II), Jaipur.] For Approval and signature : Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, 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? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Varun Beverages Limited Appellant Versus CCE, Jaipur II Respondent
Appearance Shri Bimal Jain, Advocate for the appellant.
Shri R.K. Grover, Authorized Representative (DR) for the Respondent.
CORAM: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 50133/2016 Dated : 15/01/2016 Per. B. Ravichandran :-
This appeal is against order dated 05/01/2007 passed by Commissioner of Central Excise (Appeals-II), Jaipur. The appellants are engaged in the manufacture of Aerated Water, Beverages in Bag (BIB) liable to Central Excise duty. They have filed a refund claim for Rs. 1,02,149/- on the ground that they have paid under protest Special Excise Duty on BIB which is used for manufacture of Aerated Water in automatic vending machine. The claim was rejected by the Original Authority holding that preparations for lemonades and other beverages intended for use in the manufacture of aerated water are classifiable under Tariff item 2106 90 50 of the 1st Schedule and under Tariff item 2106 90 19 in the 2nd Schedule to the Central Excise Tariff Act 1985 w.e.f. 28/02/2005. The Original Authority relied on Board Circular dated 17/08/2006. On appeal, the Commissioner (Appeals) vide the impugned order upheld the original order and rejected their appeal. Aggrieved by this, the appellant is before us in appeal.
2. The learned Consultant for the appellant submitted that the Central Excise Tariff Act got amended through Central Excise Tariff (Amendment) Act, 2004, whereby 6 digit Central Excise Tariff code were converted into 8 digit Central Excise Tariff code. Consequent on such amendment, BIB is classified under Tariff entry 2106 90 50 and is not liable to Special Excise Duty in terms of the 2nd Schedule to the Tariff Act. He further submitted that BIB is a soft drink concentrate suitable for manufacture of aerated water. The same is packed and supplied in QCD bags for use as raw material for the manufacture of aerated water in the automatic vending machine.
3. The learned Counsel submitted that after the introduction of 8 digit codes, soft drink concentrates manufactured by them will fall under the Tariff heading 2106 90 19 liable to 16% duty. The BIB manufactured and cleared by them is a compound preparation for making non-alcoholic beverages and is classified under 2106 90 50. The dispute arose regarding the appellants liability to pay SED on BIB used for automatic vending machine of beverages. The learned Consultant submitted that the reliance placed by the lower Authorities on Note 3 of the 2nd Schedule is misconceived. The impugned product is specifically covered under 2106 90 50 of the 1st Schedule in view of supplementary notes 4 of Chapter 21 which states that Tariff item 2106 90 50, inter alia, includes preparations for lemonades or other beverages, consisting, for example, of flavoured or coloured syrup, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juice and intended for use in the manufacture of aerated water, such as in automatic vending machines. The learned Consultant submitted that the 8 digit classification cannot be different for different schedules to the Tariff Act. For this, he drew our attention to Notes 1 and 2 of the 2nd Schedule which are as below :-
1. In this Schedule, heading, sub-heading, tariff item and Chapter mean respectively a heading, sub-heading tariff item and Chapter in the First Schedule.
2. The rules for the interpretation of the First Schedule, the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall apply to the interpretation of this Schedule.
4. He further submitted that the Boards clarification cannot be applied retrospectively to their case contrary to the statutory provisions, as discussed above. Even if the Boards clarification has to be considered it has no relevance to the present case as BIB is more specifically covered under Tariff Heading 2106 90 50 in view of Supplementary Notes 4 of Chapter 21 of 1st Schedule. The clarification is with reference to preparations for lemonades and other beverages intended for use in manufacture of aerated water, whereas the product in question is BIB which is a compound preparation for making non-alcoholic beverages for use in the automatic vending machine.
5. Learned AR reiterated the findings of the lower Authorities and submitted that the entry in the 2nd Schedule for Tariff item 2106 90 19 should be interpreted with reference to Boards clarification dated 17/08/2006. Since preparations for lemonades or other beverages intended for use in the manufacture of aerated water are classified under 2106 90 19, SED is liable to be paid.
6. We have heard both the sides and examined the appeal records. The point for decision is whether or not the appellants are liable to pay SED on BIB as a compound preparation intended for use in the automatic vending machine. We find that the lower Authorities have not discussed the classification of the impugned product in terms of the various Chapter Notes, as mentioned above. The classification of BIB and heading 2106 90 50 in the 1st Schedule is not disputed. This heading is not figuring in the 2nd Schedule for the purpose of levy of SED. The Boards clarification dated 17/8/2006 relied upon by the lower authority states that preparations for lemonades and other beverages intended for use in the manufacture of aerated water are classifiable the Tariff Item 2106 90 50 in the 1st Schedule and under Tariff item 2106 90 19 in the 2nd Schedule to the Central Excise Tariff Act 1985 w.e.f. 28/2/2005. We find with this clarification the imposition of SED on BIB also was sought to be justified by the lower Authorities. We find that such finding is misconceived. The reliance placed for different classification of the same product in the Board clarification is Note 3 of the 2nd Schedule. The said Note specifies the scope of heading 2106 90 19 to the effect that this will not include the products other than preparations for lemonades or other beverages intended for use in the manufacture of aerated water. We find the said tariff item entry in the 1st Schedule covers other soft drink concentrates (other than Sharbat). The case of the appellant is that their product is a compound preparation for making non-alcoholic beverages and this automatically does not imply soft drink concentrate. As such, the classification in the 1st Schedule under heading 2106 90 50 has been made and admitted by the Revenue also. Such compound preparation cannot become part of Heading 2106 90 19 even after applying Note 3 of 2nd Schedule. We find Notes 1 and 2 of the 2nd Schedule, extracted (supra) will make it clear that the Chapter Notes and Supplementary Notes of the 1st Schedule shall apply to the interpretation of the 2nd Schedule. As such, we find that valid and admitted classification of BIB under 2106 90 50 in terms of Supplementary Notes 4 of Chapter 21 of 1st Schedule cannot be included under Tariff item 2106 90 19 of 2nd Schedule. We find that impugned order simply quoted the Boards above-mentioned clarification without any analysis of its application. Provisions of General Clauses Act were quoted by lower Authority. We find no possible application for the same in the present case. The impugned order has not analyzed the appellants contention with reference to the Chapter Notes of Chapter 21, Notes 1, 2 and 3 of 2nd Schedule to arrive at the proper finding. We find the impugned order as unsustainable in view of the above discussion. Accordingly, the appeal is allowed with consequential relief, if any.
(Operative part of the order pronounced in the open court.) (S.K. Mohanty) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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