M/S.
Adhunik Food Products (P) Ltd., U.P. Vs. Commissioner of Central Excise,
Meerut [2007]
Insc 431 (20 April 2007)
S.H. KAPADIA & B.SUDERSHAN REDDY
KAPADIA, J.
A short point which arises for determination in this civil appeal is :
whether 'puffs' obtained by the swelling or roasting of cereals constitute
preparations of cereals under Chapter Heading 19.04. According to the appellant
'puffs' from cereals fall under Chapter Heading 21.07 (Edible preparations).
The assessee manufactures 'puffs' from cereals namely wheat and soya nuts.
The said product is packed in unit containers and supplied to Integrated Child
Development Scheme (for short 'ICDS') in Haryana.
On 21.3.1997 a show-cause notice was issued by the Department raising a
demand on the assessee for mis-declaration of the said products as
'chabena/prasad'. In the said show cause notice it was further alleged that the
products were sold under the brand name 'bonton'. Under the said show cause
notice it was also alleged that the said 'puffs' were sold in the market as
breakfast cereals, high in protein and low in cholesterol. It was further
alleged that the said products were sold to five star hospitals and public
schools. In the circumstances the assessee was called upon to pay to the
Department Rs.2.31 crores as duty for the aforesaid period. This demand has
been confirmed by the authorities below as well as by the Tribunal. Hence this
civil appeal.
In this case we are concerned with two sets of the same entry since the show
cause notice covers the period of 5 years between 1992-93 to 1996-97.
For the period 1994-95 we quote hereinbelow Chapter Heading 19.04
"CHAPTER 19 PREPARATIONS OF CEREALS, FLOUR, STARCH OR MILK; PASTRY COOKS'
PRODUCTS Notes:
1. xxx xxx xxx
2. Heading No.19.04 does not cover preparations containing more than 8% by
weight of cocoa powder or coated with chocolate or other food preparations
containing cocoa of Chapter 18.
Heading No.
Sub- heading No.
Description of goods Rate of duty (1) (2) (3) (4) 19.04 Prepared foods
obtained by the swelling or roasting of cereals or cereal products (for
example, corn flakes);
cereals, other than maize (corn), in grain form, pre- cooked or otherwise
prepared 1904.10 Put up in unit containers and ordinarily intended for sale 10%
1904.90 Other Nil For the same period we quote hereinbelow Chapter Heading
21.07:
"CHAPTER 21 MISCELLANEOUS EDIBLE PREPARATONS Notes :
1 to 4. xxx xxx xxx 5. Heading No.21.07, inter alia, includes:
(a) protein concentrates and textured protein substances;
(b) preparations for use, either directly or after processing (such as
cooking;
dissolving or boiling in water, milk or other liquids), for human
consumption;
(c) preparations consisting wholly or partly of foodstuffs, used in the
making of beverages or food preparations for human consumption;
(d) powders for table creams, jellies, ice- creams and similar preparations,
whether or not sweetened;
(e) flavouring powders for making beverages, whether or not sweetened;
(f) peanut butter;
(g) preparations consisting of tea or coffee and milk powder, sugar and any
other added ingredients;
(h) preparations (for example, tablets) consisting of saccharim and a
foodstuff, such as lactose, used for sweetening purposes;
(i) pre-cooked rise cooked either fully or partially and their dehydrates;
and (j) preparations for lemonades or other beverages, consisting, for example,
of flavoured or coloured syrups, syrup flavoured with an added concentrated
extract, syrup flavoured with fruit juices and concentrated fruit juice with
added ingredients. (emphasis supplied) Heading No.
Sub- heading No.
Description of goods Rate of duty (1) (2) (3) (4) 21.07 Edible preparations,
not elsewhere specified or included 2107.10 Prasad or prasadam Nil 2107.20
Sterilised or pasteurized miltone Nil Other:
2107.91 Put up in unit containers and ordinarily intended for sale 50%
2107.99 Other 50% At this stage it may be noted that Chapter sub- heading
2107.91 during the relevant period attracted 50% duty. However, the effective
rate of duty was nil in view of general exemption No.83 (item No.25) of the
Notification No.2/1994 dated 1.3.1994. We quote hereinbelow item No.25 of
General Exemption No.84 vide Notification No.2/1994.
"GENERAL EXEMPTION NO.83 Effective rate of duty for certain specified
goods of Chapters 4 to 22 In exercise of the powers conferred by sub- section
(1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the
Central Government, being satisfied that it is necessary in the public interest
so to do, hereby exempts goods specified in column (3) of the Table hereto
annexed and falling under the Chapter or sub-heading No. of the Schedule to the
Central Excise Tariff Act, 1985 (5 of 1986), specified in the corresponding
entry in column (2) of the said Table, from so much of the duty of excise
leviable thereon which is specified in the said Schedule, as is in excess of
the amount calculated at the rate specified in the corresponding entry in
column (4) thereof.
Heading No.
Sub- heading No.
Description of goods Rate of duty (1) (2) (3) (4) 25 2107.91 (i) Soya
textured protein, Soya yoghurt, soya tofu, soya based food preparations for
infant use, soya milk powder, soya noodles, soya macaroni and soya tempeh,
whether or not containing other food ingredients but not containing cocoa;
(ii) Powders of fruitsand vegetables;
(iii) Papad, idli-mix, vada- mix, dosa-mix, jalebi-mix, gulabjamun-mix or
namkeens, such as bhujyia, chabena.
Nil Heard learned counsel on both sides.
In the present matter the show cause notice concentrated more on the denial
of exemption claimed by the assessee, than the classification. We may make it
clear that the 'puffs' prepared from cereals cannot fall within the item
'Prasad/prasadam'. To that extent we are in agreement with the impugned order
of adjudication.
The main question which was required to be decided was whether 'puffs' made
from cereals would at all fall under Chapter Heading 19.04 or whether they
would fall under Chapter Heading 21.07 (remoulded as Chapter Heading 21.08
during the Assessment Year 1996-97).
For the sake of clarity we also quote hereinbelow the remoulded Chapter
Heading 21.08.
"CHAPTER 21 MISCELLANEOUS EDIBLE PREPARATONS Notes :
1 to 8. xxx xxx xxx 9. Heading No.21.08, inter alia, includes:
(a) protein concentrates and textured protein substances;
(b) preparations for use, either directly or after processing (such as
cooking;
dissolving or boiling in water, milk or other liquids), for human
consumption;
(c) preparations consisting wholly or partly of foodstuffs, used in the
making of beverages or food preparations for human consumption;
(d) powders for table creams, jellies, ice- creams and similar preparations,
whether or not sweetened;
(e) flavouring powders for making beverages, whether or not sweetened;
(f) peanut butter;
(g) preparations consisting of tea or coffee and milk powder, sugar and any
other added ingredients;
(h) preparations (for example, tablets) consisting of saccharim and a
foodstuff, such as lactose, used for sweetening purposes;
(i) pre-cooked rise cooked either fully or partially and their dehydrates;
and (j) preparations for lemonades or other beverages, consisting, for example,
of flavoured or coloured syrups, syrup flavoured with an added concentrated
extract, syrup flavoured with fruit juices and concentrated fruit juice with
added ingredients.
Heading No.
Sub- heading No.
Description of goods Rate of duty (1) (2) (3) (4) 21.08 Edible preparations,
not elsewhere specified or included 2108.10 Preparations for lemonades or other
Beverages intended for use in the manufacture of Aerated Water 40% 2108.20
Sharbat 20% 2108.30 Prasad or Prasadam Nil 2108.40 Sterilised or pasteurized
miltone Nil Other:
2108.91 Not bearing a brand name Nil 2108.99 Other 20% In the entire
discussion in the impugned judgment there is no finding given by the Tribunal
as to whether 'puffs' prepared from cereals would fall under the Chapter
Heading 19.04. As far as 'puffs' prepared from soya nuts are concerned there is
no finding as to the quantity of puffed soya nuts sold by the assessee during
the above period to ICDS, Haryana and the quantity of the said product sold by
the assessee during the said period to public schools and five star hospitals.
There is also no finding as to whether 'puffed soya nuts' were supplied to
ICDS, Haryana under the brand name 'bonton' or whether they were supplied
without any brand name being affixed to the unit containers. These questions
are important since the entry 2108.91 refers to nil rate of duty for
"Other Edible Preparations" as long as the product is supplied
without a brand name. These questions are also important to be decided
particularly since the General Exemption No.83 states that the benefit of
exemption shall be given only if the product is a soya based food preparation
for infant use. According to the assessee puffed soya nuts is a soya based food
preparation under item No.25 of the Notification No.2 of 1994 (General
Exemption No.83). According to the assessee puffed soya nuts were supplied to
the schools under ICDS programme. None of the questions have been decided.
In the circumstances, we set aside the impugned judgment of the tribunal and
remand the matter to the adjudicating authority for fresh determination in
accordance with law. The appeal is accordingly allowed with no order as to
costs.
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