2001 (12) TMI 434 - AT - Central Excise

Summary

Issues: Classification of cocoa liquor under Central Excise Tariff Act, 1985; Excisability of cocoa liquor; Marketability of cocoa liquor; Assessable value determination.

Classification of Cocoa Liquor:
The case involved determining the classification of cocoa liquor under the Central Excise Tariff Act, 1985. The appellants had initially declared the cocoa liquor under Heading 1804.00 as "other food preparation containing cocoa." The dispute arose when show cause notices alleged that certain elements in the assessable value were not included. The Asstt. Commissioner confirmed a total demand and penalty. The Commissioner did not address the excisability issue but held that the liquor fell under Heading 1804.00, emphasizing that marketability was established as it was sent to another company for further processing. The appellants argued that cocoa liquor was not excisable and not covered under any entry in the Tariff Act. The Tribunal analyzed the Harmonized System Nomenclature (HSN) and Customs Tariff, concluding that cocoa liquor was not covered under the Central Excise Tariff due to its absence in Chapter 18, supporting the appellants' claim.

Excisability of Cocoa Liquor:
The central issue revolved around the excisability of cocoa liquor. The appellants contended that cocoa liquor was not excisable, emphasizing its characteristics such as a pasty mass with high fat content and unsweetened nature, making it non-marketable. The Tribunal examined the descriptions in the sub note to Heading 18.03 and expert opinions, equating cocoa liquor with cocoa paste. By comparing the HSN, Customs Tariff, and Central Excise Tariff, it was established that cocoa liquor was not covered in the Central Excise Tariff, supporting the argument of non-excisability.

Marketability of Cocoa Liquor:
Although the issue of marketability was raised, the Tribunal did not delve into it extensively due to the finding in favor of the appellants on the excisability aspect. The Commissioner had determined marketability based on the liquor being sent to another company for further processing, indicating its commercial viability. However, the Tribunal's decision on non-excisability rendered further discussion on marketability unnecessary.

Assessable Value Determination:
The case also involved the determination of the assessable value of the cocoa liquor. The appellants challenged the addition of certain elements in the assessable value, leading to the imposition of a demand and penalty. The Commissioner remanded the proceedings back to the Asstt. Commissioner for re-determination of the assessable value, acknowledging that the proposed increase in the show cause notice might not be accurate. The Tribunal's decision in favor of the appellants on the excisability issue rendered the assessment of assessable value moot, resulting in the allowance of the appeals.