2006 (8) TMI 390 - AT - Central Excise

Summary

Issues:
Classification of products under different CET sub-headings and waiver of pre-deposit of duty and penalty.

Classification Issue:
The case involved a dispute regarding the classification of products, specifically Cheetos masala ball and Cheetos X and O's, under CET sub-heading 1904.10 as "prepared foods obtained by the swelling or roasting of cereals or cereal products" as opposed to the claim of the assessee for classification under CET sub-heading 2108.99 as "edible preparations not elsewhere specified or included" bearing a brand name. The contention revolved around whether the products were exclusively obtained by swelling or roasting of cereals and if they should be classified as namkeens under Chapter Heading 21.08 based on Note 10 to Chapter 21.

Analysis - Classification Issue:
The applicants argued that the products contained ingredients beyond cereals like gram flour, wheat fiber, edible oil, and seasoning, and underwent processes like extrusion and dehydration, thus not fitting the criteria under Chapter Heading 19.04. They relied on precedents such as Tiemac Snack Food Pvt. Ltd. to support their claim for classification under Chapter Heading 21.08. On the other hand, the respondent contended that the products were indeed obtained by swelling and roasting, distinguishing the case from Pepsi Foods Ltd. The Tribunal found a strong prima facie case for waiver based on similarities in the manufacturing process with Tiemac Snack Food Pvt. Ltd., the presence of additional ingredients not permitted under Chapter 19.04, and the potential overriding effect of Note 10 to Chapter 21 as seen in Globe Confectionery.

Waiver of Pre-deposit Issue:
The second aspect of the judgment dealt with the waiver of pre-deposit of duty amounting to Rs. 11,28,46,060/- and a penalty of Rs. 50,00,000/- covering a specific period. The Tribunal considered the arguments from both sides regarding the applicability of Chapter Heading 19.04 and the potential classification under Chapter Heading 21.08, ultimately granting the waiver and staying the recovery of duty and penalty pending the appeal.

Analysis - Waiver of Pre-deposit Issue:
After carefully evaluating the contentions presented, the Tribunal found merit in the applicant's arguments, especially concerning the presence of additional ingredients beyond cereals in the disputed products and the potential application of Note 10 to Chapter 21. This led to the decision to waive the pre-deposit of duty and penalty, providing relief to the appellant pending the appeal process.

In conclusion, the judgment addressed the classification issue regarding the disputed products and the subsequent waiver of pre-deposit of duty and penalty, highlighting the importance of ingredients, manufacturing processes, and relevant legal provisions in determining the appropriate classification under the Central Excise Tariff.