2006 (8) TMI 404 - AT - Central Excise

Summary

Issues:
Application for waiver of pre-deposit of duty and penalty under Rule 209A of the Central Excise Rules concerning classification of fruit juices and fruit juice based drinks under Chapter Heading 20.01 and 2202.40.

Analysis:
The case involves an application for the waiver of pre-deposit of duty and penalty amounting to Rs. 14,28,62,052/- on M/s Dynamix Dairy Industries Ltd. (DDIL) and a penalty of Rs. 50 lakhs on the General Manager under Rule 209A of the Central Excise Rules. The dispute revolves around the classification of fruit juices and fruit juice based drinks manufactured by the applicant under Chapter Heading 20.01 and 2202.40 of the Central Excise Tariff Act. The applicant procured concentrated juice with known brix value and added water to meet specific brix value requirements for the final product. They contended that their manufacturing process aligns with the HSN Explanatory Notes for Chapter Heading 20.01, emphasizing compliance with international standards set by Codex for fruit juices.

The applicant initially classified their products under Chapter Heading 2001.10, which was approved, and subsequently claimed duty exemption under Notification No. 3/2001. However, show cause notices were issued alleging misclassification under Heading 2202.99 and demanding substantial duties. The Commissioner upheld the notices and imposed penalties, leading to the present appeal for waiver of pre-deposit. The applicant argued that their products qualify as re-constituted juices under Chapter Heading 20.01, meeting Codex standards for brix values and water content. Additionally, they asserted eligibility for duty exemption under Notification No. 6/2002-C.E., dated 1-3-2002, even if classified under Chapter Heading 2202.40.

The Department contended that the products did not meet the criteria for classification as fruit juices or fruit juice based drinks, citing uncertainties regarding the original juice's brix value and compliance with water addition standards. They relied on a CBEC circular for classification under Heading 2202.99. The Tribunal analyzed the submissions, noting that the applicant's products, derived from fruit concentrates, aligned with re-constituted juices under Chapter Heading 20.01. They emphasized adherence to Codex standards for brix values and dismissed the relevance of the CBEC circular due to subsequent tariff changes. Consequently, the Tribunal ruled in favor of the appellants, waiving the pre-deposit of duty and penalties, and stayed recovery pending appeal disposal.

In conclusion, the Tribunal's judgment centered on the proper classification of the applicant's products under the Central Excise Tariff Act, highlighting adherence to international standards and tariff changes to determine duty liability and penalty imposition, ultimately granting relief to the appellants pending appeal resolution.