2009 (6) TMI 780 - AT - Central Excise

Summary

Issues:
1. Correct classification of the product Sugar Cone in Aluminum foil cone.
2. Dispute regarding classification under Heading 1905.3290 or 7612.9090.
3. Application to dispense with the pre-deposit of duty amount and penalty.

Issue 1: Correct Classification of the Product Sugar Cone in Aluminum Foil Cone

The dispute in this case revolves around the correct classification of the product Sugar Cone placed in Aluminum foil cone manufactured by the appellant. The appellants classify the sugar cones under Heading 1905.3290 and the aluminum sleeves under Chapter 76. However, the controversy arises when the composite product of sugar cone in aluminum foil cone is considered. The Revenue argues for classification under Heading 7612.9090, leading to proceedings against the appellants for a change in classification and recovery of differential duty.

Issue 2: Dispute Regarding Classification under Heading 1905.3290 or 7612.9090

The Assistant Commissioner initially accepted the appellant's contention that the aluminum foil cone is a covering for packing ice-cream along with the sugar cone. By applying Rule 3(4) of General Rules of Interpretation, he classified the product under Chapter 19, favoring the appellants. However, the Commissioner (Appeals) overturned this decision and sided with the Revenue's argument for classification under Chapter 76. The Tribunal noted that the dispute only pertains to the composite product of sugar cone in aluminum foil cone, emphasizing that the aluminum foil cones are not containers under Chapter 76. The Tribunal found merit in the appellant's argument that the product should be classified under Heading 1905.32, considering the weight distribution and the nature of the product.

Issue 3: Application to Dispense with Pre-Deposit of Duty Amount and Penalty

The appellants sought to dispense with the condition of pre-deposit of duty amount and penalty. After considering the arguments and the classification issue, the Tribunal found in favor of the appellants, allowing the stay petition unconditionally. The Tribunal highlighted that the balance of convenience favored the appellants, especially since the original adjudicating authority had ruled in their favor. Therefore, the application to dispense with the pre-deposit of duty amount and penalty was granted by the Tribunal.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Ahmedabad, addressed the issues of correct classification of the product Sugar Cone in Aluminum foil cone, the dispute regarding classification under different headings, and the application to dispense with the pre-deposit of duty amount and penalty. The Tribunal ruled in favor of the appellants, emphasizing the classification under Heading 1905.32 for the composite product and allowing the stay petition unconditionally.