2009 (2) TMI 693 - Commissioner - Central Excise

Issues Involved:
1. Classification of "Tea Time Puff" under the Central Excise Tariff.
2. Duty demand and imposition of penalty.
3. Interest on the duty demanded.

Detailed Analysis:

1. Classification of "Tea Time Puff" under the Central Excise Tariff:

The primary issue revolves around whether "Tea Time Puff" should be classified as "biscuits" under CETH 1905.11 (earlier tariff) and 1905.90.20 (new tariff) or under "other bakers' wares" as per the appellant's claim.

- Appellant's Argument: The appellants argued that "Tea Time Puff" is not a biscuit but a layered product similar to patties, known locally as "khari" or "khasta." They contended that their product should be classified under "other bakers' ware" falling under chapter sub-heading 1905.90 (earlier tariff) and 1905 90 90 (new tariff), which attracts NIL duty.

- Department's Argument: The department argued that the ingredients and manufacturing process of "Tea Time Puff" are similar to that of biscuits. They relied on the statement of the Manager Operations and the book "Modern Cookery" by Thangam E. Philip to support their claim that "Tea Time Puff" should be classified as biscuits.

- Judgment Analysis: The judgment emphasized the need to classify goods according to their popular meaning or commercial sense. It was noted that the term "biscuits" evokes a different mental picture compared to the layered product "Tea Time Puff." The judgment also highlighted the differences in the manufacturing processes and ingredients, supporting the appellant's claim that "Tea Time Puff" is more akin to "khari" or "patties" rather than biscuits. The judgment concluded that "Tea Time Puff" should be classified under 1905.90 (earlier tariff) and 1905 90 90 (new tariff) as "other bakers' ware."

2. Duty Demand and Imposition of Penalty:

- Appellant's Argument: The appellants argued that since the classification of "Tea Time Puff" was under dispute, the imposition of penalty was not justified. They cited precedents where penalties were not imposed in cases of classification disputes.

- Judgment Analysis: The judgment agreed with the appellants, stating that the duty demand could not be sustained as "Tea Time Puff" was correctly classified under 1905.90/1905 90 90. Consequently, the demand for interest and the imposition of penalty were also unwarranted. The judgment further noted that there was no finding of suppression or willful misstatement by the lower authority, which would justify the imposition of a penalty.

3. Interest on the Duty Demanded:

- Judgment Analysis: Since the duty demand was not sustained, the judgment concluded that the demand for interest was also not warranted.

Conclusion:

The judgment set aside the impugned order, providing consequential relief to the appellants. The "Tea Time Puff" was classified under 1905.90 (earlier tariff) and 1905 90 90 (new tariff) as "other bakers' ware," attracting NIL duty. The demand for duty, interest, and the imposition of penalty were all overturned.

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