2007 (3) TMI 16 - AT - Central Excise

Demand Alleged that assessee do not dispute the liability to pay the duty on the goods and accordingly demand for duty from him Authority after considering all the factor allow the appeal with consequential relief.

Summary

Issues Involved:
1. Classification of various products.
2. Eligibility for exemption from payment of duty under Notification 6/2002-C.E.
3. Penalties imposed on the assessee.

Detailed Analysis:

1. Classification of Various Products:

The products under dispute are categorized into four classes: sauces, soups/broths, beverage powders, and spices. The classification of these products under the Central Excise Tariff (CET) is crucial for determining their eligibility for duty exemptions.

Class 1: Sauces
- The products listed under this class include various types of sauces and mayonnaise (e.g., Pizza Gravy Sauce, Best Foods Real Mayonnaise Sauce, Thousand Island Dressing, etc.).
- The appellants claimed classification under CET sub-heading 2103.10, which covers "Sauces, Ketchup and the like and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard."
- The authorities accepted the classification but denied the exemption under Serial No. 10 of Notification 6/2002, arguing that these products are "mixed condiments and mixed seasonings" rather than "sauces or ketchup."
- The Tribunal, however, disagreed, citing various dictionary definitions and the HSN Explanatory Notes, which include mayonnaise, salad dressings, and other sauces under the heading 21.03. The Tribunal concluded that these products are indeed sauces or ketchups and thus eligible for the exemption.

Class 2: Soups/Broths
- The products in this class include Knorr Chicken Broth Powder, Knorr Instant Tomato Soup Powder, etc.
- The Excise authorities classified these products under CET sub-heading 2108.99, a residuary heading for edible preparations not elsewhere specified.
- The Tribunal found that these products, given their ingredients and usage (ready to drink by dissolving in hot water), should be classified under Chapter Heading 21.04 as soups or broths. They are thus eligible for exemption under Serial No. 11 of Notification 6/2002.

Class 3: Spices
- The products in this class include various seasoning mixes (e.g., Taco Seasoning Mix, Onion Garlic Seasoning Mix).
- The assessees did not dispute the liability to pay duty on these products, and the Tribunal upheld the duty demand of Rs. 8,14,276.44.

Class 4: Beverage Powders
- The products in this class include Kissan Fruit Kick Orange Fruit Beverage Powder and Kissan Mr. Fruit Orange Juicy Bits.
- The Tribunal classified these products under Chapter Heading 20.01, which covers "Preparations of vegetables, fruits and fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter." They are thus eligible for exemption under Serial No. 9 of Notification 6/2002.

2. Eligibility for Exemption from Payment of Duty:

- The Tribunal held that the products falling under Class 1 (sauces) are eligible for exemption under Serial No. 10 of Notification 6/2002.
- The products under Class 2 (soups/broths) are eligible for exemption under Serial No. 11 of Notification 6/2002.
- The products under Class 4 (beverage powders) are eligible for exemption under Serial No. 9 of Notification 6/2002.
- The duty demand on spices (Class 3) was upheld as the assessees did not dispute it.

3. Penalties Imposed on the Assessee:

- The Tribunal set aside the penalties imposed on the assessees, noting that the dispute related to classification, which does not warrant the imposition of penalties.

Revenue's Appeal:

- The Revenue challenged the extension of the exemption benefit to certain products (Best Food Tartar Sauce, Knorr Demi-Glace Sauce Powder, Margarita Mayonnaise Sauce) under Serial No. 10 of Notification 3/2001.
- The Tribunal, referencing its earlier findings, held that these products are indeed sauces or ketchups and are eligible for the exemption.

Conclusion:

- Appeals E/51, E/52, E/56, E/66, and E/1848 of 2006 were allowed in toto.
- Appeals E/3787/2002, E/57, E/65, and E/3262 of 2006 were partly allowed by upholding the duty demand on spices.
- Appeal E/1986/03 was rejected.
- Appeal E/247/03 filed by the Revenue was rejected.