2010 (5) TMI 509 - AT - Central Excise

Waiver of pre-deposit - The appellants are the manufacturer of Spray Dried Gum Powder Edible Preparation viz. Fresubin-Vanilla , Fresubin-DM and Fresubin-Hifibre - The appellants had tried to persuade us that the said products amount to food mix on the basis of certain certificates stated to have been submitted - It is settled law that in the matter of classification of such products the common parlance theory plays an important role and unless the same is applied, the classification, process cannot be completed - Prima facie, do not find any case having been made out for grant of stay in relation to the demand of duty is concerned - As regards the penalty is concerned, certainly the show cause notice does not make specific reference of Section 11AC based on which the penalty has been imposed. Held that deposit the duty amount within a period of eight weeks and on deposit of such duty amount, balance amount including the interest and penalty stands waived till the disposal of the appeal.

Summary

Issues:
1. Challenge to order passed by Commissioner (Appeals) dismissing the appeal against Asstt. Commissioner's order confirming demand of Rs. 3,59,333/- with interest and penalty.
2. Classification of products "Fresubin-Vanilla", "Fresubin-DM", and "Fresubin-Hifibre" under Central Excise Tariff Act, 1985.
3. Interpretation of ingredients and common parlance theory for classification as food products.
4. Grant of stay in relation to duty demand and waiver of interest and penalty.

Analysis:

1. The appellants contested the order passed by the Commissioner (Appeals), Bhopal, which upheld the demand of Rs. 3,59,333/- with interest and penalty imposed by the Asstt. Commissioner, Chandigarh. The challenge was based on the order's dismissal, leading to the appeal before the Appellate Tribunal CESTAT, New Delhi.

2. The appellants, engaged in manufacturing Spray Dried Gum Powder Edible Preparation, sought exemptions under Notification No. 3/2007-C.E. for products like "Fresubin-Vanilla", "Fresubin-DM", and "Fresubin-Hifibre." These products were treated as instant food mix under chapter sub-heading 2106.90 but were found not to meet the food item requirements, leading to a show cause notice and subsequent legal proceedings.

3. The analysis of the products revealed they primarily consisted of minerals and vitamins, raising the question of their classification as food products or food mixes in common parlance. The appellants argued for their classification as food mix based on submitted certificates. The common parlance theory was emphasized for proper classification, with the tribunal finding no strong case for a stay on duty demand. However, specific reference to Section 11AC for penalty imposition was lacking, leading to a waiver of interest and penalty upon depositing the duty amount within eight weeks.

4. While the duty amount was to be deposited within a specified period, the interest and penalty were waived until the appeal's disposal. The tribunal's decision highlighted the importance of common parlance theory in product classification and the necessity for meeting legal requirements for penalty imposition. Compliance was set for a specific date, with final disposal scheduled for a later date to address the issues comprehensively.