2012 (11) TMI 354 - AT - Central Excise

Demand of duty whether activity amounts to manufacture Held that - Putting together different items of food in one tray does not amount to manufacture - appellants are not giving any impression that the items like cheese, jam etc. are manufactured by the appellants - no ground for demanding excise duty for the activity of putting together different items of food in a tray, and serving it with their label inserted in the pouch of cultery to be used Their name card put in the cutlery package can at best convey a message that catering is done by the Appellants and not that the goods are manufactured by the Appellants waiver of pre-deposit allowed

Summary

Issues:
1. Whether the appellants are liable to pay excise duty on the complete tray of food items served with their brand name?
2. Whether putting together different food items in a tray amounts to manufacturing under the Central Excise Tariff?
3. Whether the appellants conveying their catering service through a name card in the cutlery pack constitutes manufacturing for excise duty purposes?

Analysis:
1. The case involved flight caterers who prepared food items in their factory, including a cutlery pack with their name, and served them on aircraft along with other items like dal, rice, curry, butter, and jam from other manufacturers. The Revenue argued that the complete tray with the appellants' brand name constituted an item manufactured by them, thus attracting excise duty under sub-heading 2108.99 of the Central Excise Tariff.

2. The Counsel for the appellants contended that they were not engaged in further manufacturing activities in-flight as alleged by the Revenue. The Tribunal analyzed the situation and concluded that merely assembling different food items in a tray did not amount to manufacturing. The appellants did not claim the other items as their own manufacture, and the presence of their name on the cutlery pack was to signify catering services, not food manufacturing.

3. The Revenue argued that since the final tray served to passengers carried the appellants' brand name, excise duty should be levied on the full value of the tray billed to the Airlines. However, the Tribunal held that the act of combining various food items in a tray, along with a name card in the cutlery pack indicating the caterers, did not establish manufacturing by the appellants. The name card served the purpose of identifying the catering service provider and not the manufacturer of the food items.

In conclusion, the Tribunal granted a waiver of duty for the appellants, as they did not meet the criteria for excise duty liability based on the activities of assembling and serving food items in trays with their branding. The decision emphasized that the presence of the caterers' name in the cutlery pack did not imply manufacturing by them, leading to a stay on the collection of dues during the appeal's pendency.