2013 (10) TMI 888 - AT - Central Excise

Exemption under Notification No. 3/2006 - Whether cadbury perk can be called as wafer biscuits or not - Revenue was of the view that Cadbury perk cannot be considered as wafer biscuits and therefore exemption is not available Held that - Once it is accepted that the product is a wafer and wafer is a biscuit, it may be difficult to take a view that it is not a wafer biscuit - it will require more detailed consideration - Following International Foods Vs. CCE, Hyderabad 1974 (7) TMI 118 - ANDHRA PRADESH HIGH COURT - wafer is a biscuit and therefore in view of the fact that there is no dispute that the product is covered under the category of wafer in terms of classification of Central Excise Tariff, it may not be correct to take a view to deny the exemption that it is not a wafer biscuit - the appellant has been able to make a prima facie case for eligibility of exemption under Notification No.3/2006. Valuation of Goods Waiver of Pre-deposit - Revenue was of the view that the appellant cannot claim abatement towards re-distributors margin, dealers margin, cheque discounting expenses and secondary freight etc. Held that - The appellant is paying duty following the same system as followed by M/s. Cadbury India Ltd. in respect of their own products - M/s. Cadbury India Ltd. pays duty at the price at which the goods are sold to the redistributors and the same procedure has been followed - the appellant has been able to make out prima facie case against valuation issue also - the requirement of predeposit is waived and stay against recovery during the pendency of appeals is granted.

Summary

Issues involved: Whether 'cadbury perk' is eligible for exemption under Notification No.3/2006-CE and whether the appellant can claim abatement towards various expenses.

Analysis:
1. Exemption Eligibility: The primary issue in this case is whether 'cadbury perk' manufactured by the appellant qualifies for exemption under Notification No.3/2006-CE as a wafer biscuit. The Department argued that 'cadbury perk' does not meet the criteria for wafer biscuits and hence, the exemption does not apply. However, the Tribunal examined the classification of the product under 19 05 32 90 as wafers, which both parties agreed upon. Referring to a previous decision of the Hon'ble High Court of Andhra Pradesh, it was established that a wafer is considered a type of biscuit. The Commissioner relied on the definition of wafer biscuit from the Cambridge dictionary, emphasizing the presence of a creamy filling. Despite the choco layer in the 'cadbury perk,' the Tribunal found it challenging to deny the product's classification as a wafer biscuit. The Tribunal concluded that the appellant had presented a prima facie case for exemption eligibility under the notification.

2. Valuation Issue: The second issue pertains to the valuation of the product, where the appellant claimed to follow the same valuation system as M/s. Cadbury India Ltd. The appellant argued that they pay duty based on the selling price to redistributors, similar to the procedure followed by the company. The Tribunal found that the appellant had made a prima facie case against the valuation issue as well.

3. Decision and Relief: Considering the arguments presented, the Tribunal waived the requirement of predeposit and granted a stay against recovery during the pendency of appeals. The judgment highlighted the importance of the product's classification as a wafer and the valuation methodology followed by the appellant in determining their eligibility for exemption and addressing the valuation concerns.

In conclusion, the judgment analyzed the issues of exemption eligibility and valuation in detail, relying on legal interpretations and previous decisions to determine the appellant's prima facie case for exemption under Notification No.3/2006-CE and the valuation methodology adopted by them.