2013 (12) TMI 747 - AT - Central Excise

Denial of benefit of Notification No. 3/2006 Concessional rate of duty - Revenue was of the view that the goods are White Chocolate and did not answer the description given at Sl. No. 16 Waiver of Pre-deposit - Held that - Prima facie the appellant has made case in their favour both on merits and on limitation - there is no categorical report of CFTRI that the sample was composed of cocoa butter - No other test report was available so as to find the presence of cocoa butter in the subject goods - The relevant HSN Note indicates that white chocolate is composed of sugar, cocoa butter, milk powder and flavouring agents - Even the dictionary meaning of chocolate indicates cocoa butter as an essential ingredient of chocolate - In the absence of documentary evidence of presence of cocoa butter in the goods Thus, the appellant made a good case against a major part of the demand of duty on the ground of time-bar Pre-deposits waived till the disposal stay granted.

Summary

Issues:
Waiver of pre-deposit and stay of recovery sought by the appellant regarding duty demanded based on Notification No. 3/2006-C.E., dated 1-3-2006.

Analysis:
The appellant sought waiver of pre-deposit and stay of recovery concerning the duty demanded by the adjudicating authority, amounting to over Rs. 4.64 crores, for the period from September 2006 to July 2011. The dispute arose from the denial of benefit under Notification No. 3/2006-C.E., which prescribed a concessional duty rate of 5% for certain goods falling under a specific chapter sub-heading. The adjudicating authority held that the goods in question were "White Chocolate" and thus did not qualify for the concessional duty rate. The appellant contested this finding, arguing that the adjudicating authority's conclusion lacked evidential basis. The appellant highlighted that samples sent for testing did not show the presence of cocoa butter, a key component of white chocolate, and challenged the reliance on Wikipedia and a previous tribunal decision. Additionally, the appellant emphasized the distinction between their case and the precedent cited by the authority.

Upon hearing arguments from both sides, the tribunal analyzed the evidence and submissions. The tribunal noted the absence of a definitive report confirming the presence of cocoa butter in the goods, with no other test reports available to support the adjudicating authority's findings. The tribunal expressed doubts regarding the reliance on Wikipedia and found the case law cited by the authority distinguishable from the current situation. Reference was made to the HSN Explanatory Notes on white chocolate and the dictionary definition of chocolate, emphasizing the importance of cocoa butter in chocolate composition. Ultimately, the tribunal found a prima facie case in favor of the appellant on both merit and limitation grounds, leading to the decision to grant waiver of pre-deposit and stay of recovery as requested.

In conclusion, the tribunal granted the appellant's application for waiver of pre-deposit and stay of recovery based on the lack of conclusive evidence supporting the adjudicating authority's findings regarding the nature of the goods in question and the presence of cocoa butter. The tribunal's decision was influenced by the absence of documentary proof of cocoa butter in the goods and the distinguishable aspects of the case from previous legal precedents. The tribunal's analysis focused on the merit of the appellant's arguments and the limitation aspect, leading to the favorable ruling in the appellant's favor.