2013 (12) TMI 748 - AT - Central Excise

Benefit of Notification No. 3/2006 Waiver of Pre-deposit - Revenue was of the view that the product is white chocolate which does not attract Sl. No. 16 of the notification Held that - The absence of cocoa butter in the product was found on verification of records of the assessee - presence or absence of cocoa butter was immaterial - As per HSN Notes, white chocolate should be necessarily composed of cocoa butter among other ingredients - This requirement is clearly discernible from the Explanatory Notes under HSN Headings 1704 and 1806 - Prima facie, the finding recorded by the adjudicating authority that the presence or absence of cocoa butter is irrelevant to classification of the goods as white chocolate is not legally or factually tenable Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
1. Classification of goods as sugar confectionery or white chocolate under Notification No. 3/2006-CE.
2. Denial of benefit of exemption notification due to the classification of goods.
3. Relevance of the presence of cocoa butter in determining the classification of white chocolate.
4. Applicability of a previous Stay Order to the current case based on the presence of cocoa butter in the product.

Analysis:
1. The appellant sought waiver and stay regarding the duty demanded for the period from July 2009 to September 2010, claiming the product as sugar confectionery under Notification No. 3/2006-CE. The adjudicating authority classified it as white chocolate, denying the benefit of the notification.

2. The appellant argued that they did not use cocoa butter during the specified period, supported by records and verification by the Range Officer. The counsel highlighted the misunderstanding of the Tribunal's decision in Nestle India Ltd. v. CCE, emphasizing the necessity of cocoa butter in white chocolate as per the HSN.

3. The Commissioner (AR) reiterated the authority's findings, referencing a previous Stay Order that directed a pre-deposit due to the presence of cocoa butter in the product manufactured from September 2004 to June 2009. The appellant clarified that cocoa butter was no longer used after that period, distinguishing the current case.

4. After considering the submissions, the Tribunal found the absence of cocoa butter verified by the Range Officer. It noted the necessity of cocoa butter in white chocolate as per the HSN and Explanatory Notes. The Tribunal deemed the authority's classification as 'white chocolate' without considering cocoa butter as legally unsustainable. The previous Stay Order was deemed inapplicable due to the change in the product composition. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery for the adjudged dues.