2012 (4) TMI 530 - AT - Central Excise

Waiver of pre deposit - Flight catering services - Held that - Prima facie find that meal tray provided in the flight catering is nothing but assembly of various food items purchased from the market and produced in the factory of the appellant/applicant, when prima facie, cannot be termed as an activity falling within the definition of Manufacture calling for the incidence of excise duty. Placing of brand name in the cutlery package can at best be termed as information indicating that the catering was done by the appellant - appellant has a prima facie case for waiver of the condition of pre-deposit. We may note that in a similar matter relating to Tej Sets Air Catering Ltd. the Tribunal granted stay 2012 (11) TMI 354 - CESTAT, NEW DELHI . That even on the principle of parity, the appellant is entitled to waiver of condition of pre-deposit of duty, interest and penalty - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of Central Excise duty confirmed by the order-in-original.
2. Classification of the meal tray under the Central Excise Tariff Act.
3. Whether placing the brand name on the meal tray amounts to manufacture and attracts excise duty.

Analysis:
Issue 1: The appellant sought a waiver of the pre-deposit of Central Excise duty amounting to Rs. 43,43,119/- confirmed by the order-in-original and upheld by the impugned order-in-appeal. The appellant, a flight caterer, prepared meal items in the factory and paid excise duty upon clearance. The Tribunal considered the appellant's case for waiver and granted it based on a prima facie finding that the activity did not fall within the definition of "Manufacture" calling for the imposition of excise duty. The Tribunal cited a similar case where the waiver was granted, establishing parity in treatment.

Issue 2: The Revenue contended that the entire meal tray, with the brand name of the appellant, should be classified under a specific sub-heading of the Central Excise Tariff Act, necessitating the payment of excise duty on such items. However, the appellant argued that they were only paying excise duty on the food items prepared at their unit and were not engaged in further manufacturing activities as alleged by the Revenue. The Tribunal, after considering both sides, found that the meal tray provided in flight catering was essentially an assembly of various food items purchased from the market and produced in the appellant's factory. Placing the brand name on the cutlery package was deemed as merely providing information about the caterer, not constituting manufacturing activity subject to excise duty.

Issue 3: The argument revolved around whether placing the brand name on the final tray supplied for flight catering amounted to manufacturing, thereby attracting excise duty. The Revenue asserted that the presence of the brand name on the tray constituted manufacturing and obligated the appellant to pay excise duty on the tray's value. However, the Tribunal disagreed, stating that the act of placing the brand name was merely for identification purposes and did not transform the activity into manufacturing for excise duty purposes. Consequently, the Tribunal ruled in favor of the appellant, waiving the pre-deposit condition of duty demand, interest, and penalty until the appeal's disposal, restraining the Department from any recovery actions.