2015 (7) TMI 627 - AT - Central Excise

Classification of Lays - benefit of exemption - ready to eat packaged food or not - whether the fried and salted potato wafers packaged in retail packing for sale and which are sold under the brand name Lays are classifiable under sub-heading No. 2005 20 00 as potatoes prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of Heading 2006 or the same are classifiable under Heading No. 2006 90 99 as food preparations not elsewhere specified or included - Held that - If the goods are held to be classifiable under Chapter 20, the same would be fully exempt from duty under Notification No. 3/2006-C.E. as Sl. No. 22 of this notification covers all the goods of Chapter 20 and prescribes a nil rate of duty. The Commissioner by classifying the goods, in question, under sub-heading No. 2106 90 99 has held that the same are ready to eat packaged food covered by Sl. No. 30 of the Notification No. 3/06-C.E. for which the rate of duty is 8% adv. There is no difference between Chapter 20 of the Central Excise Tariff prior to 1-1-2005 and Chapter 20 of the Central Excise Tariff w.e.f. 1-1-2005, except that the 8-digit tariff is more detailed and specifically covers a large number of commodities in the General Group of the preparations of vegetable, fruits, nuts or other parts of the plants . In our prima facie view, therefore, Board s Circular dated 6-2-88 clarifying that the potato slices fried in edible oil, salted and packed in printed plastic pouches (or other unit containers) are classifiable under Chapter 20 is applicable Commissioner in the impugned order has held that the goods, in question, are not covered by SI. No. 29 of the Notification No. 3/2006 but are covered by Sl. No. 30, which covers ready to eat food preparation . However, in this regard the Board vide Circular No. 841/18/06-EX, dated 6-12-2006 has clearly clarified that the namkeens and mithai covered by Sl. No. 29 of the Notification No. 3/2006-C.E. would continue to be fully exempted from duty even if the same are in packaged forms. We find that this circular of the Board has been totally ignored by the Commissioner. In any case, when Sl. No. 29 of the Notification No. 3/06-C.E. covers, Sweetmeats (known as misthans or mithai or by any other name) namkeen, bhujia, mixture, chabena and similar edible preparation in ready for consumption form for which nil rate of duty is prescribed, just because such mithais, namkeens, etc., though in ready to eat form are in retail packs, the same would not be ceased to be covered by the Sl. No. 29 of the Notification. - appellant have prima facie case in their favour - stay granted.

Summary

Issues:
Classification of salted potato chips for duty exemption under Central Excise tariff.

Analysis:
1. The appellant classified the product under Heading No. 2005 20 00 for full duty exemption under Notification No. 3/2006-C.E., while the department argued for classification under Tariff Heading No. 2106 90 99, subject to an 8% duty rate.

2. The appellant's counsel referred to historical tariff classifications and legal precedents to support the classification under Heading No. 2005 20 00. They cited a High Court judgment and Board circulars to strengthen their case.

3. The department's representative opposed the appellant's classification, emphasizing the differences in the tariff structure pre and post-2005 and contended that the product should be classified as "food preparations not elsewhere specified or included."

4. The Tribunal analyzed the classification issue, finding that the product falls under Chapter 20 of the Central Excise Tariff, making it eligible for full duty exemption under Notification No. 3/2006-C.E. The Tribunal also highlighted the relevance of a Board circular and a High Court judgment supporting this classification.

5. Even if the product were classified under Heading No. 2106 90 99, the Tribunal noted that it would still be exempt from duty under Sl. No. 29 of Notification No. 3/06-C.E. as a "namkeen" with a nil duty rate. The Tribunal criticized the Commissioner for disregarding a Board circular that confirmed the exemption for packaged namkeens.

6. Ultimately, the Tribunal found in favor of the appellant, ruling that the impugned order was incorrect. The Tribunal granted a waiver of the pre-deposit of duty demand, interest, and penalty for the appeal hearing, staying the recovery process.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and precedents considered by the Tribunal in resolving the classification dispute for duty exemption of salted potato chips under the Central Excise tariff.