2019 (1) TMI 244 - AT - Central Excise

Clandestine manufacture and removal - Restaurant Business - preparation and sale of Indian, Continental, Fast food, Desserts, Biscuits, Cake, Chocolate, etc. - products under Chapter-18 and 19 - it was alleged that during the period June, 2008 to Feb. 2013 the Central Excise duty was not paid nor registration was taken - invocation of extended period of limitation - SSI benefit denied - Held that - When it is an admitted fact that the appellant was duly registered with Commercial taxes department, has neither charged nor calculated any excise duty, recorded the turnover in balance sheets, books of accounts, maintained vouchers, menu card, bills etc., invocation of extended period on the ground of alleged evasion and suppression of facts is not tenable, and therefore the demand for the extended period alongwith penalty needs to be set aside. The contention that products of Chapter Heading 16 to 19 and 15 are exempt, if the same are prepared in the Hotel and Restaurant, whether consumed at the place or not, excludes items under Chapter -1905, which are related to bread, pastry, cakes and biscuits, leaving behind certain items under the said tariff. Therefore, the demand to the extent of items under Chapter heading cake and pastry for the normal period of limitation, from the relevant date is held to be chargeable and therefore demand to the extent of ₹ 5,41,959/- and ₹ 25,553/- stand confirmed - remaining demand alongwith the penalty is set aside. Appeal allowed in part.

Summary

Issues:
Appeal against confirmation of demand under show cause notice for Central Excise duty on bakery products and related items, challenge on merits and limitation, SSI benefit denial, interpretation of exemption notification, extended period applicability, bonafide belief defense.

Analysis:
The appeal was filed against the confirmation of demand under a show cause notice for Central Excise duty on bakery products and related items. The appellant, engaged in running a Restaurant Business, argued that certain products were exempted under a specific notification. The department alleged non-payment of duty and clandestine removal of products, leading to the demand. The appellant contended that tailor-made food items with short shelf life were not excisable goods, and SSI benefit was granted for such turnover. However, demand towards specific items like pastry, biscuits, and chocolate was maintained as marketable and excisable.

The appellant challenged the confirmation of demand on both merits and limitation grounds, arguing against the sustainability of the demand and the applicability of the extended period. The department, represented by the Ld. DR, relied on the findings in the order-in-original. The Tribunal considered the submissions and found that the appellant had been running the Restaurant for a long time, offering a variety of food items. The adjudication authority had granted SSI benefit for certain turnover, excluding trading items with short shelf life from excisable goods calculation.

The Tribunal noted that the appellant believed in the exemption under the relevant notification and had maintained proper records and compliance with tax authorities. The department's allegations lacked evidence of evasion or suppression. Therefore, the invocation of the extended period based on alleged suppression was deemed untenable. The Tribunal held that certain items like cakes and pastries fell under chargeable categories, confirming demand for those items for the normal limitation period. The remaining demand and penalty were set aside, with only specific amounts confirmed for payment based on the items found chargeable.

In conclusion, the appeal was allowed in part, with consequential benefits granted to the appellant. The Tribunal's detailed analysis considered the nature of products, exemption notifications, bonafide belief, and compliance with tax regulations in determining the liability for Central Excise duty on bakery products and related items.