2019 (7) TMI 486 - AT - Central Excise

Classification of goods - Nimbus Masala Soda - whether classified under Chapter Heading 22029029 (fruit pulp or fruit juice based drinks) or under Heading 22021020 (Lemonade)? - period September 2014 to June 2015 - HELD THAT - The products which are not essentially and waters with flavouring, elements as lime and lemon, would not fall for classification under 22021020 (lemonade). On the other hand, if the products are not essentially water and the lemon juice is the basis of fruit drink and is not merely use as a flavouring agent the product will fall under 22029029. Nimbu masala soda 7 UP alongwith other products in the said decision is held to be classified under Tariff Item No. 22029029 as fruit pulp or fruit juice based drink - the Adjudicating Authority below have ignored the relevant criteria that lemon juice has been used by the appellant as fruit juice and not merely as flavouring agent while manufacturing Nimbus soda. Imposition of penalty - HELD THAT - There was no malafide intention of the appellant to evade the duty. Penalty upon the company as well as Shri Gopal Krishna Kasturi is therefore opined to have wrongly been imposed. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Classification of Nimbu Masala Soda, imposition of central excise duty, penalty on the company and the Plant Accountant.

Classification of Nimbu Masala Soda:
The case involved the classification of Nimbu Masala Soda by the company under Chapter Heading 22029029 instead of 22021020 as lemonade. The Department alleged that this misclassification led to a shortfall in central excise duty payment. The Tribunal referred to a decision by the Larger Bench which clarified that products not essentially water with flavoring elements like lime or lemon fall under 22029029 as fruit pulp or fruit juice based drinks. The Tribunal found that Nimbu Masala Soda was correctly classified under 22029029 as it was based on lemon juice, not just used as a flavoring agent. The Tribunal set aside the order due to the incorrect classification.

Imposition of Central Excise Duty and Penalty:
The Department had imposed central excise duty and penalty on the company and the Plant Accountant due to the alleged misclassification. However, the Tribunal, based on the Larger Bench decision, concluded that there was no malafide intention to evade duty. The Tribunal noted that the Department had previously issued show cause notices to the appellants on similar observations. Considering all aspects, the Tribunal held that the penalty was wrongly imposed and set aside the order, allowing both appeals.

In conclusion, the Tribunal's judgment revolved around the correct classification of Nimbu Masala Soda and the subsequent implications on central excise duty and penalties. The decision was based on a thorough analysis of the product, relevant legal provisions, and previous show cause notices, ultimately leading to the setting aside of the order and allowing both appeals.