1999 (5) TMI 264 - AT - Central Excise

Summary

Issues:
Whether addition of dry fruits like nuts, raisins on duty paid chocolate moulded after melting and solidification creates a new commodity liable to duty.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolved around the question of whether the addition of dry fruits to duty paid chocolate after melting and solidification constitutes the creation of a new dutiable commodity. The lower Appellate Authority had ruled that this process did not amount to manufacturing, thus no fresh duty liability was incurred on the chocolate with added dry fruits. The Revenue, dissatisfied with this decision, appealed the order.

In the grounds of appeal, the Revenue argued that chocolates in any form, as per sub-heading 1803.00, are taxable, including chocolates with nuts, fruits, or kernels. They contended that chocolates in block form or slabs, when repacked into consumer packs, remain taxable under the same sub-heading. The Revenue emphasized that the process of manufacturing chocolates with added ingredients involves both manual labor and machinery, making it a clear manufacturing process. Therefore, they urged for the dismissal of the appeal and setting aside the lower Authority's order.

On the contrary, the Respondents, supported by their advocate, referenced a Supreme Court judgment in Prabhat Sound Studios v. Addl. Collector of Central Excise, where a similar tariff description was analyzed. They argued that the addition of fruits or dry fruits to duty paid chocolate in block form does not create a new dutiable commodity. Citing the Supreme Court's ruling, they contended that had the chocolate with added ingredients been cleared as such from the factory for the first time, it would have been dutiable. Therefore, they asserted that no new product emerged during the manufacturing process, aligning with the precedent set by the Supreme Court.

After careful consideration of the arguments presented by both sides, the Appellate Tribunal concurred with the lower Appellate Authority's detailed order. They agreed that the addition of dry fruits to duty paid chocolate did not result in the creation of a new product. Drawing parallels with the Supreme Court judgment in Prabhat Sound Studios, the Tribunal found the Tariff entries in both cases to be similar. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision that no fresh duty liability arose from the process in question.