2015 (9) TMI 982 - AT - Central Excise

Denial of exemption claim - Classification of salted potato chips - 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 - 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 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. Ratio of judgment 2011 (10) TMI 564 - UTTARAKHAND HIGH COURT is squarely applicable to the facts of this case and hence, in view of this judgment also, the goods in question, would be covered under Heading No. 2005 20 00 of Chapter 20 and accordingly, the same would be exempted from duty under Notification No. 3/2006-C.E. (Sl. No. 22). - 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 cease to be covered by the Sl. No. 29 of the Notification. - as per the CBEC Circular No. 841/18/2006-CX dated 06/12/2006 although they made classify under Central Tariff Heading 2106 90 99 the item in question is not dutiable, therefore, we hold that impugned order is not sustainable in the eyes of law consequently impugned order is set aside - Decided in favour of assessee.

Summary

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

Analysis:
1. The appellants classified salted potato chips under Heading No. 2005 20 00, availing full duty exemption under Notification No. 3/2006-C.E. The department argued for classification under Tariff Heading No. 2106 90 99 as "other food preparations." The Commissioner confirmed duty demand and imposed penalties, invoking extended period under Section 11A(1).

2. The appellant's counsel argued that the potato chips should be classified under Heading No. 2005 20 00 based on historical classifications and relevant case law. They cited a High Court judgment supporting their classification and exemption under Notification No. 3/06-C.E. The Commissioner's classification under Heading No. 2106 90 99 was contested based on Board Circulars and Tribunal precedents.

3. The Department reiterated the Commissioner's findings, emphasizing the classification under sub-Heading No. 2106 90 99 as "food preparations." They argued against the appellant's claim for full duty exemption under Notification No. 3/06-C.E., asserting the goods as "ready to eat packaged food" under Sl. No. 30 of the Notification.

4. The Tribunal analyzed the dispute over classification, considering the historical and current Central Excise Tariff. They referenced the Board's Circular and a High Court judgment supporting the classification of potato chips under Heading No. 2005 20 00. Even if classified under Heading No. 2106 90 99, the goods would be exempted under Sl. No. 29 of the Notification.

5. The Tribunal concluded that the classification of salted potato chips under Heading No. 2005 20 00 was appropriate, entitling them to full duty exemption under Notification No. 3/2006-C.E. They emphasized the relevance of CBEC Circular No. 841/18/2006-CX, clarifying the exemption for namkeens and mithai even in packaged forms. The impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis highlights the legal arguments, precedents, and circulars considered in the judgment, leading to the decision in favor of the appellants regarding the classification and duty exemption of salted potato chips under the Central Excise Tariff.