2017 (3) TMI 1282 - AT - Central Excise

Classification of goods - rate of duty - wheat puffs - the assessee wanted classification under CETA 2107 for the period up to 1994-95 and from 16.03.1995 onwards under 2108, whereas the department classified it under CETA 1904 10 - Soya nuts - The assessee sought their classification of Soya Nuts under CETH 2107 99 however, the department classified the same under CETH 2107 91 - The claim of the assessee is that 98.5% of the goods manufactured by them have been cleared to Integrated Child Development Scheme (ICDS), which is an organization of the State Governments of Haryana and Delhi with the objective to improve the nutrition level among young children as well as expecting and lactating mothers. Held that - as regards soya nuts, the wording put up in unit containers and ordinarily intended for sale , in trade parlance refers to goods cleared for sale in convenient sizes of 100 gms., 200 gms. etc. for retail sale. The unit container cannot be used to refer to bulk packing of 10 Kgs./15 Kgs. which are mostly used in clearance for wholesale. It is also not in dispute that the goods have been cleared to ICDS for free supply and not for sale. Hence, the most appropriate classification for these goods is 2107.99. We note that the goods of 2107.99 were chargeable to nil rate of duty as per tariff rate up to 28.02.1994 and with effect from 01.03.1994 the goods enjoyed nil rate of duty under various N/N. 6/92-CE dated 01.03.1992 and 2/94 dated 01.03.1994. As regards wheat puffs, clearances made to ICDS in jumbo packs cannot be considered as clearance in unit containers. Consequently, the classification of the product Wheat Puff will be most appropriate under CETH 1904.90 and not under 1904 10. It is necessary for the issue to go back to the adjudicating authority for re-quantification of such demand of excise duty in respect of clearances of both the products made in unit containers to the agencies other than government (ICDS) - appeal allowed by way of remand.

Summary

Issues:
Classification and rate of duty for Wheat Puff and Soya Nuts products from 1993-95 to 1996-97.

Detailed Analysis:

1. Background and Previous Litigation:
The appeals were filed against an Order-in-Original dated 28.03.2008 by the Commissioner, Central Excise, Meerut. The matter had previously reached the Hon'ble Supreme Court, which remanded it back to the original authority for fresh determination based on specific observations and directions.

2. Classification of Soya Nuts:
The dispute centered around the classification of Soya Nuts under CETH 2107.99 or 2107.91. The Revenue argued for classification under 2107.91 due to packaging in unit containers, while the assessee contended that the goods were supplied for free and not intended for sale. The Tribunal agreed with the assessee, classifying the goods under 2107.99, eligible for nil rate of duty.

3. Classification of Wheat Puff:
The classification issue for Wheat Puff involved determining if clearances in 10/15 Kg packs constituted goods put up in unit containers intended for sale. The assessee sought classification under 2107.91 or 2108.91, while the department classified it under 1904 10. The Tribunal ruled that clearances to ICDS in jumbo packs were not in unit containers for sale, classifying the product under 1904.90 instead of 1904 10.

4. Clearances in Unit Containers with Brand Name:
For Wheat Puff and Soya Nuts cleared in unit containers with the brand name 'BONTON,' a different classification was applicable. Wheat Puffs with brand name were classified under 1904 10, while Soya Nuts were classified under 2109 91, subject to excise duty at appropriate rates.

5. Re-quantification and De-novo Order:
The Tribunal directed the adjudicating authority to re-quantify the excise duty demand for clearances in unit containers to non-government agencies. The issues of duty demand, interest, and penalties were to be re-evaluated based on the new classification and quantities sold in unit containers.

6. Final Decision:
The appeals were disposed by way of remand, with the Tribunal providing detailed classifications for both Soya Nuts and Wheat Puff products based on the nature of clearances and packaging. The adjudicating authority was tasked with issuing a fresh order after considering the new classifications and quantities sold in unit containers.

This comprehensive analysis outlines the key issues, arguments, and the Tribunal's decisions regarding the classification and rate of duty for the products in question, ensuring a detailed understanding of the judgment.