2019 (10) TMI 813 - AT - Central Excise

Process amounting to manufacture - classification - placing of the vegetables cuisine, rice, roti, salad etc. on a tray and placing the leaflets bearing the logo as well as the name of Ambassador Sky Chef in the cutlery pack placed on the tray - whether classifiable under Heading 2108.99 upto 28.02.2005 and under Tariff Item 2106 9099 thereafter or not? - HELD THAT - The issue decided in the case of TAJ SATS AIR CATERING LTD. VERSUS CCE, DELHI-II 2016 (3) TMI 777 - CESTAT NEW DELHI , where it was held that The Central Excise duty was said to be demanded on the full value of the final complete food tray as served to the passengers on board the aircraft. There is nothing in the impugned order which will substantiate and support the claim of the Revenue on the taxability of such complete food tray on whole value. There are no reason to deviate from the observation of the Tribunal in the aforesaid case which has been consistently followed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of food items supplied to airlines under Central Excise Tariff; Demand for duty, interest, and penalty; Applicability of brand-name on food preparations; Time-bar for issuing demand-cum-show cause notice.

Classification of Food Items:
The appeal involved the classification of food items supplied to airlines under the Central Excise Tariff. The appellant supplied food items packed as per airline specifications and loaded according to flight schedules. The issue was whether placing vegetables, rice, roti, salad, and leaflets bearing a brand name in the cutlery pack amounted to food preparation bearing a brand name. The demand for duty, interest, and penalty was based on this classification. The Tribunal analyzed the process of supply by the appellant to airlines and the nature of the items supplied. It was observed that the appellant did not manufacture branded food preparations as alleged by the Revenue. The Tribunal found that the demand for duty on the full value of the food tray served to passengers was not sustainable as the items supplied by the appellant did not have a brand name when cleared from their premises.

Applicability of Brand-Name:
The issue of brand-name on food preparations was also considered. The Original Authority alleged that the appellant supplied food preparations with a brand name to airlines. However, the Tribunal noted that the food prepared by the appellant was supplied without a brand name, and the label with the logo and name of the appellant was placed separately in the cutlery pouch. The Tribunal did not further examine the brand-name issue as the demand for duty was found to be unsustainable based on the lack of liability of the appellant for manufacturing branded food preparations.

Time-Bar for Issuing Demand:
The appellant contested the demand on the ground of time-bar, as the demand-cum-show cause notice was issued after several years invoking an extended period due to alleged suppression of facts. The Tribunal found that the demand for the extended period was unjustified as there was no substantial ground to allege fraud or suppression by the appellant. The Tribunal noted that the demand for the extended period was not sustainable considering the nature of the dispute, which involved legal interpretation rather than intentional evasion of duty. The impugned order was held to be unsustainable both on the question of manufacture and time-bar, leading to the appeal being allowed with consequential relief.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal based on the analysis of the classification of food items, the absence of liability for manufacturing branded food preparations, and the unjustified demand for the extended period. The judgment highlighted the importance of legal interpretation in tax matters and emphasized the need for substantial grounds to support demands for extended periods.