2006 (4) TMI 131 - SC - Central Excise

Whether French Fries should be classified under sub-headings 2001.10 or 2001.90 of Chapter 20 of the Central Excise Tariff Act, 1985? Held that - There is a value attached to the brand name, a value which has been recognized in the tariff entry by providing for levy of excise duty on goods bearing a brand name. It may be that the appellant had deliberately omitted the brand name in selling the French Fries to avail of the nil rate of tariff. This cannot detract from the consequences which would follow in law. If the assessee opts not to take advantage of the brand name in its trade, it could at least have the benefit of the rate of duty applicable to unbranded product. Appeal allowed. The The impugned decision of the Tribunal that the Commissioner was wrong and held that the second type of packing was very similar to the first type and, therefore, was also classifiable under T.H. 2001.10 is set aside.

Summary

Issues: Classification of 'French Fries' under sub-headings 2001.10 or 2001.90 of Chapter 20 of the Central Excise Tariff Act, 1985.

In this judgment, the central issue revolves around the classification of 'French Fries' under specific sub-headings of the Central Excise Tariff Act, namely 2001.10 or 2001.90 of Chapter 20. The appellant sells 'French Fries' under two scenarios: one with the brand name 'Inland Valley' and the other without any brand name. The contention arises as to whether the packets without the brand name should be classified under 2001.10 or 2001.90. The Department initially argued that both types of packets should fall under 2001.10, but the Commissioner disagreed, stating that the non-branded packets belong under 2001.90. The Tribunal later supported the Department's view, leading to the appeal.

The distinction between the two tariff entries lies in the requirement of the preparation being put in unit containers and bearing a brand name for classification under 2001.10. The definition of 'brand name' under Chapter 20 emphasizes a unique connection between the product and a person using the name or mark. The Tribunal believed that the non-branded packets were similar to the branded ones and should also be classified under 2001.10, contrary to the Commissioner's decision.

The Court analyzed the phrase 'New Improved Quick Frozen French Fries' present on the non-branded packets, concluding that it does not establish a unique connection with the manufacturer and merely describes the product contents. The Court highlighted that the manufacturer's name alone does not suffice as a brand name for classification purposes. The judgment referenced a previous case to elaborate on the definition of a brand name and its significance in establishing a trade connection.

The Court emphasized the importance of a brand name in classification for excise duty purposes, noting that deliberate omission of a brand name should not circumvent the applicable duty rates. The judgment ultimately favored the Commissioner's decision, setting aside the Tribunal's ruling and restoring the Commissioner's order. The Court highlighted the value attached to a brand name and upheld the distinct classification criteria outlined in the tariff entries.