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TMI Blog2010 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... r consumption at the outlet - The prepared dish is standard and contains four wings of the bird - These are also sold as take away or delivered at the customer’s residence on order - As regards the packing of these chicken wings also, we find that our finding on ‘unit container’ applies - Therefore they were not covered by CSH 160110 prior to 1-3-2005 and were eligible for exemption under Notification No. 3/05-C.E., dated 24-2-2005 from 1-3-2005 - Hence, the impugned demand and penalties on DCPL cannot be sustained. - E/935-936/2008 - 826-827/2010 - Dated:- 24-11-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, REPRESENTED BY : Shri G. Shivadass, Advocate, for the Appellant. Shri U. Raja Ram, JDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. - The appellants, M/s. Dodsal Corporation Pvt. Ltd., Bangalore (DCPL) run restaurants in the name and style Pizza Hut at different Locations in the Bangalore city. DCPL are a franchisee of M/s. Yum! Restaurants India Pvt. Ltd. for operating Pizza Hut chain of restaurants selling food products with the trade mark Pizza Hut held by YRPL and pay royalty and mutually agreed contribution towards sale promotion. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artons bearing the brand name Pizza Hut under CSH 1601.10 and held DCPL liable to pay duty on their clearances during the material period. The Commissioner found that non-vegetable pizza and chicken wings impugned had been cleared in unit containers . 2. In the appeal before the Tribunal, DCPL has made the following submissions and raised the following grounds :- The dispute relates to classification of non-vegetable pizza and chicken wings. As far as the product pizza is concerned, the department did not dispute that irrespective of the toppings on the pizza, the product is sold as pizza only. They cited definitions of the word pizza figuring in the Encyclopedia Britannica, Oxford Dictionary, etc. The Encyclopedia Britannica described pizza as follows : It consists of a flattened disk of bread dough, typically topped with olive oil, tomatoes, and mozzarella cheese, baked quickly, and served hot, Pizza is eaten throughout Italy, with regional variations in toppings....... It is now popular worldwide..... The appellants submit that pizzas are also made without meat for Vegetarians and without cheese for vegans. They stated that different varieties of pizza are sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e different from raw meat and that mixing of chicken with spices or potatoes or green peas would result in emergence of a product known as a preparation of meat. It was held that the items such as chicken kabab, chicken koftha, chicken pakodas, chicken pre-spiced keema and chicken burger patties were preparations of meat classified under Chapter 16. It was evident from the above decision that for a product to be classified as a preparation of meat, the starting point should be meat/chicken which may be further mixed with other ingredients, such as fat, starch, masala, condiments, etc. Pizzas sold by the appellants could not be considered as preparation of meat as the starting point was invariably wheat flour which is converted into pizza base and later topped either with vegetarian topping or non-vegetarian toppings or both. The impugned pizza could not be termed as a preparation of meat classifiable under Chapter 16. It is submitted that though the pizzas sold in different parts of the world are adapted to suit the local taste, all the pizzas universally contained certain basic ingredients, like pizza base and cheese. Use of some specific percentage of meat for a certain variety o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of HSN and Chapter 19 of CETA correspond to reach other, as in both the cases they deal with the same goods viz, Preparation of cereals, flour, starch or milk; pastry cooks products. It is submitted that classification of the goods had to be decided on the basis of Interpretative Rules and HSN Explanatory Notes were to be used for the limited purpose of understanding the scope of the different entries. 5. The Chapter Notes of Chapter 16 19 of the tariff relied upon for the period prior to 1-3-05 was incorrect since the said notes were not there on the statute during this period. The classification had to be in terms of General Rules of Interpretation in the absence of Chapter Note or Section Note. The classification of the impugned goods following the Chapter Note 2 to Chapter 19 prior to 1-3-2005 is illegal and not sustainable. These notes were to be applied for the period from 1-3-2005. In any case, the classification determined was not justified. HSN Explanatory Notes to Chapter 16 explain the scope of Chapter Note 2 to Chapter 16 in the following manner :- This Chapter also covers food preparations (including so-called prepared meals ) consisting, e.g. of sausage, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been determined. The Commissioner held that the non-vegetable pizzas and chicken wings involved had been manufactured and cleared in unit containers bearing a brand name/trade name and they were therefore classifiable under CSH 160110 attracting duty liability. The appellants argued that put up meant that the seller unilaterally placed the quantity in the containers and based on the information displayed on the container, the buyer would purchase the goods. Put up envisaged a situation where the manufacturer pre-determined the product, the quantity and price at which he intended to sell it. In the instant case, pizza and chicken wings were sold by the appellants as fresh food products and served on order basis. They were not off the shelf products. The carton boxes could contain different pizzas or chicken wings. The carton did not contain any information whatsoever as to the content. The carton boxes did not display the information as to the nature of the toppings. Pizza was never placed in the container de hors an order by a customer. Pizza was placed in the carton box in the constructive/physical presence of the buyer. The carton box involved could not be considered to ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... threshold and the impugned clearances of chicken wings qualified for the SSI exemption. Therefore, the demand of duty confirmed in respect of chicken wings was liable to be set aside. 10. They have also challenged the correctness of quantification of the duty demand, invocation of larger period demand of interest and penalty imposed. Appeal No. E/936/06 11. This appeal is filed by Shri Pravin Nabar, Sr. Vice President, DCPL. The appellant has sought to vacate the penalty of Rs. 5,00,000/- imposed on him under Rule 26 of Central Excise Rules, 2002 on the ground that the demand and penalty against the assessee was not sustainable and was liable to be set aside. It is submitted that the assessee has filed a detailed appeal seeking to vacate the impugned order of the Commissioner. 12. We have heard both sides. The dispute to be decided in this case is the classification of non-vegetable pizzas and chicken wings manufactured and sold by the appellants during the material period. These are products manufactured using the technical know how received from the franchisor YRPL and conform to certain prescribed standards as regards quality and quantity. The impugned order has classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resented for consumption. The assessee s case is that the impugned pizzas cannot be classified under Chapter Heading 160110 as the said entry provided for preparations predominantly of meat. We are inclined to agree with this argument of the assessee for the reasons that we presently discuss. 15. The entry 1601 speaks of preparations of meat including sausages and similar products. Pizza essentially comprises bread dough base and, vegetable or non-vegetable topping, at the option of the customer cannot be held to be a preparation of meat. The appellant rightly relied on the decision of the Tribunal in the case of Venk y Fast Food v. C.C.E, Pune [2000 (124) E.L.T. 939 (Tri.)] in support of the claim that products envisaged by the entry were goods such as chicken kabab, chicken koftha, chicken pakodas and chicken burgers. We find that the non-vegetable pizzas are not preparations like goods held to fall under chapter 160110 in the Venky s Fast Food case (supra). We agree with the argument that for any product to be considered as a preparation of meat, the starting point should be meat. It may further be mixed with ingredients like fat, starch, masala condiments etc. The impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the heading of Chapter 16 corresponding to the component or components which predominate by weight. In all cases the weight to be considered is the weight of meat, fish, etc., in the preparation at the time it is presented and not the weight of the same products before preparation. (It should, however be noted that stuffed products of heading 19.02, sauces and preparations therefor, condiments and seasonings, of the kind described in heading 21.03, soups and broths and preparations therefor and homogenized composite food preparations, of the kind described in heading 21.04, are always classified in those headings.) The EN under the heading 1601 clarifies the scope of the entry as preparations consisting of meat or meat offal which have been chopped or minced, or blood, enclosed in guts, stomachs, bladders, skins or similar casings. These products may be pressed into characteristic shape of sausages and similar products, may be raw or cooked or semi cooked and may contain added fat, starch, condiments spices etc. In addition, they may contain relatively large pieces of meat or meat offal. The heading also includes certain food preparations called prepared meals based on sausa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her aquatic invertebrates or in combination. In all the cases, the weight to be considered is the weight of meat, fish etc. in the preparation at the time it is presented and not the weight of the products before cooking/preparation. We find that the impugned pizzas in respect of which demand has been confirmed are not found in the order to fulfil this condition in the order. 17. The chicken wings are sold like pizza for consumption at the outlet. The prepared dish is standard and contains four wings of the bird. These are also sold as take away or delivered at the customer s residence on order. As regards the packing of these chicken wings also, we find that our finding on unit container applies. Therefore they were not covered by CSH 160110 prior to 1-3-2005 and were eligible for exemption under Notification No. 3/05-C.E., dated 24-2-2005 from 1-3-2005. In the circumstances the impugned demand and penalties on DCPL cannot be sustained. We vacate the same. Appeal No. E/936/08 18. In view of our above order, no penalty can be imposed on Shri Pravin Nabar, Sr. Vice President, DCPL on account of evasion of duty found against the assessee. We vacate the penalty of Rs. 5,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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