PEPSICO INDIA HOLDINGS PVT. LTD. Vs. COMMR. OF C. EX. & S.T.
LAWS(CE)-2015-1-108
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 06,2015

PEPSICO INDIA HOLDINGS PVT. LTD. Appellant
VERSUS
Commr. of C. Ex. And S.T. Respondents


Referred Judgements :-

COLLECTOR OF CENTRAL EXCISE,BOMBAY V. INDIAN ORGANIC CHEMICALS LIMITED [REFERRED TO]
CCE,INDORE V. HELLO AGRO FOODS LTD [REFERRED TO]
SHRIYA ENTERPRISES VS. COMMISSIONER, COMMERCIAL TAXES, UTTARAKHAND [REFERRED TO]


JUDGEMENT

Rakesh Kumar, Member (T) - (1.)THE facts leading to filing of this appeal, in brief, as under: -
1.1 The appellants are manufacturers of salted potato chips in retail packs which are sold under the brand name 'Lays'. The appellants were classifying this product under Heading No. 2005 20 00 which covers "potatoes prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than the products of Heading No. 2006" and were availing full duty exemption under Notification No. 3/2006 -C.E. (Sl. No. 22) of the Table annexed to this Notification which prescribes 'nil' rate of duty for all the goods of Chapter 20 of the Central Excise tariff. The department, however, was of the view that the goods, in question, are correctly classifiable under Tariff Heading No. 2106 90 99 as "other food preparations not elsewhere specified or included". According to the Commissioner, the potato chips being sold in the retail packages are covered by Sl. No. 30 of the Notification No. 3/2006 -C.E., which covers "ready to eat packaged food" for which rate of duty prescribed is 8%. It is on this basis that after issue of show cause notice, the Commissioner vide order -in -original dated 25 -10 -2013 confirmed the duty demand of Rs. 35,75,01,970/ - against the appellant company along with interest thereon under Section 11AB and besides this, imposed penalty of equal amount on the appellant under Rule 25 of Central Excise Rules read with Section 11AC of the Central Excise Act, 1944. The duty demand has been confirmed by invoking extended period under proviso to Section 11A(1). Against this order of the Commissioner, this appeal has been filed along with stay application.

Heard both the sides in respect of stay application.

(2.)SHRI B.L. Narsimahan, advocate, the ld. counsel for the appellant, pleaded that before introduction of the 8 -digit Tariff w.e.f. 1 -1 -2005, Chapter 20 had only one heading 20.01 which covered "preparations of vegetables, fruits, nuts or other parts of plants, including jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes, fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter", that in respect of this tariff entry, there was Board's Circular No. 6/88, dated 18 -2 -1988 clarifying that the potato wafers are classifiable under Heading No. 20.01, in view of the Chapter Note of Chapter 20, and such wafers will not fall under Heading No. 21.08, as this is a residuary heading and Heading 20.01 is more specific, that in the 8 -digit tariff in force w.e.f. 1 -1 -2005, Heading No. 21.06 is the same as Heading 21.08 of the old tariff covering as "food preparations not elsewhere specified or included" and scope of the Chapter 20 of the new tariff w.e.f. 1 -1 -2005 is the same as the scope of Heading 20.01 of Chapter 20 of the tariff during period prior to 1 -1 -2005, that, in view of this, the Board's circular dated 6 -2 -88 clarifying that potato wafers are classifiable under Heading No. 20.01 is still applicable, that the Hon'ble Uttarakhand High Court in the case of Shriya Enterprises v. Commissioner reported in : (2012) 51 VST 413 (Uttarakhand), wherein the point of dispute was as to whether potato chips are classifiable under tariff heading covering, "all processed and preserved vegetables, vegetable mushrooms and fruits, including fruit jams, jellies, fruit squash, paste, fruit drinks, fruit juices and achar (whether in sealed containers or otherwise)", held that potato chips are processed vegetables and the same would be covered by the entry "All processed and preserved vegetables, vegetable mushrooms and fruits including fruit jams, jellies, fruit squash, paste, fruit drinks, fruit juices and achar", that the ratio of this judgment is squarely applicable to the facts of this case and hence the potato chips would be correctly classifiable under sub -Heading No. 2005 20 00 of chapter as "other vegetables prepared or preserved, otherwise than by vinegar or acetic acid, not frozen, other than products of Heading 2006", that even if the goods, in question, are treated as covered by the Heading No. 2106 90 99 as "food preparations not elsewhere specified or included", the same would be fully exempted from duty under Notification No. 3/06 -C.E. (Sl. No. 29) which covers "Sweetmeats (known as 'misthans' or 'mithai' or by any other name), namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, papad and jaljeera", for which the rate of duty prescribed is nil, that the Commissioner by classifying the goods, in question, under Heading No. 2106 90 99 has wrongly given a finding that these goods are covered by Sl. No. 30 of the Notification No. 3/06 -C.E. which covers "ready to eat packaged food" and for which the rate of duty prescribes is 8% adv., that the Commissioner ignored the Board's Circular dated 6 -12 -2006 wherein the Board has clarified that even if the goods covered by Sl. No. 29 of the Notification No. 3/06 -C.E. are in the packaged form, the same would still be eligible for exemption under Sl. No. 30 of the notification, that this circular of the Board has been totally ignored by the Commissioner, that the Tribunal in the case of CCE, Indore v. Hello Agro Foods Ltd. reported in : 2012 (279) E.L.T. 529 (Tribunal - Delhi) has held that "Rings made out of flour of rice, wheat and potato, fried after adding flavour and packed for retail sale" are correctly classifiable as "other food preparations" under 2108.99 and hence are eligible for exemption as namkeens under Notification No. 4/97 -C.E., that the Tribunal in the case of Collector of Central Excise, Bombay v. Indian Organic Chemicals Limited reported in : 1998 (104) E.L.T. 149 (Tribunal) has held that potato wafers not put up in unit containers are classifiable under Heading No. 2001.90 of the Tariff and not under sub -heading No. 2001.10, even if the same were ordinarily intended for sale, that in view of the above submissions, the impugned order is not correct, that the appellant have strong prima facie case in their favour and hence the requirement of pre -deposit of duty demand, interest and penalty may be waived for hearing of their appeal and recovery thereof may be stayed.
Shri Pramod Kumar, ld. Jt. CDR opposed the stay application by reiterating the findings of the Commissioner. With regard to the classification of the goods, whether under Heading No. 2005 20 00, as claimed by the appellant or under sub -Heading No. 2106 90 99, as claimed by the Department, he pointed out to the findings of the Commissioner in Para 4.2 of the impugned order and pleaded that the Board's Circular No. , dated 18 -2 -88 is applicable to the old four digit tariff, while the Central Excise Tariff in force w.e.f. 1 -1 -2005 is totally different. He pleaded that the potato chips cannot be called "other vegetables, preparation preserved, otherwise than by vinegar or acetic acid, not frozen....." and the same have to be treated as "food preparations not elsewhere specified or included." With regard to the appellant's plea that even if the goods, in question, are held as classifiable under sub -heading No. 2106 90 99 as "food preparations not elsewhere specified or included", the same would be fully exempted from duty in view of the Sl. No. 29 of the Notification No. 3/06 -C.E., as the same are namkeens, he, reiterating the findings of the Commissioner in Para 4.9 of the impugned order pleaded that the goods, in question, being ready to eat packaged food would be covered by Sl. No. 30 of the Notification No. 3/06 -C.E. and not by Sl. No. 29 which covers "sweetmeats (known as 'misthans' or 'mithai' or by any other name), namkeens, etc." He accordingly pleaded that there is no infirmity in the impugned order and as such, this is not the case for waiver from the requirement of pre -deposit.

(3.)WE have considered the submissions from both the sides and perused the records.
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