2005 (98) ECC 193 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Regional Bench -- Mumbai

Ms. Jyoti Balasundaram, Member (J) and Moheb Ali M., Member (T)

Godrej Foods Limited

Versus

Commissioner of Customs & Central Excise, Indore-II

Appeals No. E/3768/1998-Mum & E/187 to 200/1999-Mum

[Arising out of Order-in-Original 39-62/CEX/COMMR/98 dated 26.8.1998 passed by Commissioner of Customs & Central Excise, Indore-II]

Order On A/1140 to 1150/04/WZB/C-I, dt. 29.6.04, Certified on 6.7.2004

Classification (C. Excise)

CETA Sub-heading 2202.90 -- Non-alcoholic beverages -- Various flavours of Godrej Jumpin -- Upheld under CETA sub-heading 2202.90.

Exemption (C. Excise)

Benefit of exemption in terms of Notifications 103/90, 2/94 and 16/96 is admissible to Jumpin Mango and Jumpin Guava which are fruit pulp based drinks manufactured by the assessees and the duty demand is to be re-worked after extending such benefit.

Modvat Credit

Fruit pulp based drinks -- Such benefit is extended to the products -- Subject to verification of duty paying documents and this aspect of the case is remanded to the jurisdictional Commissioner -- Rule 56A of CER.

Remand

The assessable value is to be computed afresh in the light of the Srichakra Tyres decision and after also considering the claim for deductions on account of freight and sales tax, by the jurisdictional Commissioner to whom the case is remanded for this purpose -- Section 35I of CEA.

PRESENT :

Shri R. Ravindran, Advocate for the appellant.

Shri Ajay Saxena, SDR for the respondent.

Cases Cited :

1. Duncans Agro Indus. v. Union of India, 1988 (18) ECC 399 (Del)........................ [Para 9]

2. Krishna District Milk Producers Union v. CCE, 1994 (71) ELT 1026.................... [Para 5]

3. Lipton Tree Top, 2000 (121) ELT 231 (Relied on).............................................. [Para 5]

4. Mangalore Refinery & Petrochemicals Ltd. v. Commissioner of Customs, Mangalore, 2002 (82) ECC 88 (T)................................................................................................................. [Para 10]

5. Srichakra Tyres Limited v. CCE, Madras, 2002 (80) ECC 588 (T).............. [Paras 8 & 11]

Per : Ms. Jyoti Balasundaram

The appellants herein are engaged in manufacturing of Godrej `Jumpin" drinks of various fruit flavours besides other excisable goods. 15 Show cause notices demanding duty short paid/not paid on goods cleared by them during the period from 1.9.1993 to February 1997, details of which are in the annexure to this order, were issued, proposing recovery of duty amounting to Rs. 8,59,09,619.09. The notices proceeded to demand duty on the basis that the Godrej Jumpin drinks of flavours Mango, Guava, Pineapple, Lime and Orange fall for classification under CETA sub-heading 2202.90 as "ready to serve non-alcoholic beverages", and not under CETA sub-heading 2001.10 as "preparations of fruits put up on unit containers and intended for sale" as claimed by the assessees; and that the benefit of exemption from duty under the Notification No. 19/91-CE was not available as the goods falling under CETA Chapter heading 22.02 were not covered by the notification. In addition, to above-mentioned 15 notices, 9 more show cause notices were issued proposing denial of inadmissible modvat credit and proposing recovery as set out below:

S. No. | Date of SCN | Period | + | Amount
|  | From | To | (Rs.)
1. | 24.3.1994 | 5.10.1993 | 14.10.1993 | 7,47,023.17
2. | 24.3.1994 | 15.10.1993 | 27.10.1993 | 6,90,055.00
3. | 24.3.1994 | 4.11.1993 | 30.11.1993 | 5,08,228.00
4. | 3.5.1994 | 3.12.1993 | 29.12.1993 | 2,41,751.00
5. | 4.5.1994 | 30.12.1993 | 31.12.1993 | 9,90,074.17
6. | 21.11.1994 | July 1994 | Sept. 1994 | 7,91,252.06
7. | 17.1.1997 | August 1996 | Sept. 1996 | 9,55,024.06
8. | 13.5.1997 | November 1996 | January 1997 | 3,20,624.16
9. | 1.10.1997 | February, 1997 | + | 5,19,444.00

2. These notices proceeded on the basis that credit was not admissible on inputs used in or in relation to the manufacture of finished goods, wholly exempted from duty. All the notices were taken up for adjudication together by the Commissioner who passed the impugned order confirming demand of Rs. 8,27,87,908 (out of the demand of Rs. 8,59,09,619.09 raised in the demand notice) under Section 11A of the Central Excise Act, by upholding classification of the goods in dispute under CETA sub-heading 2202.90, and imposing penalty of Rs. 20 crores upon the appellants under Rule 173Q. He disallowed modvat credit of Rs. 10,300 availed in July 1994 and directed recovery of the same. The remaining modvat demands issued under 9 notices were dropped as all the 7 inputs on which the assessee had taken credit under Rule 57A were specified inputs used in the manufacture of specified final products and chargeable to effective rate of duty. He also levied interest as per the provisions of Section 11AB of the Act. Hence these appeals.

3. We have heard both sides.

4. The issues for determination by us are:

--(i)

--Correct classification of the disputed goods;

--(ii)

--Admissibility of exemption in terms of Notification 103/90, 2/94 and 16/96 to fruit pulp based products, namely, Jumpin Mango and Jumpin Guava.

--(iii)

--Availability of modvat credit;

--(iv)

--Correct Assessable value; and

--(v)

--Whether penalty is justified.

5. As far as issue No. (i) is concerned we note that it is no longer res-integra in view of the Tribunal's order in their own case reported in 2000 (121) ELT 231 wherein classification of Lipton Tree Top which the appellants admitted during the hearing before us to be similar to the products in dispute in the present case, has been held to fall under CETA sub-heading 2202.90 as ready to serve non-alcoholic beverage and not as a fruit juice under CETA sub-heading 2201.10. In para 7 of the order the Tribunal has relied upon HSN Explanatory Notes to heading 20.09 (which has been held to be identical to chapter heading 20.01 of the schedule to CETA, 1985 in the case of Krishna District Milk Producers Union v. CCE, 1994 (71) ELT 1026 which states that "However, the addition of water to a normal fruit or vegetable juice, or the addition to a concentrated juice of a grater quantity, of water than is necessary to reconstitute the original natural juice, results in diluted products which have the character of beverages of Heading 22.02". The composition of the product Lipton Tree Top which contains 15.18% to 19.32% fruit pulp/concentrate 14.44% to 14.7% sugar and 70% water and preservatives and additives is similar to the composition of the products in dispute. Hence the ratio of the earlier order in the case of the same appellant is directly applicable and following the ratio thereof we hold that the products in dispute are classifiable under CETA sub-heading 2202.90 as ready to serve non-alcoholic beverages.

6. On Issue No. (ii) we find that the Commissioner has held that the question of availability of exemption does not arise as no exemption was claimed in terms of any notification in the form of classification list by the assessees. This cannot be a ground to deny the benefit if othewise found applicable. The products, Jumpin Mango and Jumpin Guava are undisputedly fruit pulp based drinks. The benefit of the notifications claimed by the appellants is available to fruit pulp based drinks. Hence, we extend the benefit of the notifications cited above to these products.

7. As regards Issue No. (iii), in view of the classification of the products in dispute under Heading 2202.90 attracting duty, modvat credit of duty paid on inputs used in the manufacture of these products is held to be admissible to the appellants, subject to verification of duty paying documents, except credit of Rs. 10,300 which has been disallowed by the Commissioner and not appealed against to the Tribunal.

8. As regards Issue No. (iv) The assessable value of the goods is required to be re-computed in the light of the appellant's claim that the price charged by them is the cum-duty price in the light of the larger bench decision of the Tribunal in the case of Srichakra Tyres Limited & Ors. v. CCE, Madras, 2002 (80) ECC 588 (T) : 1999 (32) RLT 1. The claim for deductions such as freight, sales tax, etc., which have been disallowed as they were not supported by necessary details showing quantum of deductions, are also to be considered as the appellants state that they have now obtained all the necessary details and also Chartered Accountant's certificate dated 27.10.1998 and are in a position to produce them for verification.

9. The contention of the assessees that demand cannot be sustained when the assessments are provisional requires to be rejected in the light of Hon'ble Delhi High Court judgment in the case of Duncans Agro Industries v. Union of India, 1988 (18) ECC 399 (Del) : 1989 (39) ELT 511 (Del) which has been upheld by the Supreme Court as seen from 1995 (75) ELT A39, wherein it has been reported that the assessees withdrew its appeal before the Apex Court.

10. As regards Issue No. (v) is concerned, penalty is not sustainable in view of the decision of the Tribunal in the case of Mangalore Refinery & Petrochemicals Ltd. v. Commissioner of Customs, Mangalore, 2002 (82) ECC 88 (T) : 2002 (145) ELT 689, holding that penalty cannot be imposed in a case of finalisation of provisional assessments. In the present case the assessments were provisional and have been finalised only by the impugned order of the Commissioner. We accordingly set aside the penalty.

11. To sum up we hold as under:

--(i)

--Classification of various flavours of Godrej Jumpin is upheld under CETA sub-heading 2202.90;

--(ii)

--Benefit of exemption in terms of Notification Nos. 103/90, 2/94 and 16/96 is admissible to Jumpin Mango and Jumpin Guava which are fruit pulp based drinks manufactured by the assessees and the duty demand is to be re-worked after extending such benefit.

--(iii)

--Modvat benefit is extended to the products in dispute subject to verification of duty paying documents and this aspect of the case is remanded to the jurisdictional Commissioner;

--(iv)

--The assessable value is to be computed afresh in the light of the Srickakra Tyres decision cited supra and after also considering the claim for deductions on account of freight and sales tax, by the jurisdictional Commissioner to whom the case is remanded for this purpose.

--(v)

--Penalty is set aside.

12. In the result the appeals are partly allowed.

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