Cadbury's 'Perk' Products Are 'Wafer Biscuits', Not Chocolates, Qualifies For Concessional Duty: CESTAT

Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) were addressing the issue of whether Perk, ULTA Perk, Perk Poppers and Wafer Uncoated Reject manufactured by the assessee are classifiable under Excise Tariff Item 1905 32 11 of the Central Excise Tariff Act, 1985 or under ETI 1905 32 90.

According to the assessee, the manufactured Products are classifiable under ETI 1905 32 90 with duty @ rate of 16%/12.5% during the relevant period. Serial No. 19 of Notification No. 3/2006-CE dated 01.03.2006 (for period upto March 2012) and Serial No. 28 of Notification No. 12/2012-CE dated 17.03.2012 (for period from March 2012) prescribed reduced rate of duty of 8% on “Wafer Biscuits” classified under ETI 1905 32 90.

The department formed a view that the Products manufactured by the assessee are classifiable under ETI 1905 32 11 instead of ETI 1905 32 90.

Accordingly show cause notices were issued to the assessee for the period from November 2006 to July 2017 alleging that the Products manufactured by the assessee deserve classification under ETI 1905 3211 and would, therefore, not be eligible for reduced rate of duty under the Exemption Notification.

The Principal Commissioner confirmed the demand of differential excise duty with interest and penalty.

The assessee submitted that “Wafer” is a kind of biscuit and “Wafer Biscuit” is nothing but a form of “wafer”. Therefore, references to “wafer” in the Excise Tariff is akin to reference to “wafer biscuit”. If it is otherwise established that “wafer biscuit” is classifiable under ETI 1905 32 90, the description of “wafer biscuit” in the Exemption Notification will include all its forms, including the form where such “wafer biscuit” may be coated with chocolate or may contain chocolate.

It was argued that as there is nothing in the description of Exemption Notification to exclude any particular form of wafer biscuits, all forms of wafer biscuits will be eligible for exemption.

The department contended that the product Perk is wafer coated with chocolate and the other product Ulta Perk is wafer sandwiched with chocolate (wafer containing chocolate). The product Perk contains wafer and chocolate along with other ingredients. Therefore, exemption provided to “wafer biscuits” under Exemption Notification, in any case is not applicable to the products Ulta perk, Perk, Perk popper which are not wafer biscuits.

The Tribunal stated that for a product to qualify as “coated with chocolate or containing chocolate” under ETI 1905 32 11, the product should conform to the description of “communion wafers”. The Products of the assessee neither have the characteristics of “communion wafers” nor they are used in the Church for Eucharist purpose.

The order passed by the Principal Commissioner accepts the contention of the assessee that “Perk” is a “wafer biscuit” and not a chocolate as this fact was not disputed by the department, observed the bench.

The Tribunal further opined that “when the Products are “wafer biscuits” and it has been found that the classification of the Products would be under ETI 1905 32 90, the Products of the assessee would clearly be entitled to the benefit of the Exemption Notification.”

The bench held that the Products of the assessee would fall under ETI 1905 32 90 and would be entitled to reduced rate of excise duty under the Exemption Notification.

In view of the above, the Tribunal allowed the appeal.

Case Title: M/s. Mondelez India Foods Pvt. Ltd. v. The Commissioner of CGST & Central Excise

Case Number: Excise Appeal No. 50720 of 2020

Counsel for Appellant/ Assessee: V. Lakshmikumaran, Sukriti Das and Mehak Mehra

Counsel for Respondent/ Department: Sanjay Jain

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