Appellant wins concessional duty benefits under Notification 12/2012-CE as product not classified as white chocolate

CESTAT Bangalore held that appellant's product qualified for concessional duty benefits under Notification 12/2012-CE. The tribunal determined that the goods were not classified as white chocolate and therefore not excluded from exemption provisions. Following precedent from a previous tribunal decision involving identical products, the classification issue was considered settled law. The original order was set aside and the appeal was allowed, granting the appellant the sought duty concession.

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Issues Involved:
1. Classification of Nestle Milkybar Eclairs as white chocolate.
2. Eligibility for concessional duty under Notification No.12/2012-CE dated 17/03/2012.

Detailed Analysis:

1. Classification of Nestle Milkybar Eclairs as White Chocolate:

The primary issue in the appeal was whether Nestle Milkybar Eclairs could be classified as white chocolate. The appellant argued that this issue had already been resolved in their favor in a previous Tribunal decision (Final Order No.20394-20401/2020 dated 14/07/2020). The Tribunal had found that the classification of the product under CETH 1704 was undisputed, but the contention lay in the presence or absence of ingredients like cocoa butter and hydrogenated vegetable oils.

The Tribunal referred to the Tariff Headings, Chapter/Section Notes, and HSN Explanatory Notes to clarify the classification. Specifically, Tariff Entry 1704 covers sugar confectionery (including white chocolate) not containing cocoa. The HSN Explanatory Notes further clarified that white chocolate is composed of sugar, cocoa butter, milk powder, and flavoring agents, but not containing more than mere traces of cocoa.

The Tribunal noted that the product in question did not contain cocoa butter after January 1, 2008, based on an affidavit from the appellant's Deputy General Manager and other evidence. The Department did not provide any specific evidence or conduct tests to prove the presence of cocoa butter in the product during the disputed period. Therefore, the Tribunal concluded that the product did not qualify as white chocolate under the relevant tariff heading.

2. Eligibility for Concessional Duty Under Notification No.12/2012-CE:

Given the classification issue, the Tribunal examined whether the product was eligible for concessional duty under Notification No.12/2012-CE. The Tribunal found that the product did not contain cocoa butter during the relevant period, making it eligible for the exemption provided in the notification.

The Tribunal also referred to a similar case, Marko Foods v. CCE, Kanpur, where products like "Parle 2-in-1 Eclairs" and "Kismi Toffee and Bar" were found to be boiled sweets containing no cocoa butter and were classified under Tariff Item 1704 90 30, making them eligible for the same exemptions.

Conclusion:

The Tribunal concluded that the Department had not conclusively proven that the product contained cocoa butter during the disputed period. As a result, the product was not classified as white chocolate and was eligible for the concessional duty under Notification No.12/2012-CE. The appeals were allowed with consequential relief as per law.

Order:

The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, following the previous Tribunal decision on the identical issue. The order was pronounced in open court on 29/03/2022.

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