TaxTMI 
TaxTMI 
2026 (4) TMI 290
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....s and finished goods available in the factory premises. During investigation, the officers recorded statements of their directors namely Shri Bipinbhai Laljibhai Kaswala, on 16.07.2015, 21.07.2015 & 13.08.2015 and of Shri Jigneshbhai Ghanshyambhai Panseriya on 08.09.2015. After conducting investigation, show cause notice dated 10.12.2015 was issued proposing recovery of central excise duty of Rs. 1,24,79,150/- under Section 11A(4) of the Central Excise Act, 1944 by invoking extended period of limitation alongwith interest under Section 11AA and imposition of penalty under Section 11AC of the said act. A separate penalty was also proposed against both the Directors under Rule 26 of the Central Excise Rules, 2002. 1.2 In adjudication, the Commissioner vide impugned order dated 18.07.2016 dropped the demand of Rs. 12,03,860/- and confirmed Central Excise duty of Rs. 1,12,75,290/- upon the appellant along with interest and equal penalty under Section 11AC. He also imposed penalty of Rs. 5 Lakhs each on both the Directors under Rule 26. Aggrieved with this order, M/s Nutema and both the Directors filed appeal before this Tribunal. 2. In their appeal, the appellants took the follow....
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....r which the final goods are sent to the packing section for batch coding and packing. (vii) Each of the final products differs in its composition. Minerals and vitamins are utilized in minor quantity as majority constituents are carbohydrates, protein and sugar. These ingredients are supported by the test reports issued by recognized Laboratories. By very nature of its composition and manner of consumption, these products are referred to as "instant food mixes" or ready to eat packed food classifiable under CTH 21069099 of the Central Excise Tariff Act, 1985 and liable to be assessed under Section 4A after allowing abatement of 35% from RSP as per Notification No. 49/2008-CE dated 24.12.2008. (viii) They place reliance on the decision in the case of Abbott Health Care Pvt Ltd. Vs Commissioner of Customs (Import) Mumbai, reported at 2015 (317) E.L.T. 305 (Tri-Mumbai), wherein products such as "Pediasure" and "Ensure" consisting of starch, sugar, oil, etc. with minor quantity of minerals and vitamins for consumption of children and elderly people respectively who need essential nutrition diet are treated as food mixes and thereafter, held to be eligible for the bene....
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....n of Hon'ble Supreme Court in CCE Chandigarh Vs. Pepsi Food Ltd- 2010 (260) ELT 481 (SC), wherein it was held that when the statute creates an offence and ingredients of offence is deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires mens rea as a necessary constituent of such an offence. Similar finding was given by Punjab and Haryana High Court in the case of CCE Delhi-III Vs. M/s VG Faucets Pvt Ltd- 2015 (329) ELT 76 (P&H). * They have clearly deposed in their respective statements that they were under impression that excise duty is applicable only after clearance value exceeds Rs. 150Lakhs in a year. This shows that there was no mens rea on their part to evade payment of excise duty. * penalty under Rule 26 of the Central Excise Rules, 2002 cannot be imposed unless goods are held liable to confiscation. He relies on the decision of Mumbai Tribunal in the case of Ritesh Jain Vs. CCE, Nagpur reported at 2015 (3) TMI 471. * Their firm is not operating under cover as it is duly registered with Gujrat Commercial Tax Department and holding various certificates and also filing periodic returns for their clearances with ....
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....it was ever submitted to the department at any point of time. Moreover, affidavit filed by him is in the capacity of Director of M/s Vintech Shoppe Pvt Ltd stating that they are not a service provider and so not liable to pay service tax whereas the present case against M/s Nutema Foods Pvt ltd relates to demand of Central Excise duty. He thus, pleads that no reliance be placed on the said affidavit. He places reliance on the decision in the case of Bayir Extracts Pvt. Ltd. V/s Commissioner of Customs, Bangalore- 2012 (285) E.LT. 97 (Tri. - Bang.), wherein it has been held that "Retraction Affidavit of Managing Director which contained averments such as that there was no power in the unit during the material period is not acceptable as a valid retraction on account of the long gap between the dates of confessional statement and affidavit and also on account of the fact that it was not sworn before the authority which recorded the confessional statement Affidavit is not clarificatory as any clarificatory statement should have been given, without delay, to the authority which recorded the original statement. There should not be any inconsistency between the original and clar....
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....mitted that since the appellant has violated various provisions of Central Excise Rules,2002 and considering clandestine clearance by them which shows their intent to evade payment of duty, they do not deserve benefit of above notification. Hence, the duty be confirmed along with applicable interest and penalties. He cited the following cases to plead that conditions of an exemption notification are to be strictly complied with for availing it's benefit. The condition of filing declaration/undertaking under exemption notification are not merely procedural and hence, exemption to be denied for non-observance of said condition :- * Eagle Flask Ind Ltd- 2004(171)ELT 296(SC) * Motiram Tolaram-1999 (112) ELT 749 (SC) * Hari Chand Shri Gopal-2010(260) ELT 3 SC * Commissioner of Cus. (Import), Mumbai Vs. Dilip Kumar & Company-2018 (361) E.L.T. 577 (S.C.) 6. We have heard the rival submission. The following issues need to be decided in this case:- a) Whether the products manufactured by the appellant are classifiable as Food Mixes under CTH 2106 of the Central Excise Tariff Act, 1985? b) Whether the appellants are eligible to benefit....
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....ucts are consumed as such by people who are recuperating from illness and therefore, it is ready to eat package product. Similar findings were given by Delhi Tribunal in the case of Dry Tech Processors (I) Pvt Ltd (cited supra) wherein the product "Fresubin" made from, or mixture of the basic food ingredients namely, corn starch, sucrose, milk protein and vegetable oil were treated as instant food mixes. 6.2 For ease, Chapter heading 2106 is reproduced below:- Heading No. H S Code ITC(HS) Code Description Unit of Quantity 2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR INCLUDED 21061000 - Protein concentrates and textured protein substances kg. 210690 21069011 21069019 --- --- --- --- Other: Soft drink concentrates: Sharbat kg. Other kg. 21069020 --- Pan masala kg. 21069030 --- Betel nut product known as "Supari" kg. 21069040 --- Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified....
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.... than pan masala containing not more than 15% betel nut 40 20. 2106 90 20 Pan masala containing not more than 15% betel nut 20 22. 2106 90 30 All goods 30 23. 2106 10 00, 2106 90 50, 2106 90 70, 2106 90 80, 2106 90 91 or 2106 90 99 All goods 35 6.4 We find that the products manufactured by the appellant are appropriately covered under Srl. No. 23 of the above table having abatement of 35% from RSP for determining the assessable value of the goods. As regards the appellant's claim that their products are eligible to benefit of Notification No. 01/2011 dated 01.03.2011, as amended, attracting Central Excise duty @ 2%, we find that the learned Adjudicating authority has rejected their claim and confirmed duty @ 12.5% on the ground that various types of Food supplements, vitamin supplements etc though classifiable under 21069099 do not fall under category of " all kinds of foods mixes" including instant food mixes covered at Sr. No. 19 of the Notification. We find that the above reasoning is flawed as the products manufactured by the appellants are for use, either directly or after processing (such as cooking, dissolving or boiling in water or ....
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....espectfully agreeing with the decisions of Hon'ble Supreme Court in the case of Eagle Flask India Ltd (cited supra), Motiram Tolaram (cited supra), Hari Chand Shri Gopal (cited supra), Dilip Kumar & Company (cited supra), we hold that the conditions of Notification No. 1/2011 of non-availment of Cenvat credit is must before allowing benefit of exemption under this notification. Therefore, these products are eligible to the benefit of concessional excise duty under this notification subject to the condition that no Cenvat credit on inputs or input services has been availed. We therefore, remand the matter to the Adjudicating authority to extend benefit of this Notification after satisfying himself of the above conditions and re-quantify central excise duty and interest liability. Needless to say, quantum of penalty on the appellant as well as on both the Directors shall be determined afresh after considering various evidences and their submissions. 6.5 Regarding extended period, we find that the appellant neither took registration with Central Excise Department nor were they filing any Excise returns. The department became aware of their manufacturing activities when they searche....
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....th similarly situated traders. It was fully aware that those traders who produced similar compounds had their units licensed or registered and yet the assessee herein did not take steps to get the above two units, in which the impugned compound (kimam) was manufactured, registered or licensed. As stated above, it has been buying a similar kimam from various traders. These circumstances constituted evidence of suppression brought on record by the department in answer to which it was contended on behalf of the assessee that they were under a bona fide impression that the compound was not excisable and that the benefit of proforma and modvat credit together with the benefit of exemption under Notification No. 121/94, dated 11-8-1994 was substantially equal to the demand for duty herein and, therefore, there was no intention to evade payment of duty. 24. We do not find any merit in these submissions. As stated above, the adjudication in this case was confined to the question of excisability and concealment of the existence of two units in which the compound (kimam) was manufactured. No explanation has been given by the assessee for not disclosing the affairs of these units, pa....