CESTAT: Cadbury’s ‘Perk’ Products Are Wafer Biscuits, Eligible for Concessional Duty Under Excise Law
Pranav B Prem
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, comprising Justice Dilip Gupta (President) and Ms. Hemambika R. Priya (Technical Member), has held that 'Perk', 'Ulta Perk', 'Perk Poppers' and other related products manufactured by Mondelez India Foods Pvt. Ltd. (formerly Cadbury India Ltd.) are “wafer biscuits” and not “chocolates,” thereby qualifying for concessional duty under the relevant exemption notifications.
The Tribunal allowed the appeal filed by the company, setting aside the order of the Principal Commissioner of CGST and Central Excise, Bhopal, who had classified the products under Excise Tariff Item (ETI) 1905 32 11 and denied the benefit of the exemption notification applicable to wafer biscuits.
Background
The issue before the Tribunal was whether various products including 'Perk', 'Ulta Perk', 'Perk Poppers', and 'Wafer Uncoated Reject' were classifiable under ETI 1905 32 11, which covers “coated with chocolate or containing chocolate,” or under ETI 1905 32 90, which covers “other waffles and wafers.” Mondelez had claimed classification under ETI 1905 32 90 and cleared the goods at a concessional rate under the relevant exemption notifications. The department, however, issued 25 show cause notices for the period from November 2006 to July 2017, alleging that the products ought to be classified under ETI 1905 32 11 and, therefore, not entitled to the concessional rate.
Arguments and Findings
Mondelez argued that ETI 1905 32 11 refers specifically to "communion wafers" that are coated with or contain chocolate and that their products do not fall within this category. They submitted that the products were "wafer biscuits" and not chocolates, and were therefore rightly classified under ETI 1905 32 90.
The Tribunal accepted this position and noted that the scheme of the Excise Tariff, along with the explanatory notes and dictionary meanings of "wafer" and "communion wafer", supported the assessee’s claim. It emphasized that "communion wafers" have a religious and ceremonial purpose, unlike the commercial snack products manufactured by the appellant.
The Tribunal observed that interpreting the tariff entries in a way that places the appellant’s products under the "communion wafers" category would render the intermediary entry “communion wafers” redundant, which is not permissible. It relied on the decision in Pepsico Holdings Pvt. Ltd [2019 (25) GSTL 271 (Tri.-Mumbai)] and GAIL (India) Ltd [2019 (24) G.S.T.L 626(Tri. Ahmd)], where similar issues of classification and hierarchy of tariff entries were discussed.
The Tribunal further noted that in earlier proceedings involving the same appellant (under the name Little Star Foods), the department itself had accepted the classification of 'Perk' under ETI 1905 32 90. Therefore, it held that it was not open to the department to now argue otherwise.
As to the eligibility for exemption, the Tribunal held that the products were “wafer biscuits” as commonly understood and as confirmed by various judicial and dictionary references. The Tribunal emphasized that merely being coated or containing chocolate does not remove the character of a wafer biscuit, especially when the principal ingredient remains the wafer and not the chocolate.
The Tribunal concluded that the appellant’s products are classifiable under ETI 1905 32 90 and, being “wafer biscuits,” are eligible for concessional duty under the exemption notifications dated 01.03.2006 and 17.03.2012. Consequently, it set aside the order of the Principal Commissioner confirming excise duty demand, interest, and penalties. The appeal was allowed.
Appearance
Counsel for Appellant/ Assessee: V. Lakshmikumaran, Sukriti Das and Mehak Mehra
Counsel for Respondent/ Department: Sanjay Jain
Cause Title: M/s. Mondelez India Foods Pvt. Ltd. V. The Commissioner of CGST & Central Excise
Case No: Excise Appeal No. 50720 of 2020
Coram: Justice Dilip Gupta (President), Ms. Hemambika R. Priya (Technical Member)
