The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the Peanut Butter is similar to Margarine in terms of usage, origin, fat content, etc. and therefore not eligible for excise duty exemption. Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) examined whether Peanut Butter could be considered similar to Margarine. If...
The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the Peanut Butter is similar to Margarine in terms of usage, origin, fat content, etc. and therefore not eligible for excise duty exemption.
Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) examined whether Peanut Butter could be considered similar to Margarine. If found similar, then it would not be exempt from excise duty; and if not similar, the exemption would apply.
In this case, the assessee/appellant was importing Peanut Butter and was re-packing and re-labelling the said imported Peanut Butter and thereafter cleared the same on payment of appropriate Central Excise duty.
The assessee has taken credit of Rs. 1,35,98,208/- in respect of CVD (Countervailing Duty) paid at the time of import and utilised the same towards duty paid on re-packed Peanut Butter, as also towards payment of SAD (Special Additional Duty).
The Department felt that the goods being cleared by them were unconditionally exempted by virtue of Rule 11 of Notification No. 03/2006-CE dated 01.03.2006, as amended, and therefore, the assessee had deliberately taken the credit and utilised the same by paying excise duty at the time of clearance.
It was also noticed by the Department that they have taken credit of Rs. 4,51,157/-, where the goods themselves have not been utilised for manufacture or, for that matter, written off in their books of accounts.
The Adjudicating Authority confirmed the demand and recovery of Cenvat Credit of Rs. 1,35,98,208 and Rs. 4,51,157/- along with interest and also imposed equal penalty under Rule 15 read with Section 11AC of the Central Excise Act.
The Tribunal found that both Margarine and Peanut Butter are edible preparations, which are directly fit for human consumption and even in terms of fat content, origin and usage, etc., they are quite similar.
In fact, even in the case of usage, the only difference is that Margarine can be, apart from used as table spreading, can also for baking, whereas Peanut Butter can be used only as a table spread in sand witches etc., and not for baking. However, essentially, both are similar to each other, stated the Tribunal.
The bench stated that Peanut Butter and Margarine are similar edible preparations, therefore not exempted.
The Tribunal held that even on independent evaluation of the properties of both the items, including their end use, it would be covered within the expression “similar edible preparation”, similar to Margarine.
The bench set aside the demand of Rs. 1,35,98,208/- and equal penalty thereon and upheld the demand of Cenvat Credit of Rs. 4,51,157/- and penalty thereon.
In view of the above, the Tribunal partly allowed the appeal.
Case Title: M/s Agro Tech Foods Ltd. v. Commissioner of Central Tax Rangareddy - GST
Case Number: Excise Appeal No. 27780 of 2013
Counsel for Appellant/ Assessee: Narendra Dave
Counsel for Respondent/ Department: A. Rangadham