The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the products namely Parle 2-in-1 Eclairs and Kismi Toffee are not ‘white chocolates’ and can be classified as ‘Boiled Sweets’ for which payment of duty at concessional rate is allowable.
The appellants, Marko Foods and Pahladrai Confectionaries Pvt. Ltd are manufacturing ‘Chocolates’ namely “Parle 2-in-1 Eclairs”, “Kismi Toffee” and “Kismi Toffee Bar.” Respectively. The ingredients of the said manufactured goods are liquid glucose, sugar, milk solids, edible vegetable oil, lecithin, salt and flavor, emulsifier (322).
The appellants claimed that the above products must be classified as ‘Boiled Sweets’. However, the department rejected the contention and classified the same as “White chocolate.” The first appellate authority confirmed the above order.
The Tribunal, after analyzing the test report found that the ingredients of the said goods namely sugar, edible oil and emulsifier etc. concerning of full white colour several matters mainly presence of fat and protein emulsifier etc., each white chocolate preparation which does not necessary positive test of Theobromina (does not confirmed presence of cocoa) having following characters Fat content 8%).
It was noted that as per the chapter 17-HSN explanatory note „white chocolate‟ which means white chocolate composed of Sugar, Cocoa butter, Milk powder and Flavouring agents, but not containing more than mere traces of cocoa (cocoa butter is not regarded as cocoa).
“From the said definition, it is clear that white chocolate should contain “cocoa butter”. As per the test report, it is clear that the sample does not contain any cocoa butter and white chocolate requires fat content of 25% as per the Food Safety & Standards (Food Products Standard & Food Additives) Regulations, 2011 whereas the fat content in the goods in question is 8% only. Therefore, from the test report it can be said that the goods in question are not white chocolate. Therefore, the said item do qualify for exemption as per the Notification No.03/2006-CE dated 01/03/2006 (Sr.No.16), also Notification No.12/2012-CE dated 17/03/2012 (Sr.No.19), which explains that items falling under Chapter 170490 are entitled for exemption under Sugar Confectionary (excluding white chocolate and bubble gum). Admittedly, the goods manufactured by the appellants are Sugar Confectionary is neither chocolate nor bubble gum. Therefore, the appellants are entitled to pay concessional rate of duty as allowed by the above cited Notifications,” the Tribunal said.
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