In a recent ruling, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled in favour of M/s Parle Products Pvt Ltd, declaring that their product, ‘Cheeselings,’ should be classified as ‘Namkeen’ and thus exempt from excise duty under the relevant notification.
The case revolved around the classification of Parle Products’ ‘Cheeselings,’ a popular snack introduced into the Indian market in 1956. The company argued that these products, which fall under tariff item 2106 9099 of the Central Excise Tariff Act, 1985, should be considered ‘namkeen,’ qualifying them for an excise duty exemption provided under Notification No. 3/2006-CE. This notification exempts certain items categorised as ‘namkeen’ from excise duties, a benefit the company had sought for the period between January and December 2012.
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The issue arose when the adjudicating authority rejected Parle Products’ claim, arguing that ‘Cheeselings’ did not meet the criteria for ‘namkeen’ due to differences in the manufacturing process and composition compared to traditional namkeen items.
According to the adjudicating authority, ‘Cheeselings’ are not fried like traditional namkeen but are made from cereal flour, oil, and salt, distinguishing them from typical namkeen products. The authority contended that the product should instead be classified as ‘snack food’ under a different notification, which would entail a higher excise duty rate.
However, Parle Products challenged this decision, arguing that despite the different manufacturing process, ‘Cheeselings’ should still be considered ‘namkeen’ as it is a common term used for savoury snacks in the Indian market. The appellants contended that the classification should be based on the product’s market perception and common usage, rather than solely on its production process.
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CESTAT, in its ruling, mentioned that the term ‘namkeen’ does not have a specific definition in the tariff or notification. Therefore, the classification should reflect the product’s nature and market classification rather than just its manufacturing process. The tribunal found that the adjudicating authority’s decision to classify ‘Cheeselings’ as a ‘snack food’ was not supported by a clear definition of ‘namkeen’ or a proper assessment of the product’s market classification.
Accordingly, the two member bench of Ajay Sharma ( Judicial Member ) and C J Mathew ( Technical member) concluded that ‘Cheeselings’ indeed falls under the category of ‘namkeen’ and thus qualifies for the excise duty exemption.
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