Bakery Items Manufactured and Sold by Hotels subject to Excise Duty: CESTAT [Read Order]

Post-Sale Payments - Excise Duty - Taxscan

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) last day held that Excise Duty leviable on bakery Items manufactured and sold by Hotels.

The appellants are engaged in the activities of cooking and serving food, providing room accommodation, providing facilities of Banquet Hall. The food items are cooked and prepared in the respective kitchens of the Hotel and are served to the customers in the normal utensils/table-wares, simultaneously. These food items are not packed and are neither intended for fit for marketing as such. Apart from this, the appellants also operate a small bakery within the premises of the Hotel at Bangalore wherein Pastries, Cakes, Biscuits, Cookies, Chocolates and Confectionary are made for consumption in the Hotel and also for sale from the sales counter of the pastry shop, located in the Hotel premises itself. The department demanded excise duty from the appellant for the bakery items sold in their premise.

Advocate Madhumitha Singh, the counsel for the appellants submitted that in case of preparing food packages or selling the same or preparing foodstuffs for serving in the Hotel, there is no question of manufacture. the items made in the kitchens of their Hotel would not come under ‘manufacture’. They further relied on the decision in Bharat Hotels Ltd.

On behalf of the department, it was submitted that duty was rightly imposed on pastry items like Chocolates/Cakes/Pastries which do have shelf life and which are also sold through outlets in the Hotel.

Accepting the contentions of the department, the bench noted that the items such as Cookies, Pastries, Cakes and Chocolates fall under Chapter 18 and 19 of the Central Excise Tariff Act, 1985 and are chargeable to duty.

“Therefore, the department is in its right to demand duty on these items. We find that the ratio in the case of Bharat Hotels Ltd. cited supra is not applicable.”

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