Goods are Assessed in the Form they are produced for Assessment, Demand of Duty on clearance ‘Fruit Juice’ instead of ‘Fruit Pulp’ not sustained: CESTAT [Read Order]

The Mumbai Regional Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that goods are to be assessed in the form they are produced for assessment and demand of duty on clearance ‘fruit juice’ instead of ‘fruit pulp’ will not be sustained.

M/s. Mother Dairy Fruit and Vegetable Pvt. Ltd, the appellant challenged the order in appeal No. YDB(32)MV/2012 dated 29.05.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-I, upholding order dated 13.12.2011 of the Additional Commissioner of Central Excise which confirmed the amounts of unpaid differential duties of excise of 28,16,877/- under Section 11A(2) [now Section 11A(10)] of the Central Excise Act, 1944 along with accrued interest thereon under Section 11AB [now Section 11AA] of the Central Excise Act, 1944.

The appellant is a 100% Export Oriented Unit and they had cleared the “fruit pulp” and were not liable to excise duty as such to the job worker of their sister DTA unit for further processing as per the agreement and direction of their sister concern.

The Appellant reversed the duty forgone in terms of paragraph 6.8(j) of the FTP 2004-09 read with the proviso to clause 6 of Notification No.22/2003-CE dated 31.03.2003 read with the proviso to clause 3 of the Notification No.52/2003 Cus dated 31.03.2003. For determining the duty forgone they took the value at which they had cleared the “fruit pulp”. 

 It was clear that they have cleared fruit pulp to M/s. Godrej Hershey Ltd, Mandideep for converting into juices and also that the finished goods (juices) were then cleared from the premises of M/s. Godrej Hershey Ltd, Mandideep to M/s. Mother Dairy Fruit & Beverages Pvt. Ltd., New Delhi Unit for sale in market. Thus, the clearances to M/s. Godrej Hershey Ltd., Mandideep, M.P were not sold as the goods were sent only for processing.

It was observed that the goods cleared in the present case are ‘fruit pulp’ and not the ‘fruit juice’ hence the entire proceeding which seeks to demand the duty on the basis of the sale price of ‘fruit juice’ cannot be sustained.

A Coram of M r. Sanjiv Srivastava, member (technical), and Dr. Suvendu Kumar Pati, member (judicial) viewed that the findings in the impugned order in respect of the amalgamation of the Appellant with their sister concern/ DTA unit do not serve any purpose as these two units continue to be separately registered units for the purpose of Central Excise.

While allowing the appeal the Tribunal held that an extended period of limitation to demand duty cannot be invoked, since the appellants have cleared the impugned goods after obtaining permission from the Customs authority and in accordance with the permission.

Shri P.K. Shetty with Shri Virat Chanda, Advocates appeared for the Appellant and Shri Deepak Bhilegaonkar appeared for the Respondent.

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