The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the muesli is classifiable under the category of the prepared food obtained by the swelling or roasting of cereal and cereal products which attracted only 6% of the rate of Excise Duty.
Ameya Foods, the appellant assessee was engaged in the manufacture and clearance of excisable goods ie, Masala and Coriander Oats and Curry and Pepper Oats (Savoury Oats), Silk Oats (Sweet Oats), and Muesli and also engaged in packing of oats and stated that the Savoury oats and silk oats are classifiable under cereal grains and attracted ‘nil’ rate of duty and Muesli was classifiable under processed food and attracted 6% rate of excise duty.
The assessee appealed against the order passed by the adjudicating authority for confirming the demanding duty along with interest and imposed a penalty for the Savoury Oats, Silk Oats, and Muesli.
Vipin Kumar Jain, the counsel for the assessee contended that the oats used in the manufacture of muesli were “whole rolled oats” which are dry kilned and thereby have undergone the process of roasting and the assessee had therefore classified the same under the category which covered in the “prepared food obtained by the swelling or roasting of cereal or cereal products”.
Further submitted that for the manufacture of muesli, the principal raw materials are whole rolled oats, soya lecithin, wheat flakes with sugar, corn flakes with sugar, almond raisins, honey, etc, and the contents are transferred into trays and placed in the oven for drying and then they are taken out and cooled in a cooling room and required quantity of almonds, raisins are mixed with the contents and the resultant product was called ‘Muesli’.
Also stated that the muesli was classifiable under central excise tariff item under the category of “Prepared foods obtained by the swelling or roasting of cereals or cereal products” attracting 6% of excise duty.
M. Ambe, the counsel for the department contended that after the scrutiny of the agreements and analyzing the process of manufacture the department was of the view that the muesli was classifiable under the category of processed food or cooked food with unroasted cereals flakes which attracting @ 12% of duty.
The Bench observed that the whole rolled oats that are imported and used in the manufacture of muesli are roasted in a dry kiln and the reason for using whole rolled oats that are roasted is as it gives the muesli a crunchy texture while consuming and it can be seen that the whole rolled oats had undergone the process of roasting for use in the manufacture of Muesli.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that muesli was classifiable under which covered ‘prepared food obtained by swelling or roasting of cereal or cereal products’ which attracted 6% of the rate of excise duty.
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