CX - A remand order does not imply acceptance of contention of assessee - interest of Revenue is not jeopardized – Appeal dismissed: CESTAT
By TIOL News Service
MUMBAI, JAN 31, 2017: THIS is a Revenue appeal.
In the acerbic words of the Member(Technical) who, at the outset, described the case thus - "This is a peculiar dispute reminiscent of enforcement activism on the part of eager officers appointed under the Central Excise Act, 1944 that was so rampant many decades ago."
The facts are that demand Notice was issued to outlets of M/s Domino's Pizza India Ltd at Vile Parle, Lokhandwala, Malad and Esselworld for alleged evasion of central excise duty on the alleged manufacture of ‘pizzas' at these outlets. The thrust of the case was that heading no 2001 10 and 1601 10 of the Schedule to the CETA, 1985 is a precise description of the food served at these outlets and, these being put up in unit containers, are chargeable to duty owing to note in section IV; and that the use of the brand name ‘Domino's' on all the containers would deprive them of the benefit of small-scale exemption rendering each of the outlets to be liable to duty.
The demand was restricted to ‘non-vegetarian pizzas' and ‘chicago wings; which, being ‘preparations of meat' (1601 10) were dutiable at 16% during the period from 2000-01 to 2004-05 with ‘preparations of vegetables' (2001 10) and ‘preparation of sauces' (2103 10) not being subject to effective rate of ‘nil'.
Based on the fact that 22.03% of these sales were of ‘non-vegetarian pizza' and 0.71% was of ‘chicago wings' and, by applying this proportion to the total sales of each of the outlets, the duty allegedly evaded was computed at Rs. 38,50,044/-.
In adjudication, the original authority held that ‘non-vegetarian pizzas', since comprising of meat less than 20% by weight is classifiable under heading 1905 90 [Nil duty] and not under heading 200110 as alleged in the notice; ‘vegetarian pizzas' classifiable under heading 1905 90; ‘chicago wings' are classifiable under heading 1601 10; ‘cheesy dip' and ‘jalapeno dip' being repacked, and hence deemed to be manufactured at retail store, were liable to duty under heading 2103 10. Consequently, a total duty of Rs.1,20,602 was ordered to be recovered, with equal penalty and interest.
The matter was remanded back to the original authority by the Commissioner(A) pointing out various flaws in the adjudication order.
Against this order, Department has filed an appeal before the CESTAT and it is urged that the matter be decided on the lines suggested by the Committee of Commissioners.
The Bench inter alia observed–
"5. …, a perusal of the grounds of appeal filed by Revenue shows it to be entirely about acceptance of the submissions made to the first appellate authority and does not question the authority of the first appellate authority to remand the matter. A remand order does not imply acceptance of the contention of assessee but is a direction to pass an order after taking into consideration various aspects pointed out by the appellate authority. In the absence of jeopardy to interest of Revenue and in the face of the specific observations on the unreliability of data adopted to compute duty liability, the remand cannot be objected to. Further, duties of central excise are assessed on goods that are manufactured; the value adopted for such levy of duty has not only to be enunciated unambiguously but such assessment is required to conform to section 4 of Central Excise Act, 1944 and the rules framed to enable such valuation. The original authority is conspicuously silent on this."
The CESTAT also noted that the maintainability of the appeal also needs discussion in view of the fact that a threshold of Rs.10,00,000is prescribed in the instruction of 17th December 2015 issued in F No 390/Misc/163/2010-JCand which threshold was made applicable to pending appeals by letter dated 1 st January 2016. The contention of the AR that the dispute pertains to classification, which is excluded for implementation of the above instruction, was not concurred with.
In this context, the Bench observed - The exclusion of classification from the instruction to withdraw pending appeal is intended to ensure that discriminatory treatment is not meted out in applying the appropriate rate of duty. Remand does not open up such a possibility and, hence, the issue before us is the propriety of the remand which is not excluded from applicability of the new litigation policy.
The Revenue appeal was dismissed.
(See 2017-TIOL-292-CESTAT-MUM)
