NESTLE (INDIA) LTD Vs. CCE

JUDGEMENT

(1.) THE principal question for consideration in this appeal is classification of product marketed under the label 'KIT - KAT' manufactured by the appellant. The secondary questions are whether the notices issued for recovery of the duty alleged to be short paid on the product manufactured and cleared from the appellant's factory at Usgao in Goa for the period July, 1995 to August, 1997, is barred by limitation, and whether the appellant is liable to penalty.

(2.) THE principal ingredients of the product are wafer, sugar, milk powder, wheat flour, cocoa paste, cocoa butter, hydrogenated vegetable oil and process additives. The process of manufacture is in four parts. The wafer is made out of wheat flour, oil and other such goods. A filling made of praline and other substances is sandwiched between layer of such wafers and waffles. The sandwiched wafers are thereafter coated with chocolate manufactured from the cocoa paste, cocoa butter, sugar, so as to completely cover it. The resultant product is thereafter packed.

(3.) PRIOR to setting up of the factory for the manufacture of the goods the appellant claimed classification of these goods under heading 19.05 of the tariff, in the classification list filed in August, 1994 and May, 1995. The classification so claimed was approved by the Assistant Commissioner. The appellant cleared these products after paying the duty applicable to this heading. Four notices dated 3.7.1996, 14.10.1996, 20.4.1997 and 24.9.1997 were issued between July, 1996 and April, 1997 alleging short payment of duty on the ground that the goods were classifiable under heading 18.04 of the tariff and proposing recovery for each of the periods mentioned in those notices. These notices were issued by the Superintendent. Another notice was issued on 11.9.1997 by the Commissioner (Adjudication), Mumbai in exercise of powers conferred on him, proposing classification of the goods under heading 18.03 of the tariff and demanding duty so found short paid. In the order impugned in the appeal the Commissioner has confirmed classification of the goods under heading 18.03, confirmed proposed duty demand in the show -cause notice and dropped the proceedings proposed in the other four notices.