Case Law Details
M/s Bharat Hotel Limited Vs CCE (CESTAT Delhi)
On the main issue regarding the excisability of various food preparations made in the kitchen of the appellant and served to the customers, we have examined the various tariff entries from Chapter 16 to Chapter 20. The method of preparation of various food items now under consideration is of common knowledge. As correctly contended by the learned AR, it is nobody case that prepared fish or chicken curry ready to serve is can be equated to a raw fish or a chicken curry + some spices. The starting point with various ingredients and the ending point with combination of these ingredients involving different duration of preparation requiring heating, boiling and various other processes will certainly result in the new identifiable and marketable prepared food. The test laid down by the Hon’ble Supreme Court in Delhi Cloth and General Mills Co. Ltd. (supra) case is fully satisfied in such situation. The duration of shelf life by itself will not decide the marketability or excisability. This has been a well settled principle by the Apex court. What is needed is to see whether a new, commercially identifiable product emerged after processes undertaken on the raw materials which are distinct from the finished product. We have no hesitation to hold that the finished products, in the present case are different types of food preparations and are new marketable products and are liable to excise duty subject to due classification as available in the Central Excise Tariff.
FULL TEXT OF THE CESTAT JUDGMENT:-
The appellant is aggrieved by the order dated 16/08/2017 of Commissioner (Appeals), Central Excise, New Delhi. The appellant is managing hotels and restaurants. They were providing rooms for rent and also various food items, cakes, pastries, cookies, confectionary to the customers in their restaurants. The dispute in the present case is with reference to non-payment of Central excise duty on pastry, cakes, biscuits, cookies, chocolates etc. cleared by the appellant during the financial year 2003-2004 to 2005-2006. The Revenue held a view that since the appellants were engaged in preparing variety of food items using meat, vegetables, pulses etc. and these items being exempted from payment of Central excise duty, while calculating the aggregate value of clearances for SSI exemption under Notification 8/2003 dated 01/03/2003, the gross value of all products is to be considered. In other words, the appellants were held to be liable to pay Central excise duty on the dutiable pastry, cakes, biscuits, cookies etc. as their gross turnover (dutiable + exempted goods) exceeded 300 lakhs in the previous base year. The lower authorities confirmed Central excise duty liability of Rs. 6,41,711/- and imposed equal amount of penalty under Section 11AC of the Central Excise Act, 1944.
2. The learned Counsel appearing for the appellant submitted that for levy of excise duty an article must be ‘goods’ and such goods must be excisable under heading listed in the Central Excise Tariff Act. The lower authorities erred in holding that cooked food is covered under Chapter 16 to 20 of the Tariff without providing specific tariff heading under which food cooked in the kitchen is liable for duty. The learned Counsel submitted that the lower authority made their general observation regarding the products prepared in the kitchen of the appellant as excisable under various headings falling under chapter 16 to 20 of the Tariff. No detailed finding regarding the actual nature of goods classifiable under specific tariff heading and the process of such preparation satisfying the concept of “manufacture” under Central Excise law was recorded. The learned Counsel contended that food prepared in the hotel kitchen cannot be considered as manufactured item as they do not have shelf life and are not marketed as commonly understood. The chapter heading which were relied on by the lower authorities were mainly meant for preserved and packed food that were sold from the shelf having considerable shelf life. The food cooked by the appellant in the kitchen is on specific orders. These cannot be sold to anybody. These food items prepared without any preservative cannot be sold in the open market over the counter. Hence, the test of marketability to determine the excisability will not be satisfied in the present case.
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