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TMI Blog2010 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ut following statutory formalities including payment of Central Excise duty. Excise authorities had arrived at the above tentative conclusion after gathering evidence and relevant particulars from the appellants including the statement of Shri Pravin Nabar, Senior Vice President-Finance & Accounts, DCPL. After due process of law, Commissioner passed the following order : "(1) The goods viz. Non-Vegetable Pizzas and Chicken Wings manufactured and cleared during the period August 2002 to February 2006 from their eight outlets falling in the jurisdiction of Bangalore-I Commissionerate bear the Brand Name/Logo and/or Trade Name of M/s. Pizza Hut International LCC, USA, are 'put up in unit container' and are accordingly, held classifiable as under Chapter sub-heading 1601.10 of the Central Excise Tariff Act, 1985. (2) I confirm the demand of Central Excise duty amounting to Rs. 55,51,491/- (Fifty five lakhs fifty one thousand four hundred and ninety one only) i.e., BED of Rs. 54,95,071/- and Education Cess of Rs. 56,420/- under proviso to Section 11A (1) of the Central Excise Act, 1994 against M/s. Dodsal Corporation Pvt. Ltd. on the excisable goods manufactured and cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the common man's understanding of the product. 3. They cited HSN Explanatory Notes (EN for short) to Chapter 2 and Chapter 3 and argued that they cover meat, edible poultry and fish suitable for human consumption whether or not previously scalded or similarly treated "but not cooked". Meat as obtained from the animal, but only preserved for further use would not be classifiable under Chapter 16 but under Chapter 2. The Chapter 16 covers "Preparations of meat or fish or of ........., or other aquatic invertebrates". As per the General Explanatory Notes of Chapter 16 of the HSN, that chapter covers prepared foodstuffs obtained by processing meat, meat offal, blood, fish, etc. 4. They have invited our attention to the relevant tariff entry 1601 as it existed during the material time. The entry is reproduced hereunder : Up to 28-2-2005 Tariff Item Sub-Heading No. Description of goods Rate of duty 16.01 - Preparations of meat, of fish or of crustaceans, mollusks or other aquatic invertebrates, including sausages and similar products, extracts and juices, prepared or preserved fish and caviar and caviar substitutes 1601.10 Put up in unit containe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportion, it would be classified under Chapter Heading 1902. This indicated that even if pasta contained more than 20% by weight of meat, the classification remained Chapter Heading 1902. Chapter Note 2 to Chapter 16 of HSN classifying products containing more than 20% by weight of meat under that Chapter did not change classification of such pasta. Explanatory Notes to Chapter Heading 1905 covered bread, pastry, cakes, biscuits and other baker's wares. The most common ingredients of these products were cereal flours, but may contain meat, fish, etc. It further refers specifically to pizza as consisting of bread dough covered with various other ingredients such as cheese, tomato, oil, meat and anchovies. The EN therefore recognizes that pizza as a matter of rule is not preparation of meat, but may optionally contain other ingredients including meat. It follows that even if the quantity of meat used in topping on pizza base is more than 20% once it was baked and ready to be presented, the Chapter Note relating to classification of such products under Chapter Note 16 would not apply. Pizza was nothing but bread prepared further with toppings, vegetarian or non-vegetarian, and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassified in the heading of Chapter 16 corresponding to the component or components which predominate by weight. In all cases the weight to be considered is the weight of meat, fish, etc. in the preparation at the time it is presented and not the weight of the same products before preparation ........" (Emphasis supplied) The appellants submit that in applying the above Chapter Note, the department had wrongly adopted weight of meat before preparation of pizza to decide the percentage of meat in the total weight of the preparation. The appellants produced extract of the letter dated 10-12-2006 communicating the above position during investigation to the authorities. The meat content in terms of weight underwent drastic change while cooking in the oven as the moisture content in the pizza including the topping evaporated. This vital factor was ignored by the authorities. The appellants submitted that out of total 48 varieties, the department had selected only such of those pizzas which contained more than 20% meat by weight, before cooking. The department had not gathered samples to ascertain the meat content as prescribed in the Chapter Note at the material time. The Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bags showing brand name of the respondents. The quantity is not pre-printed on the bags which are also not sealed, as seen from the averment in the show cause notice and the finding of the authorities below. The adjudicating authority had classified the goods under C.E.T. sub-heading 1601.10 solely on the ground that the plastic bags were nothing but unit containers for the reason that a pre-determined quantity was packed in the plastic bags. However, unit container, as per the definitions contained in several dictionaries, is a container containing pre-determined uniform quantities of contents whereas the items cleared by the respondents were not of uniform quantities. For this reason, the goods in question which were cleared in plastic bags not sealed and not containing pre-printed quantities thereon cannot be treated as unit containers for the purpose of classification of meat articles packed therein under C.E.T. sub-heading 1601.10." It is further submitted that the cartons did not indicate the product, quantity, weight, number, price, size or type of the goods put in the box. Consequently, the impugned goods also qualified for the exemption under Notification No. 3/05-C.E., d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a base and different toppings, the composition of which varies according to the taste of the customer and the standard followed by the franchiser. The toppings consist of cheese, tomato, oil, meat, anchovies, etc. The pizza base and toppings are cooked in an oven and served to customers dining at the outlet. At the request of the customer, the pizzas are also packed in paper cartons carrying the logo and brand name "Pizza Hut" and handed over to the customer visiting the outlet or arranged to be delivered at his residence. The dispute relating to pizzas concerns classification of pizzas with chicken topping sold as take away or for home delivery. The material period extends prior to and from 1-3-2005 when the tariff entries were aligned with HSN on enactment of Central Excise Tariff Amendment Act, 2005. 14. The tariff entry 160110 relevant for the dispute as it existed during the material period is reproduced below : Prior to 1-3-2005 Tariff Item Sub-Heading No. Description of goods Rate of duty 16.01 Preparations of meat, of fish or of crustaceans mollusks or other aquatic invertebrates, including sausages and similar products extracts and juices, prepared or pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 05.04, for example, products which have been; (1) Prepared as sausages or similar products, (2) Boiled, steamed, grille, fried, roasted or otherwise cooked, except smoked fish, which may have been cooked before or during smoking (heading 03.05), crustaceans, in shell, cooked by steaming or boiling in water (heading 03.06) and flours, meals and pellets obtained from cooked fish, crustaceans, mollusks or other aquatic invertebrates (headings 03.05, 03.06 and 03.07 respectively). (3) Prepared or preserved in the form of extracts, juices or marinades, prepared from fish eggs as caviar or caviar substitutes, merely covered with batter or bread crumbs, truffled seasoned (e.g. with both pepper and salt), etc. (4) Finely homogenized and based solely on products of this Chapter (i.e. prepared or preserved meat, meat offal, blood, fish or crustaceans, mollusks or other aquatic invertebrates). These homogenized preparations may contain a small quantity of visible pieces of meat, fish etc., as well as a small quantity of ingredients added for seasoning, preservation or other purposes. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oppings are not covered under CH 1601. We find that as per the explanatory notes to Chapter Heading 1905, provision for bread, pastry, cookies, biscuits and other baker's wares, pizza consisting of pizza base covered with ingredients such as tomato, oil, meat and anchovies is correctly classified under that entry. Therefore, pizzas cannot be brought under heading 160110 for the reason that pizza has a topping of chicken along with other ingredients. 16. For the period prior to 1-3-2005 duty was attracted only when such preparations of meat were 'put up' in unit containers bearing a brand name. For the subsequent period, such goods not put up in unit containers are exempted from payment of duty under Notification No. 3/05-C.E., dated 24-2-2005. We find that in the instant case, the paper carton bearing the logo of Pizza Hut is used mainly for packing and transportation of the pizzas from the outlet to the place where the pizza is consumed. Pizzas are packed in these cartons when pizzas are ordered by the customer for delivery at his residence or when the customer wishes to take away the pizza instead of consuming it at the eatery. The carton itself does not display the quantit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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