In the case of M/s, Bharat Hotel Limited, Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently held that food preparations made in restaurants such as pastry, cakes, biscuits, cookies, chocolates etc are excisable goods.
The assessee in the present case is managing hotels and restaurants. They were providing rooms for rent and also various food items, cakes, pastries, cookies, confectionery to the customers in their restaurant.
The main issue in the present case is regarding non-payment of Central excise duty on pastry, cakes, biscuits, cookies, chocolates etc.
The Revenue held that since the Assessee 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, but the Assessee using goods such as pastry, cakes, biscuits, cookies etc. for preparing the food items which did not come under the list of exempted items. Therefore the authority confirmed the Central Excise duty liability of Rs. 6,41,711 and imposed the equal amount of penalty under Section 11AC of the Central Excise Act, 1944.
On the other hand, the counsel for the Assessee contended that the lower authority made their general observation regarding the products prepared in the kitchen of the Assessee as excisable under various headings and 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. Further, he submitted that food prepared in the hotel kitchen cannot be considered as the manufactured item as they do not have the shelf life and are not marketed as commonly understood. Hence the test of marketability to determine the excisability will not be satisfied by the lower authorities.
After analyzing the facts and circumstances of the case, the Tribunal including Technical Member B. Ravichandran and President Justice Dr. Satish Chandra observed that “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 and it is an admitted fact that the duration of shelf life by itself will not decide the marketability or excisability”.
The Tribunal further held that “whether a new, commercially identifiable product emerged after processes undertaken on the raw materials which are distinct from the finished product. therefore, 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”.
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