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Sweetmeat cereal bars coated with cocoa are exempt from duty

Sweetmeat cereal bars coated with cocoa
Recently CESTAT gave an important judgment dated 14th March 2019, regarding classification of supply of sweetmeat cereal bars supplied by applicant in case of Shaik Iqbal Mohammed v. Commissioner of Customs Central Excise & Service Tax, Hyderabad [2019] 110 447 (Hyderabad - CESTAT) which is discussed as below:

Facts of the Case
  • The applicant was engaged in the manufacture of sweetmeat cereal bars coated with cocoa and not coated with cocoa packed in sealed containers with various ingredients. The applicant classified the products as chikki sweet meat cereal bars under the category of Mithai which was classified under Heading No. 2106 90 99 and was eligible for an exemption from payment of duty.
  • The adjudicating authority held that the product containing cocoa would fall under Heading No. 1806 90 90 and the product not containing cocoa was to be taxed as ready to eat packaged food under Heading No. 2106 90 99, liable to tax as per applicable rates.
  • Applicant filled appeal to Tribunal: 

Observation/ Judgment
  • CESTAT observed that appellants were manufacturing cereal bars with ingredients like rice crispies, soya crispies, white oat with nuts along with cane sugar, milk solids, soya proteins etc., minerals and vitamins are also included, few of the cereal bars do not contain cocoa selling them as "Chikki - Nutrition Bar Sweet meat.". Appellant is marketing and selling the product as Sweetmeat. Even similar products of the competitors which are sold in the market are known in the trade circle and in mind of the consumers as “Sweet meat”.
  • 'Chikki' is Sweet meat which is made up of Til and Jaggery, whereas the product contains other ingredients. It is not necessary that a product to be held as 'Chikki', the same should contain sugar or jaggery. In a new development of products instead of sugar or jaggery, items like honey, cane sugar, liquid glucose and other items are used for giving sweet taste to the product. Ingredients of different Sweetmeat can defer but it would not result in losing its basic identity as 'Chikki' or a "sweetmeat' due to difference in ingredients.
  • Mere packing of the sweetmeat same would not remove the product from the heading of 'mithais/misthans' to make it "ready to eat packaged food".
  • CESTAT held that exemption of NIL rate of duty would be available to products sold by applicants as “sweetmeat”. 

Please click here for judgement.


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