CESTAT allows appeal by Hindustan Coca Cola Beverages challenging classification of ‘Minute Maid Nimbu Fresh’ as lemonade instead of fruit pulp or fruit drink

A show cause notice was issued to the appellant, to recover Central Excise Duty payable on the impugned product, during the period of April 2011 to August 2012, on the grounds that the appellant had misclassified the product as fruit pulp or fruit drink, instead of lemonade.

CESTAT

Customs, Excise and Service Tax Appellate Tribunal, Allahabad: In an appeal arising out of order dated 23-04-2015, passed by Commissioner (Appeals-I) Central Excise, Meerut (‘the Appellate Auhtority’), whereby the product ‘Minute Maid Nimbu Fresh’ was classified as lemonade, the Bench of P.K. Choudhary, Member (Judicial) and Sanjiv Srivastava, Member (Technical) relied on Brindavan Beverages (P) Ltd. v. Commr. of Customs, Central Excise, 2019 SCC Online CESTAT 9229, wherein it was held that Minute Maid Nimbu Fresh was classifiable under the category of ‘fruit pulp or fruit juice-based drinks’. Accordingly, the Tribunal allowed the present appeal.

Background

The Appellant-Hindustan Coca Cola Beverages Private Limited, were engaged in the manufacture of aerated drinks and fruit pulp or fruit juice-based drinks under different brand names, classifying them under Chapter 22 of the First Schedule of the Central Excise Tariff Act, 1985. On 19-03-2011, the appellant commenced the production of ‘Minute Maid Nimbu Fresh’ (‘impugned product’) in returnable glass bottle of size 200ml and classified the same as fruit pulp or fruit juice drink. The Appellant was duly clearing the same at the rate of 5% duty.

A show cause notice dated 31-05-2013 was issued to the appellant, proposing to recover Central Excise Duty payable on the impugned product, during the period of April 2011 to August 2012, on the grounds that the appellant had misclassified the product as fruit pulp or fruit drink, instead of lemonade. Therefore, the appellant had contravened the provisions of Central Excise Rules, 2002. It was alleged that the appellant was required to pay duty at 10% during 19-03-2011 to 16-03-2012, and at the rate of 12% from 17-03-2012 onwards on the transactional value on the clearances of the impugned product by classifying the product.

Subsequently, Additional Commissioner, Central Excise, Meerut, vide order dated 30-09-2014, held that the impugned product was classified as ‘lemonade’. Further, this order was challenged by the appellant before the Appellate Authority, whereby the original order was upheld to the extent it confirmed the duty demand. However, the quantum of penalty was reduced to Rs. 17,02,649, on account of misclassification. Thus, aggrieved by the order passed by the Appellate Authority, appellant filed the present appeal.

Analysis, Law, and Decision

The Tribunal stated that the Appellate Authority had relied on Hindustan Coca-Cola Beverages (P) Ltd. v. CCE, 2014 SCC Online CESTAT 5118, however, the larger bench in Brindavan Beverages (P) Ltd. v. Commr. of Customs, Central Excise, 2019 SCC Online CESTAT 9229 (‘Brindavan Beverages case’) did not agree with the decisions laid down in former case. The Tribunal relied on Brindavan Beverages case (supra), wherein it was held that the impugned product was classifiable under the category of “fruit pulp or fruit juice-based drinks”. It was held that when the lime juice was added but the fruit content of lime or lemon juice was not less that 5%, the product would be classified as fruit juice-based drinks, but if the lime or lemon juice content was less than 5%, then it would be classified as lemonade.

Thus, the Tribunal allowed the appeal filed by the appellant.

[Hindustan Coca Cola Beverages (P) Ltd. v. CCE, 2024 SCC OnLine CESTAT 662, Order dated 25-06-2024]


Advocates who appeared in this case:

For the Appellant: Atul Gupta, Advocate;

For the Respondent: Manish Raj, Authorised Representative for the Respondent.

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