Part-Cooked Yet Still Bread: CESTAT Rules ‘Ready Roti’ Retains Essential Character, Sets Aside Excise Demand

Part-Cooked Yet Still Bread: CESTAT Rules ‘Ready Roti’ Retains Essential Character, Sets Aside Excise Demand

Introduction

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT New Delhi) has held that “Ready Roti/Halka Fulka” manufactured by Ready Roti India Pvt. Ltd. is classifiable as bread under the Central Excise Tariff and not as ready-to-eat packaged food. Consequently, the product is chargeable to a nil rate of excise duty. The Bench comprising Judicial Member Ajay Sharma and Technical Member P.V. Subba Rao allowed the appeal and set aside the excise duty demand, interest, and penalty imposed by the department.

Factual Background

Ready Roti India Pvt. Ltd. commenced manufacture of “Ready Roti/Halka Fulka” in September 2015. The appellant classified the product under Central Excise Tariff Heading (CETH) 1905 90 90, which covers bread and bakery items chargeable to nil duty. The department, however, took the view that the product was only partially cooked and required further heating before consumption. It therefore sought to classify the goods under CETH 2106 90 99 as “food preparations not elsewhere specified,” attracting excise duty at 12.5%. On this basis, excise duty demand, along with interest and penalty, was confirmed on the allegation that the appellant had manufactured ready-to-eat packaged food without registration and payment of duty.

Procedural Background

Aggrieved by the order confirming the demand, Ready Roti India Pvt. Ltd. filed an appeal before the CESTAT New Delhi. The Tribunal examined the nature of the product, the relevant tariff entries, and the applicability of the General Rules for Interpretation (GRI) of the Central Excise Tariff.

Issues

1. Whether “Ready Roti/Halka Fulka” is classifiable as bread under CETH 1905 90 90.

2. Whether the product falls under CETH 2106 90 99 as ready-to-eat food preparation.

3. Whether partial cooking and requirement of further heating alters the essential character of the product for classification purposes.

Contentions of the Parties

The department contended that since the product was partially cooked and required further heating before consumption, it could not be treated as bread. It argued that only fully cooked products could fall under CETH 1905 and that the appropriate classification was under CETH 2106 as food preparations not elsewhere specified.

The appellant submitted that roti is a form of unleavened bread and that the product retained the essential character of roti. It argued that the requirement of minimal further heating did not change the nature of the product and that classification must be determined based on essential character under the Rules of Interpretation.

Reasoning and Analysis

The Tribunal observed that rotis are a form of unleavened bread and that the product in question was not in the form of wheat, flour, or dough, but had already assumed the character of roti. Applying Rule 2(a) of the General Rules for Interpretation of the Central Excise Tariff, the Bench held that incomplete or unfinished goods having the essential character of the finished article are to be classified as the finished article. The Tribunal rejected the department’s contention that only fully cooked products could qualify as bread. It held that the Ready Rotis manufactured by the appellant had the essential character of rotis and that the requirement of brief additional heating before consumption did not alter their classification. Accordingly, the goods were found to be squarely covered by CETH 1905 90 90.

Decision

The CESTAT New Delhi allowed the appeal and held that “Ready Roti/Halka Fulka” is correctly classifiable under Central Excise Tariff Heading 1905 90 90 as bread, attracting a nil rate of excise duty. The duty demand, along with interest and penalty, was set aside.

In this case the appellant was represented by Advocate Priyamwada Sinha.