Ready Rotis Classifiable as Bread, Not Ready-To-Eat Food; CESTAT Grants Nil Excise Duty

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that “Ready Roti/Halka Fulka” manufactured by Ready Roti India Pvt. Ltd. is classifiable as bread and not as packaged or instant food, and is therefore chargeable to a nil rate of excise duty.

The bench of Judicial Member Ajay Sharma and Technical Member P.V. Subba Rao was dealing with an appeal against an order upholding excise duty demand, interest and penalty on the allegation that the appellant was manufacturing ready-to-eat packaged food without registration or payment of duty.

The appellant commenced manufacture of “Ready Roti/Halka Fulka” in September 2015 and treated the product as bread under Central Excise Tariff Heading 1905 90 90, which covers bread and bakery items chargeable to nil duty.

The department took the view that the product was partially cooked and required heating before consumption, and therefore fell under CETH 2106 90 99 as food preparations not elsewhere specified, attracting duty at 12.5%.

The tribunal examined the nature of the product and noted that rotis are a form of unleavened bread. It observed that the fact that the product required further heating before consumption did not alter its essential character as 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 such.

Rejecting the department's contention that only fully cooked products could be treated as bread, the Tribunal held:

“The Ready Rotis manufactured by the appellant have, undoubtedly, the essential character of Rotis. They are not in the form of wheat or flour or dough. However, they are incomplete and need to be cooked for a few more minutes before consuming. Therefore, they are squarely covered by Rules of Interpretation 2(a).”

Accordingly, the bench concluded that the ready rotis were correctly classifiable under Central Excise Tariff Heading 1905 90 90 and not under CETH 2106 and are therefore chargeable to a nil rate of excise duty.

For Appellant: Advocate Priyamwada Sinha

For Respondent: Authorised Representative, Bhagwat Dayal