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‘Substance over Form’

This or That?
 KitKat – Chocolate or Wafer?
Wafer with chocolate coating – 10% Tax
Chocolate with a wafer inside – 20% Tax

The battle was settled in 1999, when court had to agree to the fact that “while all
chocolate must necessarily contain cocoa, it is not every cocoa product or
preparation that it is chocolate”. Therefore, though Kitkat had milk chocolate as
main ingredient, it could not be labeled as chocolate. Also, court had no proof that
the product was being sold as a “chocolate”.

KitKat was finally declared

as a
WAFER!!
 Pringles – Chips or Crisps?
Potato Chips/Crisps – 17.5% VAT
Not a Potato product – 0% VAT

The new, U.S. name (chips) caused further confusion in the U.K. where potato
chips are always referred to as crisps. On top of that, Procter & Gamble (the
snack's original developer) didn't want the snack identified as a potato product,
since they're taxable across the pond.
Britain's court decided that Pringles are legally potato chips, despite containing
corn, rice and wheat, and Procter & Gamble U.K. had to cough up $160 million in
taxes.
 Parachute – Hair oil or Cooking Oil?
Excise Duty on Edible Oil – 0%
Excise Duty on Hair Oil(beauty product) – 8%

In order to avoid excise duty, Marico planned to never advertise the

end-usage of the product. As oil was available in comparatively
smaller bottles, it became popular as ‘hair oil’. The advertising of
Parachute talked of just purity & its diverse usage & while applying
classification under excise duty, it was labeled as edible oil since it
passed approval from FSSAI.
When questioned by CBEC, company got off the hook as there was
no proof of the product being marketed or sold as hair oil. Hence,
CBEC modified its earlier rule to “coconut oil packed in containers up
to 200ml may be considered as generally used as a hair oil”. Marico
appealed against the decision & judgement turned in their favor. &
Marico’s parachute continued to be classified as ‘edible oil’.
However, company launched variants of this oil as Parachute
Advanced which are marketed & sold as hair oil.
 Soft-serve – Ice cream or just another
dairy product?
Dairy Produce – 0% excise duty
Ice Creams – 16% excise duty

McDonald’s claimed that there is a distinction between soft serve and ice-cream
on account of the difference in its milk fat content & the same be construed in the
scientific sense for the purpose of classification. “Soft serve cannot be classified
as ice-cream because ice-cream contains about 10 per cent milk fat, while the
milk fat content in soft serve ranges between three and five per cent.”
The 12 year long legal battle came to an end in Dec, 2012 when Supreme Court
ruled against the brand and upheld claims of Excise department by saying that
“the true character of a product cannot be veiled behind a charade of terminology,
which is used to market a product”.
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