Chocolate Day: When Nestle’s Kitkat was embroiled in controversies in India regarding tax and packaging

Valentine Week is going on, that is, a week dedicated to love. In Valentine’s Week starting from Rose Day on 7th February, today i.e. on 9th February is Chocolate Day. On hearing the name of chocolate many people get water in their mouth, a different good feeling surrounds you. Nestle India’s KitKat is a very favorite and popular name among the chocolates present in India. It is known because of its test, but its name has also been in controversies. Let’s know when this happened…

KitKat: Chocolate or Wafer

It is about the year 1998. In India, Nestle India wanted to keep its product KitKat in the wafer category and wanted to pay 10 percent central excise duty accordingly. But the tax authorities believed that KitKat is a chocolate and hence 20% central excise duty should be levied on it. The tax authorities said that Nestle India was advertising KitKat as a chocolate and not as a wafer. But the duty wafer wali wants to fill.

But Nestle said that it does not sell KitKat as chocolate. People buy it considering it to be a combination of wafer and chocolate. At the same time, the tax authority said that KitKat has 68-70% chocolate milk and because of this it should be considered as chocolate.

At that time, the Central Excise Department imposed a duty of Rs 24 crore on Nestle India. This included a mandatory penalty of 100 per cent for the alleged misclassification of KitKat. In an order dated 27 July 1998, the Commissioner of Central Excise (Adjudication), Mumbai confirmed duty of about Rs 12 crore and an additional mandatory penalty of Rs 12.04 crore on Nestle India. Along with this, Nestle India was also directed to pay interest as per the provisions of Section 11 AB of the Central Excise Act. Nestle India was issued a show cause notice by the Central Excise Department on September 11, 1997, demanding central excise duty of Rs 12 crore (approx) from the company.

Eventually the matter reached the ‘Customs, Excise and Gold Tribunal, Mumbai’. Nestle India Vs. Commissioner of Central Excise (Adjudication), Mumbai. The tribunal had to decide whether the wafer in KitKat is coated with chocolate or the wafer is placed inside the chocolate.

Finally in the year 1999, the tribunal ruled “…while all chocolate must necessarily contain cocoa, it is not every cocoa product or preparation that is chocolate”. That is, it is necessary to contain cocoa in chocolate, but it is not necessary that all cocoa products or preparations are chocolate. The verdict came in favor of Nestle. KitKat was treated as a wafer and it was kept in the category of 10 percent central excise duty.

When the picture of Lord Jagannath stuck on the packaging

In January 2022, Nestle India had to face customer outrage on social media over pictures of Lord Jagannath, Balabhadra and Mata Subhadra on KitKat packets. People accused the company of hurting religious sentiments through this step. However, Nestle India said that the purpose of this step was only to engrave the beautiful and scenic places of the country. The culture of Odisha was engraved on the box through Pattachitra.

But even then, the company had expressed regret and said that it took immediate steps to recall those coaches who had these pictures from the market. It was said on behalf of Nestle India that if unknowingly it has hurt someone’s feelings, then it is sorry for it. The company also said that it had withdrawn those controversial packaging KitKat boxes from the market in the year 2021.

Earlier in April 2021, the company had apologized for showing Manipur’s Keibul Lamjao National Park in Meghalaya on its KitKat chocolate packet. The company had taken this step after the objection of the state government officials.

 

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