2014 (9) TMI 659 - AT - Central Excise

Classification of Minute Maid Nimbu Fresh under Chapter sub-heading 2202 9020 or under sub-heading 22021020 - Exemption under Notification No. 3/2006 C.E. dt. 01.03.2006 - whether it should be under Sub-heading 22021020 as Lemonade or under sub-heading 22029020 as Fruit Pulp or fruit juice based drinks - appellant describe the MMNF as a drink which is close to house made Nimbu Pani and further relates that minute Maid Nimbu Fresh offers Ghar Ki Yaadon Ka Ras (memories of home-made lemonade) in every sip - Held that - product described in the Prevention of Food Adulteration Rules 1955, is Lime and not lemon. The two words are described differently in Chamber s 21st Century Dictionary. However, even ignoring this point we note that the requirement of Prevention of Food Adulteration Rules 1955 is that the total soluble solid should not be less than 10%. Whereas the appellants technical note describes above states that the solid content of the juice is measure in terms of brix and the lemon juice brix is at 6 degree i.e. 6%. We have also seen the labels on the bottles of the MMNF which also indicate the brix content as 5.7%. Under these Rules too, the appellant s product does not meet the criteria of fruit juice base drink since it does not have the required brix content. The lemon juice concentrate in the MMNF is only 1%. Which falls below the limit of 5% specified in PFA Rules. The MMNF thus squarely falls under CTH 22021020. duty is payable accordingly with interest. However imposition of penalty is set aside. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Correct classification of Minute Maid Nimbu Fresh (MMNF) under Central Excise Tariff.
2. Applicability of duty, interest, and penalty on MMNF.

Issue-wise Detailed Analysis:

1. Correct Classification of MMNF:
The primary issue was whether MMNF should be classified under sub-heading 22021020 as "Lemonade" or under sub-heading 22029020 as "Fruit Pulp or fruit juice based drinks." The appellant classified MMNF under 22029020, availing exemption under Notification No. 3/2006 C.E., while the department argued it should be under 22021020 as "Lemonade."

The appellant contended that MMNF contains 5.6% lemon juice, meeting the Prevention of Food Adulteration Rules, 1955, and should be classified as a fruit juice-based drink. They argued that similar products by competitors and their own factories in other jurisdictions were classified under 22029020.

The Commissioner, however, referred to the definition of lemonade from Wikipedia and held that MMNF should be classified under 22021020, as it fits the description of lemonade.

The Tribunal analyzed the tariff structure and the Rules for Interpretation, noting that lemonade is a sub-classification of Chapter heading 220210, which includes waters containing added sugar or other sweetening matter or flavored. The Tribunal disagreed with the appellant's argument that MMNF cannot be called a flavored drink, stating that the term "flavored" includes both natural and synthetic flavors.

The Tribunal also considered the HSN notes, which describe lemonade as beverages consisting of water, sweetened or not, flavored with fruit juices or essences. The Tribunal concluded that MMNF, containing lemon juice, fits this description.

2. Applicability of Duty, Interest, and Penalty:
The Tribunal upheld the classification of MMNF under 22021020, making it subject to duty and interest. However, they set aside the penalty, noting that the appellants had informed the Assistant Commissioner of their intended classification at the outset.

In conclusion, the Tribunal held that MMNF should be classified under 22021020 as "Lemonade," making it liable for duty and interest, but no penalty was imposed. The appeal was disposed of accordingly.