1986 (6) TMI 169 - AT - Central Excise

Issues Involved:
1. Interpretation of Entry 14 in the schedule to Notification 17/70, dated 1-3-1970.
2. Classification of the product 'Spert' under the Central Excise Tariff.

Issue-Wise Detailed Analysis:

1. Interpretation of Entry 14 in the Schedule to Notification 17/70, dated 1-3-1970:
The core issue in this appeal is whether the product 'Spert' falls under Entry 14 of the schedule to Notification 17/70, which lists dutiable goods under Item 1B of the Central Excise Tariff (CET) described as 'prepared or preserved foods.' Entry 14 specifies:
"Preparations with a basis of flour, of starch, of malt extract, or of malted barley, and milk foods, which by simply mixing with, or boiling in milk or water, can be used for making beverages invalid foods and gruels, whether or not containing cocoa, but excluding baby foods, that is to say, foods specially prepared for feeding of infants."

The appellant contends that 'Spert' qualifies under this entry as it contains malt extract and skimmed milk powder, which are principal ingredients. They argue that skimmed milk powder is implicitly a milk food based on entries 12 and 13 of the schedule, which mention skimmed milk powder and condensed milk.

The respondent (assessee) argues for a different interpretation, suggesting that Entry 14 should be read as:
"Preparations with a basis (1) of flour, (2) of starch, (3) of malt extract, or (4) of malted barley, and (5) milk foods."

2. Classification of the Product 'Spert' under the Central Excise Tariff:
The composition of 'Spert' includes liquid glucose, skimmed milk powder, calcium caseinate, malt extract, sugar, and vitamins. The controversy revolves around whether 'Spert' can be classified as a 'milk food' under Entry 14.

The appellant asserts that 'Spert' is a milk food because skimmed milk powder is a major constituent, and the addition of other ingredients does not change its essential character as a milk food. They argue that the term 'milk foods' should be interpreted broadly, beyond just infant milk foods.

The respondent counters that 'milk foods' are not defined in the Central Excise Tariff and that 'Spert' cannot be considered a milk product as it contains significant amounts of calcium caseinate, a non-dairy product. The respondent provided several expert opinions and affidavits from food technologists, dieticians, and doctors, asserting that 'Spert' is a protein-rich supplementary food, not a milk food.

Analysis of Judgments:
- Majority Opinion (Vice President and Member (J)):
The majority opinion, represented by the Vice President and another Member (J), supports the respondent's interpretation. They argue that the term 'milk foods' lacks a precise definition in the Excise Law and should be understood in the context of trade and industry. The majority opinion accepts the expert testimonies and affidavits provided by the respondent, which indicate that 'Spert' is a protein-rich supplementary food and not a milk food. They conclude that the department has not provided sufficient evidence to classify 'Spert' under Entry 14, and thus, the product is exempt from excise duty.

- Dissenting Opinion (Member (J)):
The dissenting opinion, represented by another Member (J), argues that 'Spert' should be classified as a milk food under Entry 14. This opinion emphasizes that skimmed milk powder, a major constituent of 'Spert,' qualifies it as a milk food. The dissenting Member (J) contends that the addition of other ingredients does not alter the essential character of 'Spert' as a milk food.

Conclusion:
In accordance with the majority decision, the appeal is dismissed. The product 'Spert' is not covered by Entry 14 of the schedule to Notification 17/70, dated 1-3-1970, and is thus exempt from payment of excise duty.

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