1988 (7) TMI 176 - AT - Central Excise

Summary

Issues Involved:
1. Classification of canned fruits in syrup.
2. Classification of fruit squashes and cordials.

Detailed Analysis:

Canned Fruits in Syrup

Facts and Contentions:
The appellants, M/s. Northland Industries, classified their canned fruits in syrup under sub-heading No. 0801.10 of the Central Excise Tariff. The Assistant Collector reclassified these under sub-heading No. 2001.10, a decision upheld by the Collector (Appeals). The Assistant Collector's rationale was that only provisionally preserved fruits fall under Chapter 08, whereas canned fruits, being long-lasting, do not qualify as provisionally preserved.

Legal Analysis:
The Assistant Collector relied on statutory Note 1 to Chapter 20 and the Explanatory Notes to Chapter 8 of the Harmonized Coding System of Nomenclature (HSN). The appellants argued that canned fruits continue to be edible fruits and should be classified under sub-heading No. 0801.10. They cited Supreme Court judgments in Deputy Commissioner, Sales Tax, Ernakulam v. PIO Food Packers and Sterling Food v. State of Karnataka to support their position that processed fruits remain classified as fruits.

Judgment:
The Tribunal analyzed the manufacturing process of canned fruits, noting that the process involves washing, removing inedible portions, adding sugar, and sealing the cans. The Tribunal concluded that canned fruits are essentially the same as naturally occurring fruits, merely made more presentable and long-lasting. The Explanatory Notes to Chapter 8 of the HSN, which state that fruits generally intended for human consumption whether fresh or processed, support this view. The Tribunal found that the lower authorities misinterpreted the Explanatory Notes, which do not restrict Chapter 8 to only provisionally preserved fruits. Consequently, the Tribunal ruled that canned fruits in syrup are classifiable under Heading No. 08.01, sub-heading No. 0801.10.

Fruit Squashes and Cordials

Facts and Contentions:
The appellants classified fruit squashes and cordials under sub-heading No. 2001.10, arguing that these are fruit juice preparations. The Assistant Collector reclassified them under sub-heading No. 2107.91, relying on Chapter Note 5(j) of Chapter 21, which includes preparations for beverages like syrups and concentrated fruit juices.

Legal Analysis:
The Tribunal noted that the competing sub-headings were 2001.10 and 2107.91. The Assistant Collector's classification under sub-heading No. 2107.91 was based on the interpretation that preparations of fruit juices were not included in Heading No. 20.01. The appellants contended that squashes and cordials contain a minimum of 25% fruit juice and should be classified under Chapter 20. They referred to definitions in the Prevention of Food Adulteration Rules and the Fruit Products Order, 1955, which categorize squashes and cordials as fruit products.

Judgment:
The Tribunal examined the definitions and specifications in the Fruit Products Order, 1955, and the Prevention of Food Adulteration Rules, 1955. It concluded that squashes and cordials are not fruit juices but preparations thereof. The Tribunal disagreed with the Assistant Collector's interpretation that the word "preparations" in Heading No. 20.01 does not qualify "fruit juices." Given this position and the fact that Heading No. 21.07 is a residual heading, the Tribunal ruled that fruit squashes and cordials, being preparations of fruit juices, are correctly classifiable under Heading No. 20.01, sub-heading No. 2001.10.

Conclusion:
The appeal was allowed, and the impugned order was set aside. The Tribunal classified canned fruits in syrup under Heading No. 08.01, sub-heading No. 0801.10, and fruit squashes and cordials under Heading No. 20.01, sub-heading No. 2001.10.