1986 (3) TMI 239 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the products Tartrazine, Sunset Yellow FCF, and Amaranth.
2. Whether these products fall under Tariff Item 14D as Synthetic Organic Dyestuffs or under the residuary Tariff Item 68.

Detailed Analysis:

Issue 1: Classification of the Products
The primary issue in this appeal is the classification of the respondents' products, namely Tartrazine, Sunset Yellow FCF, and Amaranth. The respondents claim these products to be food colours, which they argue should be classified under the residuary Tariff Item 68, "all other goods not elsewhere specified." Conversely, the Revenue contends that these products should be classified under Tariff Item 14D as Synthetic Organic Dyestuffs (including pigment dyestuffs) and Synthetic Organic Derivatives used in any dyeing process.

Issue 2: Applicability of Tariff Item 14D vs. Tariff Item 68
The respondents, a small-scale sector unit, initially classified these food colours under T.I. 14D but later filed for classification under T.I. 68. The Assistant Collector of Central Excise upheld the classification under T.I. 14D. However, the Collector of Central Excise (Appeals) found that since the products were not used in any dyeing process, they should be classified under T.I. 68. The Revenue appealed this decision.

During the hearing, the appellant-Collector argued that the words "in any dyeing process" in T.I. 14D qualify only the portion "Synthetic Organic Derivatives" and not "Synthetic Organic Dyestuffs (including pigment dyestuffs)." Therefore, the reasoning that dyestuffs not used in the textile industry for dyeing cannot be classified under T.I. 14D was flawed. The respondents countered that the products are food colours by name, character, and use, and are not known as Synthetic Organic Dyestuffs. They cited ISI specifications and the Prevention of Food Adulteration Rules, 1955, to support their claim.

The Tribunal carefully considered the arguments and noted that previous decisions did not specifically address food colours. The material presented by the respondents, including ISI standards and Prevention of Food Adulteration Rules, indicated that the products are understood in the commercial sense as food colours, i.e., edible products.

The Tribunal referred to the Supreme Court decision in Commissioner of Sales-tax UP v. S.N. Brothers, which held that "food colours" should be construed in the sense ordinarily understood by people dealing in such goods. The Supreme Court emphasized that edible goods like food colours should not be classified under entries meant for non-edible items like dyes and colours.

The Tribunal concluded that the classification of food colours should not be based on dictionary meanings but on the commercial parlance test. Given the Supreme Court's observations and other materials, the Tribunal held that the proper classification of the respondents' products, which are admittedly food colours, should be under the residuary Item T.I. 68 and not as synthetic organic dyestuffs under Tariff Item 14-D.

Conclusion:
The Tribunal upheld the classification of the respondents' products under Tariff Item 68 as held by the Collector (Appeals) but for different reasons. The appeal was thus dismissed.