1994 (3) TMI 201 - AT - Central Excise

Issues Involved:
1. Classification of fruit drinks (Orange, Mango, Pineapple, Guava, and Maaza Mango) under Central Excise Tariff Act, 1985.
2. Determination of whether these products fall under Heading 2001.10 or Heading 2202.90 of the Central Excise Tariff.

Detailed Analysis:

1. Classification of Fruit Drinks:
The primary issue is the classification of fruit drinks such as Orange, Mango, Pineapple, Guava, and Maaza Mango. The appellants argue for classification under Heading 2001.10, while the Department contends for Heading 2202.90.

2. Arguments by Appellants:
The appellants, represented by various advocates and consultants, argue that the products in question were historically classified under Chapter 20 and there is no justification for reclassification under Chapter 22 post-1987. They assert that the manufacturing process has not changed and the items are essentially fruit juices, which should be excluded from Chapter 22 as per the tariff headings.

3. Department's Standpoint:
The Department, represented by the DR, argues that the products are not mere fruit juices but beverages, as they are diluted with water and contain other ingredients, thus fitting the broader definition of beverages under Heading 22.02. The Department relies on the Explanatory Notes to the HSN, which state that diluted fruit juices have the character of beverages.

4. Judicial Member's Decision:
The Judicial Member concludes that these products are beverages due to the addition of water and other ingredients, which dilute the original fruit juice. The classification under Heading 22.02 is deemed more appropriate. Consequently, the appeals are dismissed, and the impugned orders are upheld.

5. Vice President's Opinion:
The Vice President highlights the thin line between fruit juices used as drinks and beverages containing fruit juices. He emphasizes that the classification depends on the extent of dilution and the proportion of fruit juice. If the product contains a major proportion of fruit juice, it falls under Heading 20.01; otherwise, it is classified under Heading 22.02. Due to a lack of precise information on the extent of dilution, he suggests remanding the matters for a de novo consideration.

6. Third Member's Analysis:
The Third Member, tasked with resolving the difference of opinion, examines the manufacturing processes and the definitions provided in the HSN Explanatory Notes. For Maaza, which contains 15% mango pulp, it is suggested that it may be a preparation of fruit under Heading 20.01, despite being a non-alcoholic beverage. For other fruit drinks, the addition of water disqualifies them from being classified as fruit juices under Heading 20.01, thus fitting Heading 22.02.

7. Final Order:
In view of the majority opinion, the appeals of Krishna District Milk Producers Union (KDMPU) are rejected, confirming the classification under Heading 22.02. Other appeals are remanded to the original authority for re-adjudication, considering the observations made by the Vice President and the Third Member.

Conclusion:
The judgment addresses the classification of fruit drinks under the Central Excise Tariff Act, concluding that the extent of dilution and the proportion of fruit juice are critical factors. The final decision involves rejecting some appeals and remanding others for further consideration based on detailed examination of the manufacturing processes and ingredient proportions.

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