9911796707
TMI Blog1995 (7) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.90 of the Tariff. This sub-heading covered - other non-alcoholic beverages not including fruit or vegetable juices of Heading No. 20.01. The appellants wanted this revised classification to be effective from 1-3-1994. It was alleged in the show cause notice dated 29-6-1994 that during the period 5-3-1994 to 20-6-1994, `Sharbat Rooh Afza had been cleared without approval of the classification list, and in violation of the directions contained in the letter dated 29-3-1994 from the Superintendent of Central Excise, wherein it was stated for clearance of Sharbat Rooh Afza under sub-heading No. 2202.90 of the Tariff, without approval of the classification list would constitute an offence. The Assistant Collector of Central Excise, Ghaziabad who adjudicated the matter came to a finding, vide his order dated 16-8-1994, that Sharbat Rooh Afza was not a beverage but a syrup. He referred to the Chapter Note 5(j) under Chapter 21 of the Tariff, and the Explanatory Notes to Heading No. 21.06 of the Harmonised Commodity Description and Coding System (HSN), which corresponds to Heading No. 21.07 of the Central Excise Tariff, and held that Sharbat Roof Afza contained fruit juice, and was clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G.S. Pai. - AIR 1980 (SC) 611. 5. On 2-3-1995, Shri M.K. Jain, the learned SDR replied that prior to the 1994 Budget, the appellants were admittedly paying Central Excise duty under sub-heading No. 2107.91 of the Tariff. When the rate of Central Excise duty under sub-heading No. 2107.91 underwent a change, as a consequence of changes in the scheme of exemption, in the year 1994, the appellants wanted to change the classification of their product to sub-heading No. 2202.90, and claimed concessional rate of excise duty under exemption Notification No. 2/94-C.E., dated 1-3-1994. The goods remained the same, and the Tariff entries also remained the same. No reasons were given for change in the classification, but it was obviously as a consequence of changes in the exemption scheme. The Superientendent of Central Excise wrote to them on 24-3-1994 to know the reasons for the change, but no reasons were given for the change, and it was only pleaded that their earlier classification was erroneous. The product was a base for the beverage, and not the beverage itself. The ld. SDR referred to the Webstor Encyclopaedia and Hayward Dictionary to say that the goods were not a beverage. He ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage of the Tariff was clear, the HSN Explanatory Notes could not be pressed into service. 7. We have carefully gone through all the relevant aspects relating the product under consideration, and have given our due thought to the various submissions made by both the sides. 8. The product under consideration is `Sharbat Rooh Afza , manufactured by M/s. Hamdard Dawakhana (Wakf), under the licence issued by the Ministry of Food, under the Fruits Product Order, 1955. Label on the `Sharbat bottle exhibits the picture of fruits and flowers. It is marketed as `Sharbat (syrup). Its manufacturing formula as per the label on the bottle is as under : FORMULA Each dose of 50 ml. (70 grams approx.) contains : Invert Sugar base 40.0 ml. Pineapple Juice 4.0 ml. Distilled Extract of : Coriandrum Sativum (Dhania) Daucus carots (Gajar) Portulaca oleraces (Khurfa) Citrullus vulgaris (Tarbooz) Spinacle oleraces (Palak) Mentha arvensis (Pudina) Luffa Cylindrica (Hara Ghia) 2.25 ml. Cichorium inty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption; (d) powders for table creams, jellies, ice-creams and similar preparations whether or not sweetened; (e) flavouring powders for making beverages, whether or not sweetened; (f) peanut butter; (g) preparations cnsisting of tea or coffee and milk powder, sugar and any other added ingredients; (h) preparations (for example, tablets) consisting of saccharin and a foodstuff such as lactose, used for sweetenig purposes; (i) pre-cooked rice cooked either fully or partially and their dehydrates; and (j) preparations for lemonades or other beverages, consisting, for example of flavoured or coloured syrups, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juices and concentrated fruit juice with added ingredients." The Tariff rate under the above sub-heading had been increased from 15% to 50% ad valorem in 1992 Budget; however by amending Notification No. 6/92-C.E., dated 1-3-1992 (amending Notification No. 12/90-C.E., dated 20-3-1990), the effective rate was left at 15% ad valorem. Under Notification No. 4/93-C.E., dated 28-2-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level of the levy, contending that their product was a beverage. They had pleaded that they had been classifying their product under sub-heading No. 2107.91 erroneously. Although there is no estoppel in law against the party in taxation matters, exemption notification cannot change the classification of the goods from one entry to another, as held by the Supreme Court in the case of Eskayef Ltd. v. Collector of Central Excise, 1990 (49) E.L.T. 649 (SC). Para 14 from that judgement is reproduced below : 14. The exemption from payment of Central Excise duty which has been granted under notification dated 1-11-1982, as amended by notification dated 15-2-1984, is confined in its appilcation to goods specified in the Schedule annexed to the said notification which fall under item 68. The said notification does not grant exemption in respect of product falling in any other entry of the excise tariff. It cannot be construed as transferring a product from an entry other than Item 68 to Item 68. The insertion of animal feed supplement in the Schedule to the Notification dated 1-11-1982, by the Notification dated 15-2-1984, would not mean that a product which was liable to payment of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Tariff was not before the Hon. Supreme Court or the Ministry of Food. The term `beverage on the label had been used to meet the requirement of a different enactment. In the Cental Excise Tariff, `beverage has been expressed differently from the preparation for beverages, and as per Chapter Note 5 (j) under Chapter 21, such preparations may consist of syrups. The Note No. 5 under Chapter 21 has already been extracted above in para No. 9. 13. The classification of the goods as described in the Central Excise Tariff has to be determined according to the general usage and known denominations of the Trade. As held by the Supreme Court in the case of Collector of Central Excise v. Parle Exports Pvt. Ltd., 1988 (38) E.L.T. 741 (SC), the expressions in the Tariff Schedule have to be understood by the language employed therein bearing in mind the context in which the expressions occur (para 12). The Supreme Court added that the words used in the provision imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them . On coming to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd. v. Collector of Central Excise, 1993 AIR SCW 1782 had observed in para 3 of their judgement that to find the appropriate classification, description employed in the tariff nomenclature should be appreciated having regard to the terms of the Headings, read with the relevant provisions or statutory rules of interpretation put up thereon . In the case of Meteor Satellite Ltd. v. Collector of Central Excise, 1990 (45) E.L.T. 697 (T), the Tribunal after noting that the Central Excise Tariff Act, 1985 is aligned to the Harmonised Commodity Description and Coding System (HSN), had observed that a reference to the Explanatory Notes to HSN will be appropriate as an aid to the classification of items under the Central Excise Tariff Act, 1985. In the alphabetical index to the HSN, compound preparations for making non-alcoholic beverages have been shown as classified under Heading No. 21.06 In the Customs Tariff in Note 3 under Chapter 22 it has been explained that for the purposes of Heading No. 22.02 the term non-alcoholic beverage means beverages of an alcoholic strength by volume not exceeding 0.5% volume. The Customs Cooperation Council Nomenclature (CCCN) under Heading 21.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. It was added that every other fruit and vegetable product not so specified, shall be manufactured in accordance with the standard of quality and composition laid down in that behalf by the licensing officer. It is thus seen that the order imposed regulations of a qualitative character in the porduction and marketing of specified goods. The expression `beverages and `products in that order had to be seen in the above context. Insofar as the Central Excise Tariff Act, 1985 is concerned, its objective is to classify the goods for the levy of Central Excise duty. In this connection, para 3 of the statement of objects and reasons of the Central Excise Bill, 1985 as introduced in the Lok Sabha on 13-12-1985 as given at page B32 of 1986 (23) E.L.T., may be referred to. Seen in this context, could the product sharbat rooh afza be considered as a beverage, when the manufacturers themselves have described the product as sharbat (syrup). The question of what a word means in its context within the Act is a question of legal interpretation and therefore, one of law. The choice of the proper rule of construction to be applied to ascertain their meaning is again a matter of law . [refer Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts contains pineapple juice and orange juice of Chapter Heading 20.01 in `sharbat rooh afza keeps the product outside the purview of Chapter Heading 22.02. Beverage is a specific drink like lemonade, citer, etc. `Rooh Afza is also a beverage when diluted with water or milk etc. and its ultimate use is as a beverage. It is also a fact that the product is a non-alcoholic beverage and is indicated as such on the label itself. I do not find any material difference for the purpose of appropriate classification of goods whether it is used directly as `beverage or as a base for beverage. For deciding the classification the specific entry in the tariff heading/sub-heading supported by Section/Chapter notes is the main factor. Since, Heading No. 22.02 specifically excludes the `other non-alcoholic beverages containing fruit juices , the product `sharbat rooh afza manufactured by the appellants is appropriately classifiable under heading No. 21.07 and sub-heading No. 2107.91 of the Central Excise Tariff Act, 1985. The classification as given in clause (12) of Heading No. 21.06 at p. 161 of HSN, the preparations intended to be consumed as beverages after simple dilution with water or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sharbat rooh afza as a sharbat (syrup) under sub-heading No. 2107.91 before the 1995 Budget. Even in the case of executive instructions the Hon. Supreme Court had held that the meaning ascribed by the very authority which has been the author to the statutory provisions and responsible for its administration, has to be given much weight [refer K.P. Varghese v. Income Tax Officer Ernakulam, AIR 1981 SC 1922, and Collector of Central Excise v. Parle Exports Pvt. Ltd., 1988 (38) E.L.T. 741 (SC) para 11, and Indian Metals and Ferro Alloys Ltd. v. Collector of Central Excise, 1991 (51) E.L.T. 165 (SC)]. Hence in this case, it is the proposal made before the Parliament itself. 22. Taking all the relevant consideration into account, we find no merit in this appeal. The appeal is rejected and the impugned order passed by the Collector of Central Excise (Appeals), Ghaziabad is confirmed. Ordered accordingly. 23. [Contra per : K. Sankararaman, Member (T)]. - I have carefully gone through the order (hereinafter referred to as the proposed order) which has been prepared by my learned brother, Shri Lajja Ram. I have perused the record and the decisions cited. I regret my inability to agree w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question falling under that item and not under the residual Item 68 could not be claimed to be exempt from duty as animal feed supplement under amended notification which covered the latter item. In the present case, the appellants had classified their product, Sharbat Rooh Afza under sub-heading 2107.91 as Edible Preparations, not elsewhere specified or included, put up in unit containers and ordinarily intended for sale. If due to change in the relevant exemption notifications, they found that they were to pay more duty and if they claimed another classification, that claim has to be examined on merits and cannot be shut out on the ground that exemption notification cannot change the classification of the goods. No doubt, an exemption notification, by itself, cannot change the classification, if it is correct but where the correctness of the old classification is itself disclaimed and an alternate one is claimed, that has to be examined and decided. I shall proceed to do so in the course of this order. 25. In para 13 of his order, after referring to the case of Collector of Central Excise v. Parle Exports Pvt. Ltd., 1988 (38) E.L.T. 741 about understanding expressions in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en their practice, long before the present controversy arose. I am of the view that the terms beverage and Sharbat are two different expressions of the same product. The expression beverage refers to drink. In respect of this very product, the Honourable Supreme Court had held that the Sharbat in question fell within the purview of clause 3(d)(v) of the Fruit Product Order, 1955 which covered squashes, crushes, cordials, barley water, barrelled juice and ready to serve beverages or any other beverages containing fruit juices or fruit pulp. Thus the terms Sharbat and beverages are interchangeable with each other. The words are of common occurrence and significance in everyday household context and it cannot be said that the equivalence of these terms was only with reference to Fruits Control Order and not applicable to Central Excise Tariff entry. 26. As has come out in the preceding discussions and in the impugned order, the competing entries in the Tariff which come into reckoning in the present case are - 2202.90 - Other non-alcoholic beverage not including fruit or vegetable juices of heading No. 20.01 and 2107.91 - Edible preparation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he label itself. He found no material difference for the purpose of classification whether it is used directly as beverage or as a base for beverage. While an observation of this type by the Collector cannot, by itself be the basis for a finding by the Tribunal, I would go along with the same in holding on merits that Rooh Afza is itself a beverage and not a preparation or base for beverage. In this connection, the observations of the Tribunal in Para 14 of the order in Northland Industries v. Collector of Central Excise reported in 1988 (37) E.L.T. 229 are relevant. It was held therein that since squash is a beverage and can be consumed after simple dilution with water it is covered more specifically by the term `beverage and hence Heading 20.01 was preferred to Heading 21.07 which covers preparations for beverages and not beverages themselves. The same ratio will apply in the present case for preferring Heading 22.02 to 21.07. 27. Reliance had been placed by the authorities below on the HSN notes for deciding in favour of Heading 21.07. Thus vide clause 12 of Heading 21.06 of HSN, preparations intended to be consumed as beverages after simple dilution with water or after furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-alcoholic beverages, not including fruit or vegetable juices of Heading 20.01. Only by virtue of Chapter Notes 5(b), (c) and (j) had the general entry edible preparations not elsewhere specified or included been defined to include preparations for beverages consisting of flavoured or coloured syrups etc. But even then, sub-heading 2202.90 appears to be more specific covering as it did other non-alcoholic beverages not including fruit or vegetable juices of Heading 30.01. Even the Collector (Appeals) had held that the choice was between these two Headings both of which covered beverages but 22.02 was ruled out by him only because of the qualifying entry not including fruit or vegetable juices of Heading 20.01". This is the most vital aspect of the case on which the entire issue hinges for the purpose of classification and which, to my mind, will push to the background all other issues considered so far in this case including several decisions of the Supreme Court which have been referred to in the proposed order. I shall accordingly turn to the same for detailed scrutiny. 29. The expression not including fruit juice has been held to be the same as not containing fruit juic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ....... (b)........ (c)fruit or vegetable juices whether or not used as beverages (heading 20.09). It is thus clear that fruit or vegetable prices are not included in the particular Heading. It is not that they should not be contained in the non-alcoholic beverages covered in the said Heading. As the entries in the Excise Tariff and the HSN closely correspond to each other, the significance of the expression not including has the same effect in the Excise Tariff which bears out the view taken by me earlier. Once this issue is settled and the expression not including is found to be not equivalent to not containing , the ruling out by the Collector (Appeals) of classification 2202.90 for the product in question turns out to be wrong. As already analysed in paragraph 28 ante, as this classification is more specific than the general description other edible preparations under Tariff Heading 2107.90, the classification under 2202.90 has to be preferred. This view which is based on the actual wording employed in the relevant Tariff entry would, in my respectful view, not be inconsistent with the ratio of the cases referred to in the proposed order of learned brother Shri Laj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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