1991(04)LCX0036

IN THE HIGH COURT AT CALCUTTA

Ruma Pal, J.

KALYANI BREWERIES LIMITED

Versus

ASSISTANT COLLECTOR OF CUSTOMS

Matter No. 157 of 1991, decided on 24-4-1991

Cases Quoted

U.O.I. v. TATA IRON & STEEL CO. LTD. - 1978 (2) ELT (J 439) (S.C.)                       [PARA 8]

COLLECTOR v. PARLE EXPORTS - 1988 (38) ELT 741  [PARAS 18, 20, 21, 23.1, 23.9, 24.1 & 25]

V.V. IYER v. JASJIT SINGH - 1973 (1) S.C.C. 148                                                [PARAS 11 & 19]

BLUE STAR LTD. v. U.O.I.- 1980 (6) ELT 280                                                   [PARAS 12 & 19]

TATA EXPORT LTD. v. U.O.I. - 1985 (22) ELT 732.                                        [PARAS 19, 23.8]

P.K. TEJANI v. M.R. DANGE - AIR 1974 S.C. 228                                             [PARAS 18 & 23.3]

SHIVRAJ TOBACCO CO. LTD. v. STATE OF MADHYA PRADESH -. 1991 CR. L.J. 156 [PARA 18]

STATE OF TAMIL NADU v. WANDER LTD. - (1990) 79 S.T.C. 421              [PARAS 18 & 23.4]

CORN PRODUCTS CO. (INDIA) LTD. v.U.O.I - 1991 (51) ELT 330            [PARAS 18 & 23.4]

STATE OF BOMBAY v. V.K.G. SHAH - AIR 1952 S.C. 335                               [PARAS 18 & 23.1]

DEPUTY COMMISSIONER OF SALES TAX v. G.S.PAI. AIR 1980 S.C. 611                  [PARA 19]

STATE OF TAMIL NADU v. A.K. SUNDARAM - (1983) 54 S.T.C. 82                       [PARA 23.4]

[Order]. - The subject-matter of this writ petition is the interpretation of a notification, being Notification No. 125/86-Cus., dt. 17-2-1986 (hereinafter referred to as the said Notification). The said notification in so far as it is material reads as under:

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (2) of the Table hereto annexed and falling under Chapter 39 or 73 or 84 or 90 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for use in processing/Packaging of food articles, from -

788 SEC. XVI. CH. 84 - MACHINERY & MECH. APPLIANCES - CUS.

(a) So much of that portion of the duty of Customs leviable thereon which is specified in the said First Schedule, as is in excess of the amount calculated at the rate of 35 per cent ad valorem; and

(a) the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act.

2. In the Table to the said notification against Serial No. 20 is mentioned Automatic Bottle Labelling Machine, The petitioner imported a fully automatic Bottle Labelling Machine for labelling beer bottles. In the Bill of Entry filed for clearance of the said machine, the machine was classified under Tariff Heading No. 8422.20 and a claim for exemption of duty under the said notification was made. On 6th September, 1990 the respondent No. 1 rejected the petitioners claim for exemption under the said notification and assessed a sum of Rs. 43,71,890/- as the duty payable in respect of the said machine. A detailed representation was made by the petitioner to the respondent No. 1 in support of its claim for exemption under the said notification. The representation was replied to by the respondent No. 1 by his letter dt. 23-11-1990 in the following language :-

Your contentions for extending the duty concession under Notification No. 125/86 dt. 7-12-1986 have been considered but do not appear acceptable. However if you so desire, you may appear for personal hearing in this regard so that a proper decision can be arrived at and a suitable order of Assessment could be issued.

3. Thereafter the petitioner filed this writ application challenging the refusal of the respondents to grant exemption under the said notification in respect of the said machine to the petitioner. The field of dispute is narrow. In fact there appears to be no dispute as to the basic facts of the case. The respondents have not disputed that the said machine is classifiable under Tariff Heading No. 8422.20. It is also not disputed that the said machine would be covered by Item No. 20 of the Table to the said notification. However, issue is joined on the question whether the said machine has been imported for use in processing/packaging of food articles within the meaning of the said notification.

4. Before entering into the merits of the case it is necessary to deal with some preliminary points raised by the respondents :

5. The first preliminary point is that the petitioner had an alternative remedy available under the Customs Act, 1962 (hereinafter referred to as the said Act), if the petitioner were aggrieved by the decision of the respondent No. 1.

6. The second preliminary point is that the petitioner had accepted the decision of the respondent No. 1 by a letter written by the writ petitioners Agent to the Deputy Collector on 5th September, 1990. It is therefore contended that the petitioner had waived its right to claim exemption under said notification and was also estopped from doing so.

7. The third preliminary point is that the writ petition was premature. It is stated the respondent No. 1 had himself offered to hear the petitioner and the petitioner had accepted such offer by praying for a date for personal hearing. It is stated that the conclusion of the respondent No. 1 was tentative and that no final decision had been reached on the point by the respondent No. 1.

8. As far as the first preliminary objection is concerned it does not appear that any useful purpose would be served by relegating the petitioner to its remedy under the Act. In the affidavit in opposition which has been filed on behalf of all the respondents which includes the Assistant Collector of Customs, Collector of Customs and the Union of India, a categorical statement has been made rejecting the contentions of the petitioner and stating in no uncertain terms that the said machine had not been imported for processing or packaging of food articles and was not entitled to exemption under the said notification. Furthermore food articles has not been defined in the Act and as observed by Supreme Court in Union of India and Ors. v. Tata Iron and Steel Co. Ltd. reported in AIR 1975 S.C. 769 = 1978 (2) ELT (J 439) (S.C.).

In absence of any clear criterion to determine what is skelp and not strip, no useful purpose would be served by even remanding the matter to the Excise authorities for a decision after taking necessary evidence.

9. It is necessary therefore for the Court to define the scope and ambit of the words food article used in the said notification so that there can be no doubt or confusion in the minds either of the Authority or of the petitioner with regard to the machine in question.

10. There is another aspect of this contention, namely in exercise of power under Article 226 the Court should not interfere with the decision of a statutory authority which can be rationally sustained.

11. In the decision V.V. Iyer v. Jasjit Singh, Collector of Customs (supra) relied upon by the respondent in this connection, the Supreme Court stated:

Unless the Collectors decision is found be perverse neither the High Court nor the Supreme Court could interfere with that decision. In other words if the view taken by the Customs authorities as to the scope and applicability of the different I.T.C. Schedules be a reasonable view there should be no interferences with the decision of the Customs Authorities.

However whether a decision is perverse or not must be determined according to the facts of a particular case.

12. In fact the second decision relied upon by the respondent viz. Blue Star Ltd. v. Union of India (supra) in this connection, is an instance where the Court interfered with the decision of the Excise Authorities regarding classification of an item under the Central Excise Tariff Act.

13. The respondents have relied on two reasons in support of the finding that beer is not food for the purpose of the said notification.

The two grounds are :

(i) The decision of the Supreme Court in the case of Parle Exports (supra) and

(ii) The construction of the Customs Tariff Act.

14. This aspect of the contention is dealt with later in the judgment. However, it may be noted that in the decisions cited by the respondents the courts have recognised that interference under Article 226 with a decision of quasi-judicial authority such as the respondent No. 1 was justified when there was a complaint of procedural irregularity of the kind that would invalidate the order. The failure to give a personal hearing before the order was passed would be such a procedural irregularity.

15. In this case the petitioner has complained of the manner in which the respondent No. 1 arrived at a decision that beer was not food. The petitioners grievance is that the petitioner was not given any opportunity of being heard before such decision was arrived at. This by itself would have justified interference under Article 226.

16. As far as the second preliminary objection is concerned, it appears that the petitioners Agent had written a letter stating that no exemption would be claimed under the said notification in respect of the said machine. Unfortunately this letter has not been annexed to the writ petition. However, in the affidavit in reply an explanation has been sought to be given as to the circumstances under which the letter was written by the petitioners Agent. It also appears that the Customs Authority did not treat the matter as having been concluded by the alleged admission of the petitioners Agent and has left the matter open for decision by offering a personal hearing. Had the Customs Authority relied upon the admission of the petitioners Agent, this would have found place in the respondent No. 1s letter dt. 23rd November, 1990 quoted above.

17. The last preliminary objection of the respondents viz. that the writpetition is premature does not appear to be of any substance. The assessment as made on the Bill of Entry was a final assessment. There was no scope for the respondent No. 1 to review the matter. He had no authority to do so particularly in the absence of any fresh material. The respondent No. 1s observation in the letter dt. 23rd November, 1990 as well as the stand taken by him in the affidavit in opposition in this proceeding would show that the respondent No. 1 has already judged the issue and has formed a view regarding the matter. In fact by the stand taken in the affidavit in opposition, the respondents have disabled themselves from adjudicating on the matter at all.

18. I now come to the merits of the dispute between the parties. The petitioner has built up an elaborate argument as to why the said machine should be considered as used in the processing/packaging of a food article. The argument of the petitioner is :-

I. The object of the notification was to secure increased exports. Therefore the word food in the notification must be read in that context. Reliance has been placed on the Agricultural and Processed Food Products Export Development Authority Act, 1985 in which Item 8 of the Schedule to the said Act specified Alcoholic/and non-Alcoholic/beverages as one of the items treated as a processed food product. It is also stated that a separate Ministry of Food Processing was created with a view inter alia to further exports of food products from India. The Ministry specifically considered beer in this regard. In furtherance of this object in the relevant Import and Export policy from 1990-93 export benefits were granted to foods which includes all types of beverages including beer. The Import Policy for April 1988 - March 1991 also permitted food processing machines to be imported under an Open General Licence. According to the petitioner, it was in this context that a letter was written by the Office of the Chief Controller of Imports and Exports to the Collector of Customs at Madras, that Alcoholic beverages can be classified under food and consequently that a bottle labelling machine can be imported under Open General Licence by the Alcoholic Industry (sic). According to the petitioner therefore the said notification should be construed as exempting Bottle Labelling machines for products such as Beer keeping in view the professed objective of the Government. It was stated that in reply to a letter written by the holding company of the petitioner the Director General of the Technical Department (D.G.T.D.) had also written to the Collector of Customs, Madras recommending that the concessional rate of duty under the said notification should be made available in respect of the Bottle Labelling machines imported by the said holding Company. It is stated that the holding company, M/s. U.B. Ltd. also carries on business of manufacturing beer.

II. The Second Contention of the petitioner is that beer is considered as a food article in the Industrial context. Reliance has been list upon section 7 of the Monopoly and Restrictive Trade Practices Act, 1969 and the rules framed thereunder in this regard. Reference has also been made to the Indian Standard Institution which treats beer under the food department. The provisions of the Prevention of Food Adulteration Act, 1954 was also referred to wherein beer has been treated as food within the meaning of the said Act. In this connection the petitioner also relied upon the following decisions :-

(a) P. K. Tejani v. M.R. Dange and Ors. reported in AIR 1974 S.C. 228.

(b) Shivraj Tobacco Co Ltd. v. State of Madhya Pradesh reported in 1991 CRI. L.J. Page 156.

(c) State of Tamilnadu v. Wander Ltd. reported in (1990) 79 S.T.C. 421.

(d) Corn Products Co. (India) Ltd. v. UOI reported in 1991 (51) ELT 330.

III. The Third Contention of the petitioner is that the beer is understood in common parlance as a food article. In this connection the petitioner relied uponthe fol lowing authorities:

(a) The New Encyclopaedia Britannica, 15 edition, Macropaedia Volume 13 page 420.

(b) An Article published in Brewers Digest January, 1981 which gives the nutri tive value of beer.

(c) The decision of the Supreme Court in the State of Bombay v. V.K. G. Shah reported in AIR 1952 S.C. 335.

(d) Collector of C. Ex. v. Parle Exports (P) Ltd. reported in 1988 (38) ELT 741.

IV. The final contention of the petitioner is that beer has been treated as a food article under the Customs Tariff Act, 1975. It is contended that under the said Tariff Act, Section IV deals with food articles. Within that Section Chapter 22 deals with beverages which includes beer. It is contended that the Chapter 24 of Section IV deals with food stuffs, cigarettes and other tobacco preparations. Item No. 29 of the Table to the said notification refers to High Speed Automatic wrappers other than cigarette wrappers. According to the petitioners the fact that cigarette wrappers is specifically excluded would show that the phrase food article has been used in the body of the said notification in a very wide sense. Reliance has also been placed upon a notification bearing No. 6/86 dt. 2-1-1986 relating to exemption of kitchen equipments imported by hotels. In the list of the said kitchen equipments, certain items such as Cocktail Mixers, Beverage Mixers and Draught Dispensing Units had been specified. According to the petitioner this also showed that beer was treated as an item of food dealt with in a kitchen,

19. On the other hand the respondents have contended as follows :-

(I) The Customs have taken a view which was reasonably sustainable and therefore the Court should not interfere with such a view. Reliance has been placed upon.

(a) V. V. Iyer v. Jasjit Singh reported in 1973 (1) S.C.C 148.

(b) Blue Star Ltd. v. Union of India reported in 1980 (6) ELT 280.

(II) The interpretation of the word given by other authorities was in the context of the particular Act being considered. Beer was not commonly known as food. The purpose of the exemption was to allow packaging of food for common consumption and not for export. The average Indian would not consider beer as food nor would it be served as such. Reliance has been placed upon the decision of the Deputy Commissioner of SalesTax v. M/s. G.S. Pai & Anr. reported in AIR 1980 S.C. 611.

(III) The petitioner was claiming an exemption therefore according to the principles of statutory construction, the onus was on the petitioner and any doubt was to be resolved against it. Reliance has been placed on Tata Export Ltd. v. Union of India & Ors. reported in 1985 (22) ELT 732 in this connection.

(IV) The provisions of the Customs Tariff Act would also show that beer was beverage and that a clear distinction had been made between food products and beverages. Reliance has been palced on the decision of the Supreme Court in Collector of C. Ex. v. Parle Exports (P) Ltd. reported in AIR 1989 S.C. 644 = 1988 (38) ELT 741.

20. The issue involved in this case may be considered on the basis of the guidelines laid down by the Supreme Court in the case of Parle Exports (P) Ltd. (supra). In that case the Court held that in interpreting the said notification

Regard must be had to the object and purpose for which the exemption is granted bearing in mind the context and also taking into consideration the literal or common parlance meaning by those who deal with those goods bearing in mind that in case of doubt only it should be resolved in favour of the assessee or the dealer avoiding however an absurd meaning.

21. In the case of The Deputy Commissioner of Sales Tax v. M/s. G.S. Pai (supra) relied upon the respondents, the Supreme Court similarly laid down a test for interpreting entries in Sales Tax Legislation. The test has been stated as follows :

While interpreting the entries in Sales Tax Legislation it should be borne in mind that the words used in the entries must be construed not in any technical sense nor from the scientific point of view but as understood in common parlance. Courts must give the words used by the legislature their popular sense meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. The word in the entry must, therefore be interpreted according to ordinary parlance and must be given a meaning which people conversant with this commodity would ascribe to it."

It will be seen that this rule of interpretation has been substantially adopted by the Supreme Court in the case of Parle Exports (supra).

22. I. THE OBJECT AND CONTEXT OF THE NOTIFICATION

22.1 The notification is headed Specified Goods for Food Industries. It is further stated in the body of the said Notification that the exemption was granted because the Central Government was satisfied that it was necessary in the public interest so to do. The particular public interest sought to be served by the Central Government is not apparent from the notification itself. Therefore, the Court will have to try ascertain the matter taking an overall perspective of the objects sought to be achieved by the Government at the time and the context in which the notification was issued in connection with the food industry.

22.2 On the 9th January, 1986,. The Agricultural and Processed Food Product Export Development Authority Act, 1985 (hereinafter referred to as the said 1985 Act) came into force. The object of the said Act was to establish an authority For the Development and Promotion of Exports of Certain Agricultural and Processed Food Products. In the Statement of Objects and Reasons it is stated as follows:

Agricultural sector of the economy contributes significantly to our exports and would have to continue to do so. Increasing reliance shall, however, have to be placed on exports of agricultural and processed food products which lead to higher realisation through added value. Value addition would also generate economic activity and employment in the country.

22.3 It is further stated in the Statement of Objects and Reasons to the 1985 Act inter alia that the main function proposed to be assigned to the authority constituted under the Act was to develop processed food industry by way of........ improvement in packaging of scheduled products and marketing of the products outside India and promotion of export-oriented production and development of scheduled products." Section 2(1) of the 1985 Act defines Scheduled Products as meaning the agriculture or processed food products included in the Schedule. Item 8 of the Schedule to the 1985 Act refers to alcohol and non-alcohol beverages.

22.4 It is to be noted that the petitioner is registered under the 1985 Act in respect of its business of manufacturing beer. The petitioners business is as such subject to the restrictions, obligations and control provided under the 1985 Act.

In July 1988 a Ministry of Food Processing Industry was set up. One of the major objectives as recorded in the Annual Report of the said Ministry for the year 1989-90 has been stated as

to ensure that adequate surpluses are created consistent with price and quality to further exports and earn valuable foreign exchange for the country by providing critical inputs to the Industry to foster production for exports.

22.5 Amongst the subjects brought within the purview of the Ministry was specialised packaging for food processing industries. Therefore it would appear that in and around this time when the notification was issued and subsequent thereto, it was thought necessary by the Central Government to make special efforts to regulate and control processed food in the country with one of the ultimate objectives being the generating of sufficient surplus thereby to earn foreign exchange.

22.6 It is to be remembered that while formulating the aforesaid policy and enacting statutes in connection with the food processing industry the Central Government has invariably included beer and other alcoholic drinks as a food.

22.7 The Import and Export Policy in keeping with this objective also permitted the import of machines such as the machine in question under an Open General Licence (OGL). There is also an express provision for export of beer as an item of food under the Export Policy in the relevant years.

22.8 The emphasis on the question of export of processed food products would also indicate that the word food would have to be understood also in the context of foreign as well as indigenous gastronomic habits.

22.9 Read in this background the use of the word food article in the said notification just also include beer.

23. II. FOOD ARTICLE AS LITERALLY CONSTRUED

23.1 As noted by the Supreme Court the word food has no fixed definition of universal application and the meaning varies from statute to statute. Literally construed food has been defined in the Shorter Oxford English Dictionary as what one takes into the system to maintain life and growth. It may be noted that in Parle Exports (supra) the Supreme Court approved its earlier decision in the State of Bombay v. V.G. Shah reported in 1952 S.C.R 877 in which Vivian Bose, J construed foodstuff both in a narrow sense as well as in wider sense. In the narrow sense the Court defined food as limited to articles which are taken for purpose of nutrition and nourishment.

23.2 The test of nutrition or nourishment as a characteristic of food has also been judicially accepted not only in the cases noted above but in other cases two of which are noted below.

23.3 The Supreme Court in the decision of P.K. Tejani v. M.R. Dange reported in AIR 1974 S.C. 228 held that supari was a food within the meaning of the Prevention of Food Adulteration Act. The Supreme Court held :

It is common place knowledge that the word food" is a very general term and applies to all that is eaten by men for nourishment and takes in subsidiaries. Is supari eaten with relish by man for taste and nourishment ? It is. And so it is food."

23.4 In the State of Tamil Nadu v. Wander Limited reported in (1990) 79 STC 421 a Division Bench of the Madras High Court held that Horlicks" was a milk food. The Division Bench relied upon an earlier decision of the Madras High Court in the State of Tamil Nadu v. A.K. Sundaram - (1983) 54 STC 82 and held :

Normally, the dictionary meaning of food is something taken into the system to maintain life and growth and to supply nourishment.

23.5 Therefore in the literal sense food must be an item of nutritive value which is ingested by the human body. Beer is ingestible. The question is, is it nutritional ?

23.6 In the New Encyclopaedia Britannica (Macropaedia) beer has been included as an item of food which is of nutritive value. Under the section with the heading Classes of foods, beverages have been included, and under the heading Beverage, beer has neen noted as containing a significant amount of riboflavin. In fact while recommending the daily intake of energy and nutrition in the United Kingdom one of the essential items in the human body has been categorised as including riboflavin.

23.7 In an article written in the Brewers Digest by Anton Piendl of the Institute of Brewing Technology and Microbiology of the Technical University of Munich, West Germany the significance of beer as a food has been considered. It is noted in that article that one litre of beer contains on an average about 27 g. carbohydrate, 6300 mg. of protein, 6.7 g. of water soluble vitamin of the B group and 1200 mg. of minerals, among other contents. The respondents have not been able to produce any evidence whatsoever contradicting the aforesaid.

23.8 The reliance on the case of Tata Export Ltd. v. Union of India (supra) by the respondents to contend that the onus was on the petitioner to prove that it is entitled to the benefit of the exemption was misplaced. In fact in that case the Court held :

It is settled law that in a case of taxation the burden of proving that the necessary ingredients prescribed by the taxing provision are satisfied is entirely upon the taxing authority.

23.9 Even in the case of Parle Exports (supra) the Supreme Court held that if two views of a notification are possible, it should be construed in favour of the subject as the notification is a part of a fiscal enactment.

23.10 Therefore, even on the basis of a literal and narrow construction of the word food in the said notification, it must be concluded that beer is a food article within the meaning of the said notification.

24. III. FOOD AS UNDERSTOOD IN COMMON PARLANCE

24.1 Before considering this aspect the phrase, common parlance must be understood subject to the condition specified by the Supreme Court in Parle Exports. The Supreme Court used the phrase common parlance in conjunction with the phrase by those who deal with those goods. In other words is beer understood as food by those who deal with it? The persons who deal with beer officially may be classified as follows:

(a) The Customs Authority

(b) The authority connected with exports & imports,

(c) The authorities under the Food & Supplies Department

(d) The authorities controlling Trade.

24.2 (a) As far as the Customs Authority is concerned the matter must be decided with reference to the Customs Tariff Act, 1975 (hereinafter referred to as the 1975 Act). The Schedule to the 1975 Act relating to Import Tariff contains several sections. The relevant section in this case is Section IV which deals with Prepared Food stuffs; Beverages, Spirits and Vinegar; Tobacco and manufactured tobacco substitutes. Within the section in question there are nine Chapters namely Chapters 16 to 24.

24.3 A scrutiny of the language of the various Chapters would show that alcoholic beverage including beer are considered as food. Chapter 21 deals with Miscellaneous edible preparations.

24.4 In the note to the said Chapter it is stated as follows :

1. This Chapter does not cover :

(a) Mixed vegetables of Heading No. 07.12;

(b) Roasted coffee substitutes containing coffee in any proportion (Heading No. 09.01);

(c) Spices or other products of Heading Nos. 09.04 to 09.10);

(d) Food preparations other than the products described in Heading No. 21.03 or 21.04, containing more than 20 per cent by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates or any combination thereof (Chapter 16);

(e) Compound alcoholic preparations of a kind used for the manufacture of beverages, of an alcoholic strength by volume (see Note 2 to Chapter 22) exceeding 0.5 per cent vol. (Heading No. 22.08);

(f) Yeast put up as a medicament or other products of Heading No. 30.03 or 30.07; or

(g) Prepared enzymes of Heading No. 35.07."

24.5 Therefore items which would otherwise have been considered as edible preparations have been expressly and specifically excluded. Thus alcoholic preparations otherwise qualify to be an edible preparation except for the purposes of the Chapter. Further, Chapter 23 deals with Residues and Waste from the Food Industries; prepared animal fodder. Heading No. 23.03 in the said Chapter deals with inter alia brewing or distilling dregs and wastes as residues and wastes of a food industry. Brewing and distilling are preparations necessary inter alia for manufacturing beer. Therefore beer is treated as a food, the manufacture of beer as a food industry and the residue and waste thereof as a residue and waste of a food industry. Thus the scheme of the section appears to be that Chapters 16 to 23 deal with food or matters pertaining thereto. Alcoholic Beverages including beer are dealt with in Chapter 22 of the said section.

24.6 (b) As far as Import & Export is concerned in Appendix 17 to the Import and Export Policy April 1988 to March 1991, all types of beverages namely alcoholic beverage and beer have been included under the heading Food.

24.7 (c) As far as the Department of the Central Government dealing with food is concerned as noted above beer is considered as a food article under the Agricultural and Processed Food Product Export Development Act, 1985. Beer has also been treated as a food by the Ministry of Food Processing as well as Food and Agriculture Department.

24.8 The Food & Agriculture Department (FAD) of the Central Government which was established in 1956 for the purpose of standardization in the Field of Food and Agriculture including food procsssing published in its Programme of Work (as on 1st April, 1990) Standards for various items in the field of Food & Agricultue. Several separate committees were set up for this purpose. A Committee was also set up in respect of the standards for drinks and carbonated beverages. In connection with that subject, standards were prescribed for beer and other alcoholic drinks. Clearly this would not pertain to Agriculture and must therefore of necessity have been under the heading of food.

24.9 The Bureau of Indian Standards also published a Report on 30th June, 1988 in which standards were laid down sectionally in respect of inter alia Agricultural and Food Products. Alcoholic drinks including beer (First Revision) have been included under that heading.

24.10 (d) In the field of Trade under the Monopolies and Restrictive Trade Practice (Classifications of Goods) Rules, 1971 which were framed under Section 67 of the MRTP Act, 1969 by the Central Government, beer has been classified under the heading Food Products.

24.11 Apart from the recognition of beer as a food at the official level, even on a social plane it is not disputed that beer is treated in foreign countries and in certain levels of society in India as consumable items to be taken with relish for taste and nourishment. The mere fact that other levels of society may not so consider beer (albeit there is no such evidence) nevertheless cannot detract from the fact that beer may be considered as an article of food.

25. This brings us to the sheet anchor of the respondents case viz. the decision of the Supreme Court in the case of Collector of Central Excise v. Parle Exports (P) Ltd. reported in 1988 (38) ELT 741. In that case the Supreme Court was called upon to consider whether non-alcoholic beverage base was food within the meaning of a notification issued under the Central Excises & Salt Act, 1944. The Court only considered whether non-alcoholic beverage base was a food product or food preparation covered by the Exemption Notification in that case. The Supreme Court was careful to state

We are not concerned with the question whether in a broad general sense non-alcoholic beverage base is food or not.

26. In that background and considering the object of that particular notification the Supreme Court held that non-alcoholic beverage bases were not food. The Supreme Court held that

.....the revenue is right that the non-alcoholic beverage bases in India cannot be treated or understood as new nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process and an average Indian will not treat non-alcoholic beverage bases as food products or food preparation in that light.

27. A beverage base unlike beer is not a consumable item as such. It is the concentrate which is consumable only after processing. A beverage base is not sold for consumption to the public but is used by a soft-drinks manufacturer to produce soft drinks. This case is not an authority for the fact that beverages simpliciter are not food.

28. Therefore even in common parlance beer must be understood to be a food.

29. Finally it may be noted that in the case of Parle Exports (supra) the Supreme Court held:

While interpreting an exemption clause, liberal construction should be imparted to the language thereof provided no violence is done to the language employed.

30. In my view both on a strict and liberal construction, beer must be considered to be a food article within the meaning of food article contained in the said notification.

31. Thus neither of the two reasons put forward by the Respondents in support of their view as noted in an earlier part of this judgment can be justified either on the materials before the respondents or in law. The decision of the Respondent No. 1 was perverse.

32. For the reasons aforesaid I am of the view that the writ petitioner must succeed in this application.

33. Accordingly I set aside the assessment made by the respondent No. 1 on the Bills of Entry on 6th September, 1990. The respondent authorities are directed to grant the petitioner the benefit of the said notification in respect of the said machine and to release the said machine to the petitioner upon the petitioners paying duty in terms of the said notification to the respondents. There will be no order as to costs.

34. Upon the petitioner through its counsel undertaking to Court not to dispose of or encumber the said machine in any manner whatsoever for a period of three weeks from date, no stay of operation of the order is granted.

35. The respondents should therefore release the machine to the petitioner forthwith.

36. All parties to act on a signed copy of the operative part of this judgment on usual undertaking.

Equivalent 1992 (057) ELT 0373 (Cal.)