1989(03)LCX0059

BEFORE THE CEGAT, SPECIAL BENCH ‘D’, NEW DELHI

 S/Shri G. Sankaran, Senior Vice-President, G.P. Agarwal, Member (J) and P.C. Jain, Member (T)

COLLECTOR OF C. EX.

Versus

ROHA DYE CHEM PVT. LTD.

Order No. 83/89-D, dated 14-3-1989 in Appeal No. E/1535/88-D

Cases Quoted

COLLECTOR OF CENTRAL EXCLSE, THANE v. ANAND DYES & CO.
- ORDER NO. 129/86-C. DATED 7-3-1986                                                             [PARA 5]

COMMISSIONER OF SALES TAX, U.P. v. S.N. BROTHERS - (1973) 31 STC 302           [PARA 7]

Advocated By:  Smt. Vijay Zutshi, SDR, and Shri L.C. Chakraborty, JDR, for the Appellant.

Shri V. Lakshmi Kumaran, Advocate, for the Respondents.

[Order per : G. Sankaran, Senior Vice-President]. - This appeal is directed against the Order-in-Appeal No. AMP-660/BIII-296/87, dated 30.9.87 passed by the Collector of Central Excise (Appeals), Bombay, by which he set aside the order dated 20.4.87 passed by the Assistant Collector of Central Excise, Panvel Division, whereby he ordered that ‘Food colours’ manufactured by M/s. Roha Dye Chem Pvl. Ltd. (respondents to the present appeal) be classified under Heading No. 3204.90 of the Schedule to the Central Excise Tariff Act, 1985 (Act No. 5 of 1986), dismissing the claim of the respondents that the goods were classifiable under Heading No. 2107.99. In appeal, the Collector (Appeals) ruled that the goods were classifiable under Heading No. 21.07.

2. We have heard Smt. Vijay Zutshi and Shri L.C. Chakraborty, Departmental Representatives for the appellant-Collector and Shri V. Lakshmi Kumaran, Advocate, for the respondents.

3. The exact nature of the goods is not available in the record but there is no dispute that the goods are food colours. Nor is there any dispute that they are synthetic organic substances as slated by Shri Lakshmi Kumaran in response to a query from the Bench.

4. Before we discuss their relative, merits, it is expedient to set out the two headings :-

5. It was contended for the appellant that the decision of this Tribunal in Collector of Central Excise, Thane v. M/s. Anand Dyes & Co. (Appeal No. E. 1654/85-C disposed of by Order No. 129/86-C, dated 7.3.1986) relied on by the Collector was rendered in the context of the Central Excise Schedule as it stood prior to the coming into force the Central Excise Act, 1985, the competing items being Item Nos. 14D and 68 of the Schedule. The Schedule to the 1985 Act was far more detailed and hence the classification would have to be decided in the context of the entries therein. It was submitted that for classification under Chapter 21, the goods must be edible preparations. Food colours were not edible preparations nor food per se. They were in the nature of additives, Chapter Note 5(j) to Chapter 21 on which reliance was being placed by the respondents was not applicable to food colours because the note described certain specific goods and it was not omnibus in character. In any event, the subject goods were powders and only syrups were covered by Chapter Note 5(j).

6. Continuing, it was submitted for the appellant that there was nothing to show that Chapter 32 covered only industrial products. Since the goods were synthetic organic colouring matter, they were correctly classifiable under the residuary sub-heading 3204.90.

7. It was further submitted for the appellant that the ratio of the Supreme Court judgment in Commissioner of Sales Tax, U.P. v. S.N. Brothers (1973) 31 STC 302 was not applicable to the present case because that judgment was rendered in the context of the entries in the sales tax notification which were different from the entries in the Central Excise Tariff Schedule.

8. Concluding, the Departmental Representative submitted that the Collector (Appeals) erred in finding that Heading 21.07 was the appropriate classification in preference to Heading 3204.90.

9. Shri V. Lakshmi Kumaran, Counsel for the respondents, countered the above submissions by placing reliance on the Tribunal’s decision in the Anand Dyes case (supra) and the Supreme Court judgment in the S.N. Brothers case. It was submitted that food colours were different from synthetic organic dyes and colours. As against the erstwhile residuary entry Item No. 68, in the present Tariff Schedule the residuary headings were to be found scattered throughout the Schedule and food colours being edible preparations were more correctly classifiable under Chapter 21 than Chapter 32.

10. We have carefully considered the submissions of both sides. The Tribunal’s decision in the case of Anand Dyes (supra) was with reference to the entries in the erstwhile tariff schedule and can have no direct relevance or application in construing entries in the present tariff schedule. The question before the Tribunal in the case was whether three products which were admittedly food colours were classifiable as synthetic organic dye stuffs (including pigment dye stuffs) under Item No. 14D or the residuary Item No. 68. The Tribunal found from the material placed before it, namely, ISI Standards. Prevention of Food Adulteration Rules etc. that the products in question were known in commercial parlance as food colours, that is, edible products. The Tribunal referred to, and relied on, the observations of the Supreme Court case in the S.N. Brothers (supra) - particularly, the observation that it could not be gainsaid that food colours were edible goods whereas “dyes and colours and compositions thereof as specified in the Sales Tax entry did not prima facie seem to connote that they were edible goods. Of course, the Court went on to analyse the general scheme of the Sales Tax list and observed that the scheme suggested that apart from the undoubted edible goods, in cases where the import of the specified goods was wide enough to include both edible and non-edible category then the intention had been clearly expressed whether or not to include edible goods. In respect of Entries Nos. 10 and 37, the Court observed that they were not intended to extend to edible colours like food colours and to edible essences like syrup essences [Entries Nos. 10 and 37 read as :

“10 - Dyes and colours and compositions thereof.”

“37 - Scents and perfumes.”]

11. Though it is true that the entries in the Schedule to the Central Excise Tariff Act, 1985, are not in pari materia with the entries in the erstwhile tariff schedule, the question would still be relevant whether food colours are edible preparations. If they are intended to import colour to food preparations, it goes without saying that they must be edible and we have the authoritative observation of the Supreme Court in the S.N. Brothers case that “it cannot be gainsaid that ‘food colours’ and ‘syrup essences’ are edible goods” whereas ‘dyes and colours and composition thereof and ‘scents and perfumes’ as specified in Entries Nos. 10 and 37 of the List do not seem prima facie to connote that they are edible goods. The Court in a later part of the judgment held that these entries were not intended to extend to edible colours like food colours and to edible essences like syrup essences.

12. Though it is true that Chapter titles by virtue of the Rules for the interpretation of the Central Excise Tariff Schedule are provided for an ease of reference only and, for legal purposes, classification shall be determined according to the terms of headings and any relative section or Chapter notes, they do provide a broad indication of the good;

sought to be covered within the respective chapters. Chapter 21 is entitled “Miscellaneous edible preparations” and Chapter 32 “Tanning and Dyeing Extracts; Tannins and their Derivatives; Dyes, Colours, Paints and Varnishes; Putty, Fillers and other Mastics; Inks”. Broadly speaking, therefore, edible preparations must find classification under one or the other of the headings in Chapter 21 in preference to Chapter 32. We have already referred to the Supreme Court’s observations with reference to food colours in relation to the Sales Tax entry “dyes and colours and compositions thereof”. The Department seeks to bring the subject goods under the description ”synthetic organic colouring matter, whether or not chemically defined" under Heading 3204.90. In our opinion, there is no real difference between colours and colouring material. What applies to colours would apply to colouring material also. If food colours are not “dyes and colours”, they would not be colouring matter either, if the Supreme Court’s observations in the S.N. Brothers case were to be applied to the present case. On the other hand, Ch. Note 5 to Chapter 21 shows that Heading No. 21.07 inter alia includes flavouring powders for making beverages, whether or not sweetened. The said Note 5 is not an exhaustive one but an inclusive one and if flavouring powders for making beverages are included in Heading No. 21.07, we do not see any reason why food colours should not also be deemed to be covered by the said heading. Of course, Ch. Note 5(j) is a specific one and does not cover the present food colours. The respondents’ contention that the goods are akin to coloured syrups is not tenable because the goods are powders.

13. As between the two Headings 2107.99 and 3204.90, we are of the view that the former is more appropriate to cover food colours.

14. In the grounds of appeal, it has been urged that since Notification No. 392/86 dated 22.8.86, as amended, refers to ‘food colours’ and ‘food colour preparations’ as falling under Heading 3204.90, that would be the proper classification for the present goods. We are unable to agree with this contention. It is settled law that while statutory notifications may be looked at for the purpose of ascertaining the scope of entries in tariff schedules, they cannot be used to determine or settle disputed classification of goods for which the relevant headings and section notes and chapter notes read with relevant judgments, if any, are the guides.

15. In the above view of the matter, we uphold the impugned order and dismiss this appeal.

Equivalent 1989 (41) ELT 667 (Tribunal)