1996(03)LCX0108

IN THE CEGAT, PRINCIPAL BENCH `D’, NEW DELHI

S/Shri K. Sankararaman, Member (T), S.L. Peeran, Member (J) and Lajja Ram, Member (T)

HARI CHAND SHRI GOPAL

Versus

COLLECTOR OF CENTRAL EXCISE, MEERUT

Order No. 175 & 176/96-D, dated 1-3-1996 in Appeal Nos. E/1861 & 1862/94-D

Cases Quoted

Oswal Agro Mills Ltd. v. Collector — 1993 AIR SCW 1782                                                  [Para 7]

Indian Cable Co. Ltd. v. Collector — 1994 AIR SCW 4071                                                    [Para 7]

Unwing v. Hanson — (1891) 2 Q.B. 115                                                                                 [Para 7]

Ram Avtar Budhai Prasad v. Assistant Sales Tax Officer — AIR 1961 SC 1325                 [Para 9]

Kokil Ram v. State of Bihar — AIR 1951 Patna 367                                                             [Para 10]

Collector v. Parle Exports Pvt. Ltd. — 1988(11)LCX0047 Eq 1988 (038) ELT 0741 (SC)                                       [Para 11]

Novapan India Ltd. v. Collector — 1994(09)LCX0128 Eq 1994 (073) ELT 0769 (SC)                                            [Para 12]

Eskayef Ltd. v. Collector — 1990(09)LCX0104 Eq 1990 (049) ELT 0649 (SC)                                                        [Para 12]

Madras Fertilizers Ltd. v. Asstt. Collector — 1994(01)LCX0071 Eq 1994 (069) ELT 0625 (SC)                             [Para 14]

Advocated By : Shri S.K. Kohli, Advocate, for the Appellant.

Shri Vijay Singh, SDR, for the Respondent.

[Order per : Lajja Ram, Member (T)]. - The issue for consideration in these two appeals filed by M/s. Harichand Shri Gopal, is the classification of the product called ‘Pan Chatni’. The Collector of Central Excise (Appeals), Ghaziabad in his Order-in-Appeal, dated 30-5-1994 had confirmed the classification of the said product under sub-heading No. 2107.91 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the ‘Tariff’). Heading No. 21.07 covers ‘edible preparations not elsewhere specified or included’. The Order-in-Appeal, dated 31-5-1994 was issued following the decision in the above order dated 30-5-1994.

2. The matter was heard on 19-9-1995 when Shri S.K. Kohli, Advocate appeared for the appellants. Revenue was represented by Shri Vijay Singh, SDR.

3. The ld. Advocate stated that their product was a flavoured pan chatni in which sugar content was about 95 to 97%, and flavours were from 3 to 5%. Their price was Rs. 23.40 for 200 gms. The product had no other use and is only taken with the ‘Pan’. He pleaded that their product was classifiable under sub-heading No. 2103.11 as ‘sauces, ketchup and the like and preparations thereof’. The ld. Advocate submitted that sauces and ketchup were in the nature of chatni. He referred to the dictionary meaning of chatni and submitted that their earlier classification lists had been approved and that they were facing discrimination in the classification as at other places the like product was classifiable under sub-heading No. 2103.11 of the Tariff. It was also argued that for a product of common use like Pan Chatni, we could not go to the harmonized system of nomenclature. The ld. Advocate pleaded that as chatni was exempted from central excise duty under Notification No. 12/90-C.E., dated 20-3-1990 they should not be made to pay any duty.

4. The ld. SDR replied that the product in question, although called ‘Pan chatni’, was not a chatni in the popular sense. The reference in the dictionary is for chatni as commonly understood and not for the product, which although not chatni but had been named by the appellants as ‘Pan Chatni’. The ld. SDR submitted that the product ‘Pan chatni’ could not be used in any food dish and is only used in pan. It was also submitted that when fresh facts come to notice, the classification could be changed as has been held in various judicial pronouncements.

5. We have carefully considered the matter. The product which the appellants had named as ‘Pan chatni’ is placed in the pan. The pan leaf is prepared with katha, chuna, betel nut, saunf, etc., for chewing. Chewing tobacco is added when pan with tobacco is demanded. ‘Gulkand’ is placed in the pan when sweet pan is demanded. The product of the appellants ‘Pan Chatni’ is used when sweetened pan is required by the customer. It contains sugar syrup (95 to 97%), silver leaves, flavours, etc. Sugar syrup is generally prepared by dissolving sugar in water at a certain temperature with the addition of certain chemicals to remove odours and colour and for preservation. It is mentioned as excisable goods under sub-heading No. 1702.30 of the Tariff. The finished product was packed under the brand names - `Gopal Dil Khush’ and ‘Gopal Rachna’. Now, main point for our consideration is whether the product named as ‘Pan Chatni’ is a ‘chatni’, classifiable under sub-heading No. 2103.11 of the Tariff. The appellants had shown their product ‘Pan Chatni’ as ‘other goods’ in the classification list. They indicated the classification under sub-heading No. 2103.11, and claimed full exemption under Notification No. 12/90-C.E., dated 20-3-1990. Sub-heading No. 2103.11 covers sauces, ketchup and the like and preparation thereof. The product in question is not obviously and admittedly the sauce or ketchup. Is it a product like the sauce or ketchup.

6. It is a legitimate rule of construction under the Doctrine of Noscitur A Sociis to construe words in an Act of Parliament with reference to the words found in immediate connection with them i.e. when two or more words which are susceptible of analogous meaning are clubbed together, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general is restricted to a sense analogous to a less general. The expression ‘and the like’ had to be interpreted in the context of the items listed specifically to which this expression [qualifies]. The sauces and the ketchups have the essential character of accompaniment with eatables, to make them taste better, to relish them. Ketchup is generally made with tomatoes/vegetables, onions, salt, sugar, spices, etc. As regards the sauces, they are of different kind and go with different dishes, puddings, etc. The goods under consideration in the present proceedings are not like the sauce and the ketchup, as not having the essence of the characteristics of an accompaniment to the eatables with regard to the sum and substance of the nature of the raw materials, way of preparation, usage, packing and commercial understanding. The commercial understanding in the present context will be the understanding by the particular trade and the consumer where sauce and ketchup known and traded and consumed on the one hand, and the product under consideration is known and traded and consumed on the other.

7. In the case of M/s. Oswal Agro Mills Ltd. and Others v. CCE - 1993 AIR SCW 1782, the Hon’ble Supreme Court had observed as under :

“The provisions of the Tariff do not determine the relevant entity of the goods. They deal whether and under what entry the identified entry attracts duty. The goods are to be identified and then to find the appropriate heading, sub-heading under which the identified goods/products would be classified. 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.”

The Hon’ble Supreme Court in the case of the M/s. Indian Cable Co. Ltd., Calcutta v. CCE, Calcutta - 1994 AIR SCW 4071 had quoted with approval the following observations of Lord Esher in Unwin v. Hanson (1891) 2, Q.B. 115 at page 119

“if the Act is directed to dealing with matters affecting everybody generally the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, business or transaction and words are used which everybody conversant with that trade, business or transaction knows and understands to have a particular meaning in it then the words are to be construed as having that particular meaning though it may differ from the common or ordinary meaning of the words.” Obviously, the product named as ‘Pan Chatni’ is not a product, the like of sauce or ketchup.

8. Is it a Chatni? Chatni goes with the food articles. The product in question goes with the pan. Excisability is not dependent on the label which a manufacturer may give to his wares. It is a well settled principle that excisability of an item to tax or tax deduction can hardly be made to depend on the label given to it by the parties. Simply because the manufacturer had named his product as `Pan Chatni’ it does not become a Chatni as commonly understood. Any reference to ‘chatni’ brings to mind such indigenous eatables as pakoras, samosas, idli, dosa, dhokla, alu tikki, etc. It is a spicy preparation for relishing the eatables and is generally made of fruits, vegetables, herbs, pepper and other masalas. The product before us is not associated with eatables. Reference to chatni, chatni placed in the company of sauce and ketchup is only to that which is an accompaniment to the eatables.

9. In Ram Avtar Budhai Prasad v. Asstt. Sales Tax Officer, Akola, AIR 1961 SC 1325, the Hon’ble Supreme Court had to consider whether ‘betel leaves’ were ‘vegetable’ The Hon’ble Supreme Court observed that the words must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. Betel leaves were held to be not vegetable. The term ‘vegetable ‘was understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens or in a farm, and are used for the table.

10. In Kokil Ram v. State of Bihar - AIR 1951 Patna 367 it was held by the Patna High Court that ‘pans’ are not foodstuffs.

11. In popular sense and in common parlance, this product could not be treated as chatni. No house wife will use it with eatables. It is not placed on the dining table. With chatni we think of our desi snacks such as pakoras, samosas, idli, dhokla and the like. This product will be found in the ‘pan’ shops. It is not the name given by the assessee but the nature of the goods, their usage and known denomination “the words, the context, the subject matter, the effects and consequences or the spirit and reason of the Law” [refer CCE v. Parle Exports Pvt. Ltd. - 1988(11)LCX0047 Eq 1988 (038) ELT 0741 (SC)], which are relevant. Simply because the assessee calls it a ‘chatni’, it will not become a chatni for the purposes of Heading No. 21.03 of the Tariff.

12. In the case of Novapan India Ltd. v. CCE, Hyderabad - 1994(09)LCX0128 Eq 1994 (073) ELT 0769 (SC), the Hon’ble Supreme Court had held that exemption being in the nature of exception, was to be construed strictly at the stage of determination whether assessee falls within its terms or not and in case of doubt, or ambiguity, benefit of it must go to the State. Further, exemption notification could not change the classification of the goods from one entry to another as held by the Supreme Court in the case of Eskayef Ltd. v. CCE - 1990(09)LCX0104 Eq 1990 (049) ELT 0649 (SC).

13. Sub-heading No. 2107.91 is wide enough to cover such a product. Tariff Heading No. 2107 as before the 1995 Budget is extracted below :

[ELT Vol. 79 (Part-lV) (15th October, 1995) Page No. 606

14. As regards, the plea of the re-opening of his own order, in the case of Madras Fertilizers Ltd. v. Asstt. Collr. of Central Excise, Madras - 1994(01)LCX0071 Eq 1994 (069) ELT 0625 (SC) = 1994 (051) ECR 0337 (SC), the Hon’ble Supreme Court had held that an officer can reopen his own order on classification and rectify his mistake. Para 10 of that judgment is extracted below :

10. It is equally difficult to agree with the learned counsel for the appellant that once the Assistant Collector passed his order dated March 5, 1976 pursuant to the Government of India’s order dated February 18, 1976, he became functus officio and that he had no power to reopen the matter. The Government of India remitted the matter to the Assistant Collector to grant exemption if the conditions of the Notification are satisfied. If the Assistant Collector granted an exemption contrary to law it was always open to him to rectify the said error. Sub-rule (5) to Rule 173B of Central Excise Rules empowers the excise authorities to do so. Rule 173B provides for approval of the list of goods by the proper officer. The approval inter alia includes rate of duty leviable on each such goods. Sub-rule (5) reads :

“(5) When the dispute about the rate of duty has been finalised or for any other reasons affecting rate or rates of duty, a modification of the rate or rates of duty is necessitated, the proper officer shall make such modification and inform the assessee accordingly.”

It may be noted that before revising his order dated March 5, 1976, the Assistant Collector gave a notice to the appellant stating the grounds on which he proposed to revise and modify his earlier order. The decision cited by Sri Uttam Reddy in support of this submission viz., Collector of Central Excise v. Pallappa (1964 Madras 111) has no relevance whatsoever. That was a case where the appellate authority set aside the order of the original authority levying penalty without saying more. It was held that in such a situation, the original authority has no power to initiate de novo proceedings for levy of penalty. We are unable to see any analogy whatsoever with that case herein. The learned counsel also cited Union of India v. Kamalakshi Finance Corporation Ltd. [1991 (055) ELT 433] to stress the judicial discipline required of the Excise Officers to obey the order of the superior tribunals and courts. Again, we see no relevance of the said principle in the facts of that case.

15. Taking all the relevant considerations into account, we reject both the appeals and confirm the classification of the product “pan chatni” under sub-heading No. 2107.91 of the Tariff.

Ordered accordingly.

Equivalent 1996 (83) ELT 281 (Tribunal)