2014(06)LCX0023
IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. I]
S/Shri Ashok Jindal, Member (J) and P.K. Jain, Member (T)
C.C. (IMPORT), JNCH, MUMBAI-II
Versus
NARANG HOSPITALITY SERVICES PVT. LTD.
Final Order No. A/1091/2014-WZB/C-I (CSTB), dated 27-6-2014 in Appeal No. C/33/2008-Mum
Cases Quoted -
Commissioner v. Waterways Shipyard Pvt. Ltd. - 2011(12)LCX0239 Eq 2013 (297) ELT 0077 (Tribunal)
- Relied on [Paras 5, 7.2, 8]
Advocated By -
Shri M.S. Reddy, Dy Commissioner (AR), for the
Appellant. Shri S.N. Kantawala, Advocate, for the Respondent.
[Order per : Ashok Jindal, Member (J)]. -
The Revenue is in appeal against the impugned order wherein the learned Commissioner (Appeals) al-lowed the appeal filed by the respondent.
2. Brief facts of the case are that the respondent imported a consignment of "Red Bull Energy Drink Proprietary Food". They sought the goods are to be classified under CTH 2202.90.90 and claiming the benefit of Notification No. 2/2006-C.E. (N.T.), dated 1-3-2006 wherein no CVD is attracted on RSP. Revenue was of the view that the said goods are to be classified under CTH 2202.10.10. Therefore, proceedings were initiated against the respondent and the adjudicating authority held that the impugned goods are to be classified under CTH 2202.10.10 which was appealed before the Commissioner (Appeals) who held that the goods are classifiable under CTH 2202.90.90. Aggrieved by the said order, the Revenue is before us.
3. Heard both sides.
4. Shri M.S. Reddy, learned A.R. appearing for the Revenue submits that Chapter 22.02 deals with main product which classified the product as under :-
2202.10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured
2202.90- Other
This heading covers non-alcoholic beverages as defined in Note 3 to this Chapter, not classified under other headings, particularly Heading 20.09 or 22.01.
He submits that as per the said classification, the items which fall under CTH 2202.10 including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured items. Therefore this group includes, sweetened or flavoured mineral waters, beverages such as lemonade, orangeade, cola, consisting of ordinary drinking water, sweetened or not, flavoured with fruit juices or essences, or compound extracts, to which citric acid or tartaric acid are sometimes added. They are often aerated with carbon dioxide gas and are generally presented in bottles or other airtight containers. Therefore, these goods are classified under CTH 2202.10.10. He further submits that the learned Commissioner (Appeals) relied on the Hon'ble Madras High Court's order and also the test report of the Central Food Technological Research Institute (CFTRI) indicating that the product was a Proprietary Foods and not carbonated water. He also submits that the learned Commissioner (Appeals) also relied on European Union Ruling in his order. In fact, these are not applicable to the facts of this case as the Red Bull Energy Drink contents are mineral waters, and aerated waters, containing added sugar or other sweetening matter or flavoured with fruit juices or essences, or compound extracts and are generally presented in bottles or other airtight containers. Therefore, the reliance placed by the learned Commissioner (Appeals) has no relevance to the facts of the case. Hence, the goods are required to be classified under CTH 2202.10.10.
5. On the other hand, Shri S.N. Kantawala, learned Advocate appearing for the respondent submits that the impugned goods contains water. Glucose, Vitamins, Caffine, Taurine, etc. which are flavoured with essences and colours. This product is not only mineral water or aerated water but it is an energy drink which contains caffeine etc. and after drinking of the said drinks, energy boosts. Moreover, this product is correctly classifiable under CTH 2202.90.90 as others. He further submits that the Food Safety and Standards Authority of India (FSSAI) has also observed that the said product is caffeinated beverage and the same cannot be used more than two cans a day. Therefore, it is classifiable under CTH 2202.90.90. He further submits that in the case of Red Bull India Pvt. Ltd., the Department of Trade and Taxes also held that the "Energy Drinks are Proprietary Foods" which are not covered under the category of aerated drinks. Therefore, it is distinguishable from aerated water. He further submits that the said goods are classifiable under CTH 2202.90.90 and the same has been alien with the Harmonised Customs Tariff. He further submits that the said energy drink increase the fat burning. He also relied on a data retrieved from the system and submits that in most of the cases it is classifiable as 2202.90.90. He further submits that US Customs Ruling on the Energy Drink 'Missile' exported from Poland into USA proves classification under 2202.90.90 as per Harmonized Tariff Schedule of the United States. He further submits that as per newspaper article appeared in Mumbai Mirror dated 14-4-2014, a PIL has been filed against FSSAI for permitting energy drinks manufacturing companies to increase the caffeine content beyond the earlier prescribed limit. He has also relied on the decision in the case of Waterways Shipyard Ltd. as reported in 2011(12)LCX0239 Eq 2013 (297) ELT 0077 (Tri.-Mum.) to say that as per Rule 3(c) of Rules of Interpretation of Schedule for goods classifiable under two or more Headings, then the goods to be classified under Heading occurring last in numerical order amount those equally meriting consideration. As such, present goods more appropriately classifiable under Heading which occurs last in the numerical order among those which equally merit consideration. Therefore, the impugned energy drink is classifiable under CTH 2202.90.90.
6. Considered the submissions made by both sides.
7. Chapter 22 of Customs Tariff Act deals with beverages, spirits and vinegar. Chapter 22 includes mineral waters and aerated waters containing added sugar or other sweetening matter or flavoured and other non-alcoholic beverages. As per the said Chapter 2202.10, waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured are classifiable. Others are classifiable under Chapter 2202.90.90.
7.1 In the case of Redbull India Pvt. Ltd., the product in question before
us, the ingredients are as under :-
(a) Taurine
(b) Glucuronol actone
(c) Caffeine
(d) Inositol
(e) B Vitamins
(f) Sucrose and Glucose
(g) Sugar
As this product in question is having caffeine contents, glucose and Vitamins, etc. therefore, the said product cannot be classified under 2202.10.10 as the scope of that classification is limited i.e. mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured. Moreover, the Harmonized Tariff Schedule classified the product in question as 2202.90.90. The FSSAI also held that the said product is caffeinated beverage and not mineral waters and aerated waters. Moreover, the impugned product "Energy Drink" is not recommended for children, pregnant or lactating mothers and persons sensitive to high doses of caffeine. Therefore, it is held that this product contains of caffeinated beverage, mineral water and aerated waters therefore, the appropriate classi-fication is 2202.90.90.
7.2 We have gone through the case law in the case of Waterways Ship yard Pvt. Ltd. (supra) wherein this Tribunal has observed as under :-
"17. Another agreement taken by the respondent is that on the basis of nosciture a sociis the Commissioner has rightly held classification under Heading 8901 as articles in the Heading 8903 have to be identified by the company they keep and only a small sports vessels appear to qualify for classification under Heading 8903. We find that the first explanation in the Heading 8903 clearly states that this Heading covers all vessels for pleasure or sports. The word all is sufficient enough to cover the vessels for pleasure whether small or big. Therefore, the principle of nosciture a sociis will apply only to the second explanation and not to the first explanation.
18. In the case of Urmila & Co. Pvt. Lid. v. Collector of Customs, Bombay reported in 1998(04)LCX0061 Eq 1998 (104) ELT 0097 (Tribunal) it was held by the Tribunal that it is the basic design of the vessel that determines its classification. The para 18 of the said decision is reproduced as under :
"We have already referred to above that the vessel in question was designed and registered as a vessel for pleasure. Its fittings, fixtures and equipment indicated that it was usable not for carrying cargoes or passengers for commercial purposes but was for vacation, enjoyment etc. The items for survey which were not part of the basic design of the vessel could not change the character and classification of the vessel."
In the instant case the vessel M/s. M.V. Caravela is designed for the purpose of casino games therefore by applying the ratio of the said decision it should more appropriately be classifiable under Heading 8903 as vessel for pleasure or sports.
19. It is seen from the above that the vessel in question on one hand is classifiable as a cruise ship under Heading 8901 and on the other hand it is classifiable as a vessel for pleasure under Heading 8903. In such a situation the Rules for interpretation of the classification come into play Rule 1, 2 & 3 of the Rule for Interpretation of the Schedule are reproduced as under :
1. The titles of Sections and Chapters are provided for case of reference only; for legal purposes, classification shall be determined according to the terms of the Headings and any relative Section or Chapter Notes and provided such Headings or Notes do not otherwise require, according to the provisions hereinafter contained.
2. (a) Any reference in a Heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that the incomplete or unfinished goods have the essential character of the complete or finished goods. It shall also be taken to include a reference to those goods complete or finished (or falling to be classified as completed or finished by virtue of this rule), removed unassembled or disassembled.
(b) Any reference in a Heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partially of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3.
3. When by application of sub-rule (b) or Rule 2 or for any other reason, goods are, prima facie, classifiable under two or more Headings, classification shall be effected as follows :
(a) The Heading which provides the most specific description shall be preferred to Headings providing a more general description. However, when two or more Headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, those Headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to (a), shall be classified as if any considered of the material or component which gives them their essential character, in so far as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the Heading which occurs last in the numerical order among those which equally merit consideration."
Since the Rule 1, 2, & 3(a) or (b) are not applicable in the present situation, we find that under Rule 3(c) when the goods cannot be classified by reference to Rule 3(a) & (b) they shall be classified under Heading which-occurs last in the numerical order among those which equally merit consideration. Therefore, following this Rule of Interpretation the vessel in question is more appropriately classifiable under Heading 8903 of the Central Excise Tariff. We hold accordingly."
8. Following the precedent decision in the case of Waterways Shipyard Pvt. Ltd. (supra), more appropriate classification of the impugned Energy Drink is 2020.90.90. In common parlance also it is known as energy drink other than mineral water and aerated water. Therefore, we hold that the most appropriate classification of the impugned goods is 2202.90.90.
9. With these observations, we do not find any infirmity with the impugned order and the same is upheld. The appeal filed by the Revenue is dismissed.
(Order pronounced in Court on 27-6-2014)
Equivalent 2014 (307) ELT 0801 (Tri. - Mumbai)