2000(10)LCX0195

IN THE CEGAT, WEST ZONAL BENCH, MUMBAI

S/Shri Gowri Shankar, Member (T) and J.N. Srinivasa Murthy, Member (J)

BRITCO FOODS COMPANY LTD.

Versus

COMMISSIONER OF C. EX., PUNE

Order Nos. 3673-74/2000-WZB/C-I, dated 13-10-2000 in Appeal Nos. E/3926R/98Bom. and E/1042R/99-Bom.

Collector v. Woodcraft Products Ltd. — 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Followed ................ [Para 6]

Pepsi Foods Ltd. v. Commissioner — 1999(01)LCX0206 Eq 1999 (108) ELT 0461 (Tribunal) — Followed .. [Paras 3, 10]

Pepsi Foods Ltd. v. Commissioner — Appeal No. E/5291/92-C — Followed ............ [Paras 3, 10]

Advocated By : S/Shri Ravinder Narayan, and D.B. Shroff, Advocates, for the Appellant.

Shri B.K. Choubey, JDR, for the Respondent.

[Order per : Gowri Shankar, Member (T)]. - We are told that the appellant’s name has now been changed to Coca-cola India Ltd and the application is being filed for the change of its name.

2. The question for consideration in these appeals is the classification in the Central Excise Tariff of goods described as non-alcoholic beverage bases or concentrates. These are stated to be bases manufactured by the appellant, which are in turn used by bottlers to make branded beverages waters such as name Coca-cola, Limca, Citra etc. The appellant had claimed classification of these under heading 33.10 of the tariff. This classification was approved initially. However, subsequently notice was issued, proposing the classification of the goods under heading 21.08. The Assistant Commissioner, who adjudicated on the two notices issued (for the periods August, 1995 to January, 1996 and February, 1996 to 6th March, 1996) held that the goods were rightly classifiable under heading 33.02 and dropped the demands for duty as the clearances during this period. The department appealed this order. Disposing of this appeal, the Commissioner (Appeals) held that the goods were correctly classifiable under heading 21.08 and set aside the Assistant Commissioner’s order. Hence these appeals by the assessee.

3. The submissions of the advocate for the appellant are these. The goods are preparations based upon odoriferous substances and they are raw material of a kind used for making beverages. They are therefore specifically covered by sub-heading 10 of heading 33.02. Heading 33.02 is specifically based upon heading of the same number in the Harmonised Commodity Description Coding System referred to as to the HSN. Heading 21.08 is part of the heading 2106.00 of the HSN. A reference to the HSN therefore is justified. These specifically rule out classification of these goods under heading 21.06, specifically classifying them under heading 33.02. The exclusion at page 171 of preparations of a kind used for the manufacture of beverages based on odoriferous substances from heading 21.06 shows this to be the case. Correspondingly the note at page 509 under heading 33.02 excluding from the scope of that heading compound of alcoholic and non alcoholic preparations of a kind used for the manufacture of beverages with a basis or substance other than odoriferous substances and suggesting heading such preparations to be under heading 21.06 also supports this view. The Commissioner (Appeals) has, in his order, mainly relied upon his view that the goods in question were not merely mixtures but compound or compounded preparations in coming to his conclusion. This was beyond the scope of the notice and beyond the scope of the appeal filed before him. The department itself has earlier taken the stand that similar preparations are classified under heading 33.02. This stand is clear from the Tribunal’s decision in Pepsi Foods Ltd. v. CCE - 1999 (108) ELT 461 and the unreported decision in Pepsi Foods Pvt. Ltd. v. CCE in appeal E/5291/92C.

4. The Departmental Representative’s answer is this. The goods are edible preparations within the meaning of Note 12 to Chapter 21. The reference to the heading 21.08 to edible preparations “not elsewhere specified or included” has to be read to mean preparations not included or specified elsewhere in Chapter 21. Since the goods are edible, and heading 33.02 covers both edible as well as non-edible preparations heading 21.08 is more specific. It is also more appropriate in the light of the explanation at page 172 in the, that preparations for the manufacture of lemonades and other beverages intended to be consumed as beverages is simple dilution of water or after further treatment makes this heading more appropriate.

5. The decisions of the Tribunal referred to by the appellant did not go into the details as to the nature of the product under consideration and therefore should not be relied upon in classifying the product now under consideration Chapter heading 21.08 reads as follows :

Chapter heading 33.02 reads as follows :

6. The Assistant Commissioner has found it undisputed that the goods are based on odoriferous substances and there is no challenge to this finding. He has found that the goods are specifically covered by the terms of heading 3302.10 and not found it necessary to go beyond this. The Commissioner (Appeals) has not favoured relying upon the holding that dispute in classification has to be resolved on the material available on the basis of the tariff itself, that being the law of the land. He, however, overlooks the judgment of the Supreme Court in the case of CCE v. Woodcraft Products Ltd. 1995 (077) ELT 23 that since the tariff is based upon [HSN] the reference to the [HSN] in considering the scope and the meaning of the tariff heading would be justified. As we have indicated, both headings are based upon the Explanatory Notes.

7. The Explanatory Notes exclude from classification heading 21.08 preparations of a kind used for the manufacture of beverages based on one or more odoriferous substances. Note 12 below heading 21.08 on which the Departmental Representative relies heavily, refers to preparations for the manufacture of lemonades or other beverages consisting, for example, of flavoured or coloured syrups with natural or artificial substances, of certain fruits or plants, of syrup flavoured with fruit juices which have been modified by the addition of constituents, concentrated fruit juices with the addition of citric acid. It indicates that such preparations are intended to be consumed as beverages after simple dilution with water.

8. The beverages which are ultimately made from these products now under consideration by us are different. They are in the main sweetened, and generally (though not always) carbonated. The particular characteristic flavours which give them their brand identity distinguishes them from other beverages of the similar kind is in fact a particular odoriferous substances or mixtures of such substances that is contained in the beverage. Apart from this, heading 21.08 is residuary heading being for food, edible preparations not elsewhere specified or included. It is not possible for us to agree that the condition in the heading 21.08 that the goods must not be elsewhere specified or included, refer obviously to the entire tariff. A plain reading of the heading shows the contrary that they must not be specified or elsewhere in the tariff. If it were the intention to limit the specification or inclusion in the chapter, the chapter heading would have said so, as it does for example in headings 84.85, 84.75, 84.85. All these three headings speak of goods not specified or included elsewhere “in this chapter”. In the absence of these words, it is not permissible to read them into the words of heading 21.08.

9. The Explanatory Notes, to which we have already referred earlier, to heading 21.06 clearly excludes preparations for the food or drink industry based on odoriferous substances from that heading and put them under heading 33.02. The corresponding headings in the tariff are 21.08 and 33.02. It is not possible for us to agree that the condition in heading 21.08, that the goods must not be elsewhere specified or included and applies to the chapter and not the tariff. We must therefore approve the finding of the Assistant Commissioner that by description of the tariff heading these goods are classifiable under heading 33.02. Even if we were to agree that this is not the case, and there is in fact a dispute between the two headings, the fact that heading 21.08 is a residuary heading, would require classification of the goods under heading 33.02. This is only, of some reason, they could not be classifiable under this heading or any other heading in the tariff that classification under heading 21.08 would be required to be considered.

10. The Commissioner (Appeals) says that since “the product is in the nature of uniquely compounded formulation or preparations and not merely mixture with basis of one or more odoriferous substances as envisaged in chapter heading 3302.”, the classification claimed by the appellant cannot be accepted. He finds the goods to be “compound preparations, which characterise the branded aerated beverage which is made out of it”. We are not able to see how the fact that these are formulations, which have been made up or compounded so to speak, to a particular requirement or a specific end-use takes them out of the scope of chapter heading 3302.10. It is clear to him that this heading does not cover such a “unique compounded formulation or preparations”. We are however not able to find anything in the words of that sub-heading which would justify this view. As we have noted, sub-heading 10 of heading 3302 is for the goods described in the tariff heading “of a kind used in the food and beverage industry”. There is nothing in these words to suggest or to justify an inference that it is only goods which can be put to more than one use which could be classifiable under this heading. The Commissioner, in his order, does not give any reasons for his conclusion nor was the Departmental Representative, who echoed that reasons, were able to give any reasoning. The two decisions of the Tribunal in Pepsi Foods Ltd v. CCE and the unreported decision cited by the appellant indicate that the department itself had claimed classification of Mirinda, Lehar 7Up both of which are beverages similar to the beverages made, out of the products now under consideration, and in fact referred to in the notice to show cause as products classifiable under heading 3302. We agree with the Departmental Representative that these were not the issues specifically for consideration in this matter. However, these decisions certainly show the department’s view that these are to be classifiable under heading 3302.10 and adds reinforcement to the submissions made by the appellant.

11. We are therefore of the view that the classification as determined by the Assistant Commissioner is correct and restore that classification and it would then follow that the demand for duty is not sustainable.

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Equivalent 2001 (127) ELT 73 (Tri. - Mum.)