Product classification under a residuary entry quashed for lack of reasons and failure to apply the essential character test.

Classification of Women's Horlicks under a residuary entry was struck down because the authority failed to give reasons or examine the product's composition, milk content, statutory registration under the Milk and Milk Products Order, 1992, and the earlier classification of Horlicks as a milk product. The Court reiterated that classification must be made by applying the proper test to the essential character of the composite product, and a residuary entry can be used only when the goods do not reasonably fit a specific entry. As the clarification relied mainly on the presence of other ingredients and ignored the relevant materials, it was found arbitrary and was quashed.

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Issues: Whether the impugned clarification classifying Women's Horlicks under the residuary entry was arbitrary and liable to be quashed.

Analysis: The clarification was found to be unsupported by reasons and to have ignored the material placed before the authority regarding the product composition, the milk content, the statutory registration under the Milk and Milk Products Order, 1992, and the earlier binding classification of Horlicks as a milk product. The Court held that classification must be made by applying the proper tests, including the essential character of the composite product, and that a residuary entry can be invoked only when the goods cannot reasonably fall within a specific entry. Since the authority failed to examine these aspects and merely relied on the presence of other ingredients, the clarification was held to be devoid of reasons and arbitrary.

Conclusion: The impugned clarification was quashed and the challenge to it succeeded in favour of the petitioners.

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