Tariff classification for beverage preparations barred reclassification for special excise duty where Chapter Notes covered the product.

The beverage-in-bag product, already classified under Tariff item 2106 90 50 in the First Schedule, could not be reclassified for special excise duty under Tariff item 2106 90 19 in the Second Schedule merely on the basis of a Board clarification. Notes 1 and 2 of the Second Schedule apply the First Schedule's interpretative rules, section notes, chapter notes and supplementary notes, and Supplementary Note 4 of Chapter 21 covers preparations for lemonades or other beverages intended for use in making aerated water. As the product was a compound preparation for non-alcoholic beverages, the levy of special excise duty was held not sustainable and the appeal was allowed.

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Issues: Whether the beverage-in-bag product, classified under Tariff item 2106 90 50 in the First Schedule, could also be subjected to special excise duty under Tariff item 2106 90 19 in the Second Schedule.

Analysis: The classification of the product under Tariff item 2106 90 50 in the First Schedule was not in dispute. Notes 1 and 2 of the Second Schedule make the interpretative rules, section notes, chapter notes, and supplementary notes of the First Schedule applicable to the Second Schedule. Supplementary Note 4 of Chapter 21 specifically covers preparations for lemonades or other beverages intended for use in the manufacture of aerated water. The impugned product, being a compound preparation for making non-alcoholic beverages and already accepted as falling under Tariff item 2106 90 50, could not be shifted into Tariff item 2106 90 19 of the Second Schedule merely on the basis of the Board's clarification. The lower order did not properly examine the Chapter Notes and the relevant notes of the Second Schedule.

Conclusion: The levy of special excise duty on the product was not sustainable, and the appeal was allowed.

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