Tariff classification of beverage preparation controls liability; Special Excise Duty cannot follow when the Second Schedule entry does not apply.

A compound preparation used for making beverages was treated as classifiable under tariff item 2106.9050 of the First Schedule to the Central Excise Tariff Act, 1985. On that reading, the corresponding Second Schedule entry could not be used to shift the product into tariff item 2106.9019, because the Chapter Notes and Supplementary Notes had to be applied as written and an administrative clarification could not alter the tariff position. The effect was that no basis remained for Special Excise Duty, education cess, or interest once the product stayed within the First Schedule classification.

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Issues: Whether the respondents' product was correctly classifiable under tariff item 2106.9050 of the First Schedule to the Central Excise Tariff Act, 1985 and, if so, whether Special Excise Duty was payable under tariff item 2106.9019 of the Second Schedule.

Analysis: The product was a compound preparation used for making beverages, and its classification under tariff item 2106.9050 in the First Schedule was accepted. The Tribunal followed its earlier decision on the same product category and held that the Second Schedule entry could not be invoked to shift the product into tariff item 2106.9019. The Chapter Notes and Supplementary Notes had to be applied as they stood, and the Board clarification could not override the proper tariff position. Once the product remained classifiable under tariff item 2106.9050, no basis survived for levy of Special Excise Duty, education cess, or interest.

Conclusion: The respondents' classification was correct and no Special Excise Duty was payable.

Ratio Decidendi: Where a product is admittedly classifiable under a specific First Schedule tariff item and is not covered by the corresponding Second Schedule entry on a proper reading of the Chapter Notes and Schedule structure, Special Excise Duty cannot be levied merely on the basis of a contrary administrative clarification.

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