1988 (4) TMI 81 - HC - Customs

Cocoa Butter Classified as Vegetable Oil for Customs Duty

The High Court ruled in favor of the petitioner in a case concerning the classification of Cocoa Butter under the Indian Tariff Act, 1934. The Court held ... Butter - Cocoa butter Issues:Classification of Cocoa Butter under Indian Tariff Act, 1934 - Whether Cocoa Butter is a food item or vegetable non-essential oil for Customs duty purposes.Analysis:The petition raised the issue of the classification of Cocoa Butter under the Indian Tariff Act, 1934. The petitioner Society, engaged in chocolate manufacture, imported Cocoa Butter, which Customs authorities classified under Tariff Item No. 21(2) for levying duty. The petitioner contended that Cocoa Butter should fall under Item 15(6) as a vegetable non-essential oil, not a food item. The dispute centered on whether Cocoa Butter qualifies as a food item. The authorities below, including the Assistant Collector and the Collector of Customs, considered Cocoa Butter as a food item under Tariff Item No. 21(2, citing its use in chocolate making and other food-related industries. The Central Government, in a revision, upheld this classification, relying on the Prevention of Food Adulteration Act's definition of 'food.'The petitioner challenged this classification in the High Court, arguing that the Central Government's reliance on the definition of 'food' from another Act was unjustified. The Court agreed, citing previous Supreme Court judgments cautioning against using definitions from one Act to interpret terms in another. The Court emphasized that the common understanding of the term 'food' should guide the classification under the Indian Tariff Act, not definitions from unrelated statutes.The Court further analyzed the characteristics of Cocoa Butter, noting its inedibility in its raw form and lack of direct consumption. The Court agreed with previous judgments that not all items used in food production can be classified as food items. Additionally, the Court highlighted that Cocoa Butter did not fit under the heading of 'Products of the Food-Preparing Industries' in the Indian Tariff Act, further supporting its classification as a raw material rather than a food item.Ultimately, the Court ruled in favor of the petitioner, setting aside the previous decisions and classifying Cocoa Butter under Item 15(6) for Customs duty purposes. The Court ordered the refund of excess duty paid, with interest, and decided against awarding costs to either party.