Trade meaning of "food preparations" brings baking powder within excise exemption under the notification

Baking powder was construed to fall within the expression "food preparations" in Notification No. 55/75-C.E., because the terms were not statutorily defined and had to be understood in their ordinary commercial and trade sense. The High Court read the notification as a whole and held that the distinction between "food products" and "food preparations" could not be applied so narrowly as to exclude a bakery ingredient widely understood in trade as a food preparation. The interpretation also avoided rendering that expression redundant, with the result that manufacture of baking powder qualified for exemption from excise duty under the notification.

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Issues: Whether baking powder falls within the expression "food preparations" in Notification No. 55/75-C.E., dated 1 March 1975, so as to qualify for exemption from excise duty.

Analysis: The exemption notification was issued under Rule 8(1) of the Central Excise Rules, 1944 and had to be construed in its ordinary commercial sense and in the context of the schedule as a whole. The expressions "food products" and "food preparations" were not defined in the statute, so their meaning had to be gathered from common parlance and trade understanding. Baking powder was shown to be a product used extensively in bakery and household preparations and was understood in trade as a food preparation. The distinction drawn in the notification between "food products" and "food preparations" could not be read so narrowly as to exclude an item merely because it is used as an ingredient and not ordinarily consumed as a meal. The interpretation also had to avoid rendering the expression "food preparations" redundant.

Conclusion: Baking powder falls within the expression "food preparations" and its manufacture is entitled to exemption under the notification, with the result that excise duty is not leviable under Tariff Item No. 68 while the exemption remains in force.

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