Badam Milk Drink Ready to Drink classified under 2202 9030 not 0401 11 per Rule 3(a) interpretation

CESTAT Bangalore classified Badam Milk Drink Ready to Drink under chapter sub-heading 2202 9030 rather than 0401 11 as flavoured milk. The tribunal held that with the introduction of 8-digit classification code, specific entry for beverages containing milk exists under 2202 9030, which must be preferred over generic heading per Rule 3(a) of General Rules for Interpretation. The product containing badam powder, cardamom, saffron, and maltodextrin, processed through homogenization, pasteurization and UHT treatment for extended shelf life, differs from normal milk. Board's Section 11C Notification No. 17/2008-CE classified flavoured milk under 2202 9030 post-HSN alignment. Following precedent in ERCMPU case, the appeal was rejected.

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Issues Involved:
1. Classification of "Badam Milk Drink - Ready to Drink" under the Central Excise Tariff Act, 1985.
2. Applicability of 8-digit classification code and its impact on the classification.
3. Interpretation of flavoured milk under Chapter 04 versus beverages containing milk under Chapter 22.

Summary:

Issue 1: Classification of "Badam Milk Drink - Ready to Drink"
The appellant, a manufacturer of "Badam Milk Drink - Ready to Drink," classified the product under Chapter Heading 0402 9990, arguing it is flavoured milk. The Department issued a show-cause notice alleging the product should be classified under Chapter sub-heading 2202 9030 as 'Beverages containing Milk,' citing Rule 3(a) of the General Rules for the Interpretation of Central Excise Tariff. The adjudicating authority confirmed the classification under Chapter Sub-Heading 2202 9990. The Commissioner (Appeals) upheld this classification, leading to the present appeal.

Issue 2: Applicability of 8-digit classification code
The appellant argued that the change from a 6-digit to an 8-digit classification code should not alter the product's classification. They contended that flavoured milk was previously classified under Chapter heading 0401 11 and should remain under Chapter 04. The appellant emphasized that the introduction of the 8-digit tariff does not necessitate reclassification, as the essential character of the product remains unchanged.

Issue 3: Interpretation of flavoured milk under Chapter 04 versus beverages containing milk under Chapter 22
The appellant argued that "Badam Milk Drink" is essentially milk with added flavours and should be classified under Chapter 04. They cited the definition of flavoured milk from Wikipedia and the Food Safety and Standards Act, 2006, which includes flavoured milk under the definition of milk. The appellant also referenced several case laws supporting their classification under Chapter 04.

The Department, however, argued that the product falls under Chapter 2202 9030, as it contains multiple flavouring agents and has undergone processes like homogenization and pasteurization, giving it a longer shelf life. They cited the case of Ernakulam Regional Co-operative Milk Producers Union Ltd., where flavoured milk was classified under Chapter 2202 9030.

Judgment:
The Tribunal found that with the introduction of the 8-digit classification code, there is a specific entry for beverages containing milk under Chapter 2202 9030. The Tribunal held that the product, "Badam Milk Drink - Ready to Drink," undergoes processes that extend its shelf life and contains multiple flavouring agents, making it more akin to a beverage rather than plain milk. The Tribunal referred to the Notification No. 17/2008-CE (NT) and the case law of Ernakulam Regional Co-operative Milk Producers Union Ltd., supporting the classification under Chapter 2202 9030. The appellant's cited cases were found distinguishable on facts or not applicable.

Conclusion:
The appeal filed by the appellant was rejected, and the classification of "Badam Milk Drink - Ready to Drink" under Chapter 2202 9030 was upheld. The Tribunal found no reason to interfere with the impugned order.

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