Tribunal reclassifies 'Lipton Tree Top' as fruit preparation not beverage, overturning previous decision

GODREJ FOODS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, INDORE

GODREJ FOODS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, INDORE - 2006 (202) E.L.T. 473 (Tri. - Del.) Issues Involved:
1. Classification of the product 'Lipton Tree Top' under the appropriate Tariff Heading.
2. Determination of whether the product is a 'fruit preparation' under Heading 20.01 or a 'non-alcoholic beverage' under Heading 22.02.

Detailed Analysis:

Issue 1: Classification of the Product 'Lipton Tree Top'

Background:
The appeal was remanded by the Hon'ble Supreme Court to determine if the product 'Lipton Tree Top' falls under Tariff Heading 20.01 as a fruit preparation or under Heading 22.02 as a non-alcoholic beverage. The Tribunal's previous order had classified the product under sub-Heading 2202.90.

Relevant Tariff Headings:
- Heading 20.01: Covers preparations of vegetables, fruits, nuts, etc., including fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter.
- Heading 22.02: Covers natural or artificial mineral waters and aerated waters containing added sugar or other sweetening matter or flavored; other non-alcoholic beverages, not including fruit or vegetable juices of Heading 20.01.

Tribunal's Observations:
The Tribunal examined the product's classification, noting that 'non-alcoholic beverages' are explicitly covered under Heading 22.02, which includes aerated waters. The Assistant Collector and Commissioner (Appeals) had classified the product under 2202.90, citing that it contains 10% fruit juice, which is more than 5% but less than 25%, thus not eligible to be classified as a fruit product under Heading 20.01.

Issue 2: Determination of Whether the Product is a 'Fruit Preparation' or 'Non-Alcoholic Beverage'

Appellant's Argument:
The appellants argued that the product is a fruit preparation and should be classified under Heading 20.01. They relied on the Tribunal's decision in Northland Industries v. Collector of Central Excise, which classified squashes and cordials under sub-Heading 2001.10. They also referenced the Supreme Court's decision in Hamdard (WAKF) Laboratories v. CCE, Meerut, which clarified that beverages containing fruit or vegetable juices are excluded from Heading 22.02.

Department's Argument:
The department contended that the product is more akin to non-alcoholic beverages and should be classified under Chapter sub-Heading 2202.90. They argued that the product is not a fruit juice but a fruit drink, thus falling under Heading 22.02. They cited various circulars and Tribunal decisions supporting this classification, including the Krishna District Milk Producers Union v. CCE and Maharashtra Agro Indus. Dev. Corpn. Ltd. v. Collector of Central Excise.

Tribunal's Findings:
The Tribunal found that Chapter 20 includes preparations of vegetables, fruits, nuts, or other parts of plants, while Chapter 22 refers to beverages, vinegar, and spirits. The Tribunal noted that diluted fruit juices remain fruit juice beverages and are preparations of fruit. They concluded that there is no distinction between fruit juice and fruit juice beverages in the Tariff, and diluted fruit juices continue to be fruit preparations.

Conclusion:
The Tribunal held that the product 'Lipton Tree Top' is a fruit preparation within the meaning of Tariff Heading 20.01 and is classifiable as such. The impugned order of the Commissioner (Appeals) dated 22-6-94 was set aside, and the appeal was allowed.

Pronouncement:
The judgment was pronounced and dictated in the open Court.