Fruit drink classification turns on dilution and product character, with diluted ready-to-serve drinks treated as non-alcoholic beverages.

Ready-to-serve fruit drinks produced by diluting fruit juice with water were treated as non-alcoholic beverages under Heading 22.02 because the added water changed the character of the product and it could not be classified as fruit juice or fruit preparation under Heading 20.01. For the mango pulp-based drink, classification under Heading 20.01 could not be determined on the existing record because the exact proportions of pulp, water and other ingredients were not established; the matter therefore required fresh factual examination of dilution and product character. The stated principle is that classification depends on the product's actual composition and whether it retains the character of fruit juice or has become a beverage.

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Issues: (i) Whether the fruit drinks marketed as VOL Fruit, PINAP and similar products, after dilution with water, were classifiable as fruit juices or preparations of fruit under Heading 20.01 or as other non-alcoholic beverages under Heading 22.02 of the Central Excise Tariff Act, 1985; (ii) Whether the mango pulp based drink MAAZA MANGO required classification under Heading 20.01 or required remand for fresh adjudication on the basis of the extent of dilution and ingredients.

Issue (i): Whether the fruit drinks marketed as VOL Fruit, PINAP and similar products, after dilution with water, were classifiable as fruit juices or preparations of fruit under Heading 20.01 or as other non-alcoholic beverages under Heading 22.02 of the Central Excise Tariff Act, 1985.

Analysis: The products were found to be ready-to-serve drinks made by diluting fruit juice with water. The tariff description of Heading 22.02 covers other non-alcoholic beverages not including fruit or vegetable juices of Heading 20.01. On the admitted manufacturing process, the addition of water altered the character of the product so that it could not be treated as a fruit juice falling under Heading 20.01.

Conclusion: The goods were held classifiable under Heading 22.02, and the Revenue's classification was upheld.

Issue (ii): Whether the mango pulp based drink MAAZA MANGO required classification under Heading 20.01 or required remand for fresh adjudication on the basis of the extent of dilution and ingredients.

Analysis: The record did not establish the exact proportion of pulp, water and other ingredients, and the product was not shown with sufficient clarity to be a fruit juice within Heading 20.01. The matter required examination of factual aspects such as the extent of dilution and the character of the product, which had not been properly determined by the original authority.

Conclusion: The issue was remanded for de novo consideration.

Final Conclusion: The dispute was resolved by sustaining the classification against the assessees in respect of the admitted diluted fruit drinks, while directing fresh adjudication for the mango pulp based product where the factual matrix was incomplete.

Ratio Decidendi: A ready-to-serve product obtained by dilution of fruit juice or fruit pulp with water so that it assumes the character of a non-alcoholic beverage is classifiable under Heading 22.02, unless the facts establish that it remains a fruit juice or fruit preparation within Heading 20.01.

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