Milk-based preparation classification under prepared food tariff upheld, and exemption denied because the product fell within the notification exclusion.

A milk-based preparation containing malt extract, milk or milk powder, sugar and additives, sold in 200 g unit containers, was held to fall within Tariff Item 1-B as prepared or preserved food, including goods containing milk. Classification under Item 68 was rejected because the cited trade notice concerned protein food supplements generally and did not cover this product. Exemption was also denied because the preparation fell within the exclusion in Sl. No. 14 of Notification No. 17/70 dated 1-3-1970, being a milk-containing preparation with malt extract capable of use as a beverage. The impugned classification and refusal of exemption were therefore upheld.

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Issues: Whether the product manufactured by the appellant was classifiable under Tariff Item 1-B as prepared or preserved food put up in unit containers, and whether it was entitled to exemption under the relevant notification.

Analysis: The product consisted of malt extract, milk or milk powder, sugar and other additives, and was sold in unit containers of 200 gms. On that composition and manner of marketing, it answered the tariff description of prepared or preserved foods, particularly goods containing milk, under Item 1-B of the First Schedule to the Central Excises and Salt Act, 1944. The claim to classification under Item 68 was rejected because the cited trade notice dealt with protein food supplements in general and did not govern a milk-based preparation of the present kind. The product also fell within the exclusion in Sl. No. 14 of Notification No. 17/70 dated 1-3-1970, since it was a preparation containing milk and malt extract capable of being used as a beverage.

Conclusion: The classification under Item 1-B and the denial of exemption were upheld against the appellant.

Final Conclusion: The appeal failed, and the demand based on the impugned classification and refusal of exemption stood confirmed.

Ratio Decidendi: A milk-based preparation sold in unit containers and ordinarily intended for sale is classifiable as prepared or preserved food under Item 1-B, and it cannot claim exemption where the applicable notification excludes such a preparation by its composition and use.

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