TaxTMI 
TaxTMI 
2019 (10) TMI 762
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....ndustan Coca-Cola Beverages Private Limited vs. CCE, Thane-I reported in 2014 (310) ELT 145 (Tri. Mum.), a Division Bench of the Tribunal at Allahabad, while hearing Excise Appeal No. 50661 of 2015 and Excise Appeal No. 50662 of 2015, referred the matter for constitution of a Larger Bench for giving its opinion on whether the classification of "Minute Maid Nimbu Fresh" would fall under Tariff Item No. 2202 10 20 of the Central Excise Tariff Schedule or under Tariff Item No. 2202 90 20. This larger Bench has, accordingly, been constituted. 2. A similar issue regarding classification of 7up "Nimbooz Masala Soda" and 7up "Nimbooz" manufactured by Pepsico India Holdings Pvt. Ltd. arose in Excise Appeal No. 70012 of 2015 and so this appeal was directed to be listed with the aforesaid two appeals. 3. The reference that needs to be answered by the Larger Bench in regard to these three appeals, can be stated as: Whether the product "Minute Maid Nimbu Fresh (hereinafter referred to as MMNF) manufactured by Brindavan Beverages Private Limited, and 7up "Nimbooz Masala Soda" or 7up "Nimbooz" manufactured by Pepsico India Holdings Private Limited are classifiable under Tariff Item 2202 90 2....
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....n alcoholic strength by volume not exceeding 0.5%. 8. Headings 2201 and 2202 of Chapter 22 are reproduced below:- Tariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 2201 Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured; ice and snow 2201 10 - Mineral waters and aerated waters: 2201 10 10 --- Mineral waters............................. 1 12% 2201 10 20 --- Aerated waters............................ 1 12% 2201 90 - Other: 2201 90 10 --- Ice and snow................................ 1 Nil 2201 90 90 --- Other........................................... 1 12% 2202 Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and other non-alcoholic beverages, not including fruit or vegetable juices of Heading 2009. 2202 10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured: 2202 10 10 --- Aerated waters.........
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....as introduced as a refreshing lemon juice based drink developed especially for Indian consumers and that the "First Love" campaign centres around the core proposition of MMNF as being the next best alternative to home made lemonade. The show cause notice further mentioned that the said product was manufactured by adding lemon concentrate and the product having lemon concentrate in any form appears to be appropriately classifiable under Tariff Item No. 2202 10 20. 13. Pepsico was issued three show cause notices. The first show cause notice dated 13 June 2013 was issued for the period from April 2012 to March 2013, while the second show cause notice dated 16 April 2017 was issued for the period from April 2013 to October 2013 and the third show cause notice dated 11 November 2014 was issued for the period November 2013 upto August 2014. It was stated that Pepsico was manufacturing Nimbooz Masala Soda from March 2012, which appeared to be classifiable under Tariff Item No. 2202 10 20 and attracted full rate of duty, but Pepsico was paying duty only at the rate of 6%. It was also stated that from the information mentioned on its Wrapper it appeared that the product was basically a na....
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....'Ready to Serve Fruit Drink' under FFS Act 2006. Thus the party taking the support of FSS Act, 2006 and FSS Regulations 2011, intends to classify the goods as Ready to Serve Fruit Drink under Chapter head no. 2202 90 20 of CETA 1985." 17. This contention was repelled by the Adjudicating Authority holding that the Regulations are not required to be applied for classification under the Central Excise Act, and the observations are: "Therefore, I find that FSS Regulation 2011 are not required to be applied for classification purpose under Central Excise as the FSS Act and Regulations issued thereunder defines the goods in technical terms for the purpose and intent for which the Act has been enacted. Therefore, I do not see any need to refer to FFS Act, 2006 or FSS Regulations 2011 to decide the classification of goods under dispute." 18. The Adjudicating Authority then observed, in view of the Principles laid down under The General Rules for Interpretation of Tariff, that the products would more appropriately be classifiable under Tariff Item No. 2202 10 20 as they have the characteristics of lemonade. The relevant observations are: "Going by the contention of the party the pro....
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....opal Vs. Parle Agro Pvt. Ltd. 2008 (226) ELT 194 (Tri-Del) classifying "Appy Fizz" as a fruit juice based drink under Tariff Item no. 2202 90 20 would not help the appellant because Appy Fizz contains a far more higher and significant percentage of apple which is 23%, whereas in the case of MMNF, the juice concentrate is admittedly only 1%. Reliance placed by the appellant on the provisions of Food Adulteration Rules to contend that since the Total Soluble Solid was not less than 10% and the lemon juice content was also not less than 5%, it should be treated as a "fruit based drink" was not accepted for the reason that the labels indicated that the brix content was 5.7% and the Lemon juice concentrate was only 1%. 22. Another Division Bench for the Tribunal at Allahabad, while hearing the Appeal filed by Brindavan Beverages found itself unable to agree with the reasoning given by the Mumbai Tribunal in Hindustan Coca Cola Beverages. The Bench noticed the Tariff Item No. 2202 10 with a single dash was divided into three categories, including lemonade with Tariff Item No. 2202 10 20, while Tariff Item No. 2202 90 with single dash had four categories including Fruit Pulp or Fruit Jui....
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....roducts available in the market which are bought and sold as lemonades or lemon flavoured drinks which are not described as fruit drinks. A comparison of the labels or products that have been filed by the Appellant during the course of hearing would indicate that all the products which are bought and sold as fruit drinks with lemon juice have a juice content of 5 per cent or more and do not describe the product as lemonade or lemon flavoured drink. On the other hand, the products which are sold as carbonated sweetened beverages are bought and sold either as lemonades or lemon flavoured drinks with a further indication that they contain no fruit or no fruit juice. The first group of products which are lemon juice based drinks having a juice content of 5 per cent or more cannot be said to be lemonades in the Tariff parlance and also commercial parlance and cannot be covered under 2202 10 20; (v) That the products in question have lemon juice to the extent of 5 per cent or more than 5 per cent. Thus, the products satisfy the commercial parlance test for classifying the product under the category of 'Fruit Juice Based Drinks' under 2202 90 20; (vi) That in matters of classificati....
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....er including aerated water which contain added sugar or other sweetening matter or flavoured form part of Sub-Heading 2202 10, while other non-alcoholic beverages would be under Sub-Heading 2202 90; (ii) That Entries under Heading 2202 of the Tariff Schedule are not aligned with HSN; (iii) That the labels on the products in question specifically state 'contains no fruit juice or fruit pulp"; and (iv) That the Heading which provides more specific description is required to be preferred to the Headings which provide more general description and since Heading 2202 09 20 provides a more specific description, this Heading is required to be preferred. 26. Shri Mohd. Altaf, learned Authorised Representative of the Department, submitted : (i) That the advertisement material, and the common parlance test and the specific entry in the Tariff Schedule establish that the products are 'Lemonades' and single dash "-", two dash "--" and three dash "---" are important and pertinent only when there is a confusion in classification. (ii) That the Commissioner in the adjudication order has given cogent reasons for classification of the products as 'Lemonades' and the requirement of th....
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....coholic beverages, not including fruit or vegetable juices of Heading 2009. Chapter 20 deals with 'Preparations of Vegetables, Fruit, Nuts or other parts of Plants'. Heading 2009 deals with 'Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter'. It is these items that are excluded from non-alcoholic beverages mentioned in the second part of Heading 2202. Non-alcoholic beverages have been defined in Note 3 of Chapter 22 to mean beverages of an alcoholic strength by volume not exceeding 0.5% volume. 31. A perusal of Heading 2202 would indicate that it is divided into two sub groups; the first one covers 'waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured', while the second group covers 'other non-alcoholic beverages not including fruit or vegetable juices of Heading 2009'. 32. The first group is covered by a single dash "-" under Sub Heading 2202 10 and contains 'Aerated Waters', 'Lemonade' and 'Other' having triple dash "---". The Tariff Item Nos. of these three articles are as follows: 2202 10 10 : A....
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....tion shall be effected as follows: (a) the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to....
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....he three dash "---" 22020 10 20 as lemonade. It is not even the charge in the show cause notice or in the impugned order that any of the products in question satisfy the above description of 2202 10 as "waters including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured." These products, therefore, cannot fall under 2202 10 20 as lemonade. Tariff Item No. 2202 10 20 would cover only those products which are essentially waters with added sugar and flavoured. If the flavouring element or agent is lime or lemon, then the product would get classified under 2202 10 20 as Lemonade. On the other hand, if the products are not essentially waters with flavouring element as lime or lemon, they cannot fall for classification Tariff Item No. 2202 10 20, since they would fail the test of classification under 2201 10. 38. At this stage it will also be appropriate to compare the first portion of Heading 2201 with that of the first portion of Heading 2202. Whereas the first portion of Heading 2201 covers waters not containing added sugar or other sweetening matter nor flavoured, the first portion of Heading 2202 covers waters containing added sugar or....
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....metimes added. They are often aerated with carbon dioxide gas, and are generally presented in bottles or other airtight containers". 41. The Explanatory Notes to Heading 2201, reproduced above, also explain the scope of the first portion of Heading 2202 and the scope of flavoured water. It specifically states that the Heading excludes sweetened or flavoured (orange, lemon etc.) mineral waters (natural or artificial) (Heading 2202). What is, therefore, covered under the first part of Heading 2202 under Sub-Heading 2201 10 is flavoured water and when water is flavoured with lime or lemon or even lemon juice, the same would be 'lemonade'. This is also clear from the HSN Explanatory Notes to Heading 2202 which have also been reproduced above. It is when lemon juice or essence is added as a flavouring agent to water, be it aerated or otherwise, that it would be covered under 2202 10 and as 'lemonade' under 2202 10 20, and not when lemon juice is the basis of the fruit drink. 42. On the other hand, the second part of Heading 2202 dealing with other non-alcoholic beverages, not including fruit or vegetable juice is contained in Sub-Heading 2202 90 under 'Other' with single dash '-'. Th....
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....d is in respect of others. Whereas Central Excise Tariff under Sub-heading No. 2202 there are specific headings in respect of soya milk, drinks etc. As per the Central Excise Tariff, the waters; including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured are classifiable under sub-heading No. 2202.10. The drinks based on fruit juice are specifically classifiable under Item No. 2202 90 20 of the Tariff. In the present case, there is no dispute regarding the contents of the product. Revenue is not disputing the certificate given by the Ministry of Food and Processing Industries, New Delhi rather they are relying it in the ground of appeal, and as per the certificate, the product in question contains 23% of apple juice, therefore, we find no infirmity in the impugned order. The appeal is dismissed." (Emphasis Supplied) 44. Civil Appeal no. 5354 of 2008 filed by the Commissioner to assail the aforesaid order of the Tribunal was dismissed on 8 July 2009. 45. It also needs to be noted that the aforesaid order of the Tribunal was extensively reproduced and considered by the Supreme Court in Parle Agro (P) Ltd. Vs. Comm of Commercial Tax, ....
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....ice based Drinks" or as "Lemonades". During the course of hearing of the Appeals, a compilation of labels of different products manufactured by different manufacturers has been filed. The compilation is divided into two groups, namely, "lemon/lime juice based fruit drinks (carbonated and non-carbonated)" and "lemonades - lemon/lime flavoured drinks (carbonated and non-carbonated)". 50. The tabular chart of the labels of the first group lemon/lime juice based fruit drink is as follows : SAMPLES OF LEMON/ LIME JUICE BASED FRUIT DRINKS (CARBONATED AND NON-CARBONATED) S. No Name of Product Manufactured by Product Description Ingredients Lemon/ Lime Juice Content 1 Fruit Nik Amrutanjan Health Care Ltd., Thiruvallur Ready-To-Serve Fruit Drink Water, Sugar, Lemon Juice (5%), Acidity Regulators (330,331), Antioxidant (300), Salt, Permitted Class II Preservative (211) 5% 2 Safal Nimbu Shikanji Mother Dairy Fruits & Vegetables Pvt. Ltd., Delhi Ready to Serve Fruit Beverage Lime drink Water, Sugar, Lime Juice concentrate (0.8%), Acidity Regulators (330,296), Iodized salt, Black Salt, Antioxidant (331) and Permitted Class II preservative (211) * Equivalent to 5% lime jui....
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....452(i)) Acidity regulator (330), Preservative(202). *Equivalent to 5% real lemon juice (reconstituted) Concentrated Lemon Juice (0.8%), equivalent to 5% real lemon juice 51. The tabular chart of the labels for the second group 'lemonades' is as follows : LEMONDAES - LEMON/ LIME FLAVOURED DRINKS (CARBONATED AND NON-CARBONATED) S. No. Product Name Manufactured by Description Ingredients % of Fruit Juice 1 Arora Lemon Arora Soft Drinks, New Delhi Sweetened Carbonated Beverage Carbonated water, Sugar, Contains permitted Class II Preservatives (E-211), Emulsifying & stabilizing agents (E-414,E-445), Acidity Regulator (E-330), Added Flavors (natural & nature identical, artificial flavouring substances) (Lemon) Contains No Fruit 2 Taan Western Beverages Pvt. Ltd., Goa Sweetened Carbonated Beverage Carbonated water, Sugar, Common salt, Acidulant (330), Stabilizers (419,445), Permitted Class II Preservatives (211), Acidity Regulator( 331),quinine hydrochloride, Contains Added Flavor, Lemon Flavour Contains No Fruit 3 H2 Go Lemon Flavour JMD Beverages Pvt Ltd, Delhi Sweetened Carbonated Beverage Carbonated water, sugar, Acidity Regulators (INS 330331), Sta....
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....pha Tocopheryl Acetate, Gum Acacia, Monopotassium Phosphate, Easter Gum, Vitamin B3, Vitamin A, Zinc Aspartate, Vitamin B5, Vitamin B6, Vitamin B9, Vitamin B12 Contains No Fruit or Pulp 14 Duke's Lemonade PepsiCo India Holdings Pvt. Ltd. Mumbai Sweetened Carbonated Water Carbonated water, sugar, Acidity Regulators (330,331), Preservatives(202), Stabilizer(445), Antioxidant Contains No Fruit 15 Limca Lime n Lemon Marketed By: Coca Cola Company Manufactured by: Enrich Agro Food Products Pvt. Ltd, Rohtak, Haryana Carbonated Water Carbonated Water, Sugar, Acidity Regulators (330,331), Stabilizers(414,471), Preservative (211), Contains Added Flavours (Natural, Nature-Identical and Artificial Flavouring Substances (Lemon Flavour), - 52. A perusal of the first group indicates that the products have broadly been described as "Ready to Serve Fruit Drink", or "Ready to Serve fruit beverage lime drink" or "Carbonated fruit drink" and have a Lemon Juice content of 5 per cent or more. The products at Serial No. 8, 9 and 10, namely, MMNF, Nimbooz Masala Soda and Nimbooz' are the products involved in the present appeals. In contrast, the labels under the second category describe t....
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....e correct translation of the word "ras" is 'juice' and not lemonade and so it would mean similar to home made juice. 56. The Revenue, however, contends that the products are 'Lemonades' falling under Tariff Item No. 2202 10 20. The burden is clearly on the Revenue to support its contention with evidence. This is what was observed by the Supreme Court in Hindustan Ferodo Ltd. vs Collector of Central Excise, Bombay, reported in 1997 (89) ELT 16 (SC), and Union of India vs Garware Nylons Ltd., reported in 1996 (87) ELT 12 (SC). Paragraph 15 of the judgment of the Supreme Court in Garware Nylons Ltd. is reproduced below : "15. In our view, the conclusion reached by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the ....
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....roducts Standards. Regulation 2.3 deals with 'Fruit & Vegetable Products' and in particular Regulation 2.3.10 deals with 'Thermally Processed Fruit Beverages/Fruit Drinks/Ready to Serve Fruit Beverages' while Regulation 2.3.30 deals with 'Carbonated Fruit Beverage or Fruit Drink'. 59. Regulation 2.3.10 which deals with non carbonated fruit beverages is reproduced below : 2.3.10 Thermally Processed Fruit Beverages / Fruit Drink/ Ready to Serve Fruit Beverages 1. Thermally Processed Fruit Beverages / Fruit Drink/ Ready to Serve Fruit Beverages (Canned, Bottled, Flexible Pack And/ Or Aseptically Packed) means an unfermented but fermentable product which is prepared from juice or Pulp/Puree or concentrated juice or pulp of sound mature fruit. The substances that may be added to fruit juice or pulp are water, peel oil, fruit essences and flavours, salt, sugar, invert sugar, liquid glucose, milk and other ingredients appropriate to the product and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent spoilage. 2. The product may contain food additives permitted in these regulations including Appendix A. The product shall confo....
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.... be examined as to whether the aforesaid provisions of the Regulations can be of any help to ascertain what "fruit juice based drinks" would be. 63. This issue was examined by the Supreme Court in Parle Agro (P) Ltd. The Appellant Parle Agro (P) Ltd. was engaged in manufacture of fruit juice based drink known as "Appy Fizz". It classified the product as a fruit juice based drink under the Kerala Value Added Tax Act 2003. A notice was, however, issued to it proposing to classify it under "aerated branded soft drinks" having a tax liability of 20% as against 12.5% for fruit juice based drinks. The Supreme Court examined whether the common parlance test was the only test to be applied for understanding the different entries and whether the decision and opinion of Food Safety Authorities on the product in question was relevant. In regard to the first issue, the Supreme Court observed that the common parlance test or commercial parlance test were not the only test which can be applied for interpreting the entries. The Supreme Court observed that scientific and technical meaning of the word "aerated" used under different Statues can also to be looked into for finding out the real import....
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....Safety and Standards Act, 2011 and the Regulations framed therein and what is the nature and characteristic of the product which has been licensed to be manufactured to the appellant cannot be said to be an irrelevant factor while examining the nature and contents of the product. Whether the product is an aerated branded soft drink or can be covered by residuary of Item 5 of Entry 71 is a question on which the manufacture licence, orders issued by Food Safety and Standards Authority of India were relevant facts which were although cited before the Committee of Joint Commissioners but were brushed aside relying on the Kerala High Court's order in M/s. Trade Lines. We, thus, are of the opinion that the manufacture licence dated 19th August, 2015 granted to appellant and the opinion of the Government of India, Ministry of Food Processing Industries dated 28-3-2005 were relevant for finding the nature of the product of the appellant for the purpose of classification and the Committee of Joint Commissioners as well as High Court erred in not adverting to and considering the aforesaid material." (Emphasis Supplied) 64. The fruit juice content of lime or lemon juice in MMNF, Nimbu Ma....