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2021 (2) TMI 822 - CESTAT KOLKATAClassification of imported goods - Big Cola - Big Orange Cola - Big Lemon etc. - goods are described as “carbonated beverage with fruit juice” - whether classifiable under Customs Tariff Heading 22021090 and 22021020 as claimed by the Revenue or are classifiable under 22029920 as claimed by the respondent/importer? - HELD THAT:- There is no dispute regarding the facts of the case. The goods are sold as “carbonated beverage with fruit juice’. In the case of lime, the fruit juice content is 2.5% whereas in the case of other fruit, such as, apple the content is 5%. There are also products named Big Orange which has orange flavour but contains 5% apple juice and no orange juice but has only pictures of cut orange. Similarly, Big Kids Jeera does not appear to have any Jeera but only apple juice. To that extent, the representation on the labels appears to be inaccurate but this does not affect the classification of the products since there is no dispute that all these are “carbonated beverages with fruit juice’. The products in question are not fruit or vegetable juices themselves which would be classifiable under Heading 2009. It is also not in dispute that the Customs Tariff is relevant for determining the rate of IGST payable on the imported goods. The Schedule to the Customs Tariff Act, 1975 (commonly referred to as Customs Tariff) is based on, although it is not identical to, the Harmonised System of Nomenclature (HSN)-an internationally recognised scientific method of classifying all goods. Sometimes there are differences between the HSN and the Customs Tariff in which case, the latter is relevant for determining the duty liability under the Customs Act. In view of the explanation to this effect in the IGST Notification specifying the rates of IGST chargeable on different goods, IGST is also to be charged as per the classification under the Customs Tariff. Customs Tariff, groups goods into Sections, each of which is further divided into Chapters with a two digit Chapter number. Within each Chapter, there are four digit headings which are further divided into six digit and still further divided into eight digit tariff headings - Further, in the Customs Tariff, groups of articles are prefixed by a Single dash (-) or Double Dash (--) or triple dash (---). Wherever there is a single dash, it is to be read as a sub-classification of the article or group of articles covered by the heading preceding it. Similarly, a double dash is to be taken as a sub-classification of the goods covered by a single dash preceding it. A triple dash is a further sub-classification of the goods covered by a double dash preceding it. Within the first Single dash, there are three categories of products “Aerated waters” (22021010), Lemonade (22021020) and other (22021090). Revenue wants to classify the Carbonated beverage with fruit juice containing lime imported by the respondent under “Lemonade’ (22021020) and classify the Carbonated beverage containing other fruit juices under others (22021090) - Under the second Single dash (-) “other”, under which the respondent assessee classifies the product, there are two subcategories, viz., non-alcoholic beer (22029100) and other (220299). Undisputedly, the goods in question are not non-alcoholic beer. Within the“other” (220299), there are four further sub-categories -those containing soya, those containing milk, fruit pulp or fruit juice based drinks and others. The Respondent assessee classified their product under 22029920 --- fruit pulp or fruit juice based drinks. The question which falls for consideration in the present case is how to view the products in question- (a) as carbonated beverages treating the fruit juice as a secondary character as the Revenue views them or (b) as fruit juice based drinks as the Respondent assessee views them. In our considered view, a decision on this could be made by examining how they are being sold. They are being sold as “Carbonated beverages with fruit juice’- neither as fruit juice based drinks nor as carbonated beverages although the fruit juice content is only 5% (or 2.5% in case of lime). This gives the products their unique characteristic distinct from both carbonated beverages and fruit juices. The FSSAI regulation (2.3.30 clause 3A) also conceives of such a category of products in the market. Thus, they form a separate specie of products known to the market and are recognised as such by FSSAI. The Customs Tariff, however, does not have a separate entry for such products. We do not agree with the Revenue’s contention that the essential character of the products is only carbonated drinks and not the fruit juices. In our view both components are important. As carbonated beverages, they can be classified under 2202 10 20/ 22021090 (as claimed by the Revenue). As fruit juice based drinks, they could as well be classified under 2202 99 20 (as claimed by the assessee). In our view neither carbonated beverage alone nor fruit juice alone gives the essential character of the products in question; both contribute to its essential character. The issue cannot be resolved as per Rule 3(a) and 3(b) of the Rules of Interpretation and therefore we need to resort to Rule 3(c). Since Customs tariff heading 22029920 comes last in the order, it prevails and the goods are classifiable under this heading. Hon’ble Supreme Court in the case of Parle Agro [2017 (5) TMI 592 - SUPREME COURT] examined the classification of appy fizz which was a drink containing apple juice as well as carbonated water and held that the product is correctly classifiable under 22029920. While deciding the matter, the Hon’ble Apex Court has referred to the Regulation 2.3.30 of FSSAI too, inter-alia, found that the product appy fizz met with the conditions in Clause 2 of this Regulation. Revenue’s argument is that the appy fizz contained 10% of the apple juice whereas the present products contained only 5% fruit juice (2.5% in the case of lime). It is true that in view of this difference in the composition these goods do not fall under Clause 2 of FSSAI Regulation 2.3.30 but they do fall under Clause 3A - Identical view has been taken by the Larger Bench of the Tribunal in the case of Brindavan Beverages [2019 (10) TMI 762 - CESTAT ALLAHABAD (LB)]. The products, in question, have been correctly classified under 22029920 by the learned Commissioner (Appeals) in the impugned order and the same calls for no interference - Appeal dismissed - decided against Revenue.
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