TMI Blog1985 (4) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... t is dutiable. But the appellants had been clearing Purity Barley and Robinson s Patent Barley without observing excise formalities. When they submitted a fresh revised classification list on 19-6-1980, mentioning Pearl Barley as excisable, and the other two as non-excisable being exempted, the Assistant Collector of Central Excise under order dated 14-5-1981 approved of the classification. But subsequently the appellants received a show cause notice dated 25-7-1981 from the Collector of Central Excise, Calcutta as to why the order dated 14-5-1981 should not be set aside and why Purity barley as well as Robinson s Patent barley should not be classified as liable for excise duty under Tariff Item 1 B. After some correspondence the appellants submitted their reply. On adjudication the Collector under order dated 7-4-1984 set aside the order of the Assistant Collector and directed that Central Excise duty leviable on the said two goods mentioned above be demanded from the appellants. It is against the said order that the appeal has been preferred. 2. Sri Somnath Chatterjee, Advocate, assisted by Sri Jatin Ghosh and Sri M.M. Dua, Advocates, appeared for the appellants. Sri N.V. Ragh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed provisions of Section 35 A (2). In support of his contention he relied upon two decisions of the Supreme Court which are- (1) AIR 1965 SC 1585 (K.M. Cheria Abdullah) (2) AIR 1968 SC 843 (Swastik Oil Mills) In repelling this contention Sri Raghavan Iyer relied upon the following two decisions of this Tribunal: (1) 1983 E.L.T. 2374 (Bell punch Pvt. Ltd) (2) 1983 ECR 1888 (Nuchem Plastics) 5. In AIR 1965 SC 1585 it was observed, in the majority judgement of the Supreme Court, as follows at page 1589 : There is no doubt that the revising authority may only call for the record of the order or proceeding and the record atone may be scrutinised for assessing the legality or propriety of an order or regularity of a proceeding. But there is nothing in the Act that for passing an order in exercise of his revisional jurisdiction, if the revising authority is satisfied that the subordinate officer has committed illegality or impropriety in the order or irregularity in the proceeding, he cannot make or direct any further enquiry. This was in relation to Section 12(2) of the Madras General Sales Tax Act 9 of 1939 under which the Deputy Commissioner may... .call f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector no proper order on the classification list could have been passed by the Assistant Collector. Samples had been admittedly drawn of Purity Barley as well as Robinson s Patent Barley, evidently to ascertain the nature of the goods in order to come to a conclusion whether they fell under any one of the fourteen items mentioned in the schedule to the notification No. 17/70. Having done that the Assistant Collector could not arrive at any conclusion on the said question without having the reports of the Chemical Examiner before him. When the Collector found, on the perusal of the records, that-the order of the Asstt. Collector had been passed without the benefit of the test reports of the Chemical Examiner, that circumstance itself would be sufficient to enable the Collector to launch proceedings by way of a review show cause notice under the provisions of the Section 35A(2) of the Act. Therefore, even if the Collector had made reference to the contents of the test reports (which were not before the Assistant. Collector when he passed his order), that circumstance would not vitiate the validity of the proceedings initiated by the Collector under his show cause notice. Therefore we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Chemical Examiner on that matter, including his opinion on the question whether these two could be called foods specially prepared for feeding of infants. Whenever the report of a technical expert is required for assisting the authority in question to decide a contested matter before him, it is but natural that the attention of the Technical Expert would be drawn to the particular matters on which opinion would be required from him. This is so since otherwise, in the absence of the attention of the Chemical Examiner being drawn to the particular matters on which his opinion would be required, his report may possibly omit to deal with those matters, in which event the opinion of expert would not be of any value for resolving the dispute by the concerned authority. Therefore, we do not see any impropriety in the query in item 8 of the Test Memos having been formulated in the manner above noted. We do net agree with the contention that the query was in the form of a leading question and that itself was a defect in the preparation of the Test Memos. 9. Sri Iyer in this connection wanted to rely upon the reference (in the Photostat copy of the classification list before us) to Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est reports of the Chemical Examiner were extremely unsatisfactory and could be of no assistance at all in resolving the dispute before us. The reports read respectively as follows : The sample is in the form of white powder based on starch (Barley powder) in original, air-tight unit container labelled as Purity Indian Barley for Infants and Invalids. The use of the material has been indicated as for Barley water. Barley gruel (after mixing with sugar, lime juice, salt or milk, etc., according to taste) and for young infants (after mixing with sugar and milk). Thus it may be seen that the product is not specially prepared for use as a Baby food. Attention is invited to Board s letter M.F. (DR I) F. No. 182/6/72-CX. 3. dated 28-7-1975 giving a schedule, wherein Robinson s Patent barley and similar preparations are listed under invalid foods and not as a baby food. The sample is in the form of white powder based on starch (Barley powder) together with Calcium and Iron, packed in an original unit container labelled as Robinson s Patent Barley for Infants and Invalids. The use of the material has been indicated for use with milk (as a cooling drink together with flavour l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon to give his opinion was whether the test samples sent to him would be foods specially prepared for feeding infants. Therefore, in offering the opinion on that point he cannot be said to have been incorrect in referring to the material printed by the appellants themselves on their tins. Therefore, the second criticism above noted cannot be said to be valid. 15. No doubt the Chemical Examiner s reports as communicated to the Collector, (a copy of which had been given to the appellants when they required the same) did not contain details of the tests conducted by the Chemical Examiner for arriving at the composition of the goods. But Sri Iyer contends that the test reports need not contain details of all the tests done and the results obtained by each of the tests but that it would be sufficient if the Chemical Examiner indicates his final conclusions on the question referred to him. He contends that if the appellants were dissatisfied with the said opinion they could have asked for cross examination of the Chemical Examiner in order to obtain from him the details of the tests conducted by him and then cross examine him with reference to the correctness of his conclusions bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion would be covered by a particular item of the tariff schedule . But in the present instance it may be seen that the test reports of the Chemical Examiner (extracted earlier), do not contain his opinion as to the item of the Tariff Schedule within which the goods would fall or even the item of the Schedule to the notification No. 17/70 within which the goods would fall. The first part of his report contains the opinion based on his findings, the second part refers to the information he found on the unit container in which the goods were sold and the third part drew attention of the Collector to a letter of the Board which, according to him, would be relevant on the question whether the exclusion from item 14 of the schedule to the notification would be available. Therefore, in the present instance the Chemical Examiner cannot be said to have erred in the manner mentioned in the judgement of the Gujarat High Court. 17. Another argument which we could take note of at this stage is that according to Sri Iyer the burden was, in the present instance, on the appellants to establish that they were entitled to the particular exemption claimed by them and the onus was therefore on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved the classification list filed by them and, thereafter, the burden was on the department only in the proceedings before the Collector to establish the contrary. 18. Sri Chatterjee contended that the Purity Barley and Robinson s Patent Barley manufactured by the appellants were being cleared as non-dutiable articles ever since they were brought under Tariff Item 1 B and that the department was itself aware of the same and had permitted it and having so permitted the same for over fifteen years they could not be allowed to suddenly change the stand when there were no change of circumstances. He further submitted that when the dutiability of these articles came up for consideration in another proceeding before the excise authorities they themselves accepted that these two articles were exempted, though excisable, and in view of such a specific stand by the department itself in these earlier proceedings it was not open to the Collector to issue the review show cause notice or thereupon pass the order that he did. 19. In support of his contention above said he relied upon the decisions in- (1) 1978 E.L.T. 552 (Calcutta) (Mercantile Express Company); and (2) 1984 (18) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice had been issued on 25-7-1981. The order of the Appellate Collector is dated 14-10-1982. But the earlier proceedings related to a period when admittedly the department itself had been permitting removal of Purity Barley and Robinson s Patent Barley as not dutiable, being exempted. Therefore, naturally, in the said proceedings, which related to a period prior to the issue of the review show cause notice, the department could not alter its stand with reference to non-dutiability in relation to the applicability of notifications No. 71/78 and 80/80. That is why apparently in the appeal preferred to this Tribunal against the order of the Appellate Collector the department chose to adopt the same stand, that the goods were exempted, though, in the meanwhile, the review show cause notice had been issued. It should also be noted that the order following the review show cause notice had been passed on 7-4-1984 only, long after the filing of the appeal against the order of the Appellate Collector. Therefore, we see no inconsistency which would, for that reason, affect the validity of the order dated 7-4-1984. 22. Both sides are agreed that Purity Barley as well as Robinson s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item 14 of the notification. On the other hand, it had been already seen that the true dispute is whether the said two goods fall within item 14 at all. 24. After enumerating the point at issue in the mariner abovestated the Collector in his order has proceeded to consider the materials available, mainly by way of the Chemical Examiner s reports. He had thereafter concluded that as the said reports established that the two goods in question were in the form of white powder based on starch (barley powder) and in addition Robinson s Patent Barley has Calcium and Iron also added thereto, both the goods fell within item 14 and were therefore dutiable as they were not further exempted as infant foods. Sri Chatterjee contends that the finding of the Chemical Examiner was itself not acceptable and in any event the further conclusion drawn by the Collector on the basis thereof was also incorrect. 25. As regards the Chemical Examiner s test reports the contention for the appellants is that the same were fallacious and not supported by any factual data obtained on analysis as to composition, etc., and therefore the said test reports were wholly valueless. On the other hand, the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Gessner G. Hawley, include both simple compounds (sugars) and Polymers of these (starches and cellulose). The question therefore would be whether on the basis of the composition as given by the appellants themselves the two goods (Purity Barley and Robinson s Patent Barley) could be held to be preparations with a basis of starch (as held by the Collector) and thus falling within item 14 of the schedule to the notification No. 17/70. The contention for the appellants is that there is a world of difference between preparations on the basis of starch or preparations based on starch and preparations containing starch or goods containing starch. The appellants contend that Purity Barley and Robinson s Patent Barley are neither preparations, nor based on starch. According to them they are merely goods containing starch, as barley itself contains starch and the powdered barley also naturally, therefore, contains starch. 28. But Sri Iyer contends that the word preparations (as used in item 14 of the schedule to the notification No. 17/70) would only mean an adaptation of the original commodity and need not mean it should contain something in addition to the original commodity. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Item (15C)of the Central Excise Tariff. He therefore contends that the preparations with basis of starch would refer to preparations in which starch as a manufactured commodity had been used. He contends that the said words cannot refer to Purity barley or Robinson s Patent barley which would at best be articles containing starch and would not be preparations with a basis of starch. In this connection Sri Chatterjee further pointed out that barley is mentioned as a cereal in IS: 2813-1970 as also in the Prevention of Food Adulteration Rules. In this connection, he referred to the classification under the Explanatory Notes to the CCCN Chapter X as well as Chapter Note IIA of Chapter XI. 31. We have carefully considered the submissions of both sides on the above matter. It is in this connection that a query was raised from the Bench whether the two goods in question could not be called preparations with a basis .of flour. Flour as mentioned in -IS : 9374-1979 would mean the final ground meal of grains. From IS : 1157-1957 (Indian Standard Specification for Barley Powder) it is seen that barley powder is comparatively a much finer material than the whole-meal barley flour. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at by way of a process of addition to the original material. But, in the context of the words used in item 14 this meaning does not appear to us to be appropriate. We feel so since flour itself is a product obtained by grinding the grain. If therefore the grain in the form of flour is itself to be treated as a preparation, then the words preparation with a basis of flour would appear to be a tautological repetition. Therefore, in the context of the use of the words in the notification it appears to us that preparations as used in the said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in order to derive a new commodity. In that sense mere grinding of barley grain to prepare barley flour or barley powder (as in the case of Purity Barley) would not appear to us to amount to a preparation. 35. We are therefore satisfied that so far as Purity Barley is concerned (which consists of barley powder only) it would not fall within the description of preparation with a basis of flour as mentioned in item 14 of the schedule to the notification. But so far as the Robinson s Patent Barley is concerned this admi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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