1983 (10) TMI 173 - AT - Central Excise

Summary

Issues:
1. Eligibility for duty exemption under Notification No. 17/70-C.E.
2. Interpretation of Serial No. 14 of the schedule to Notification No. 17/70.
3. Classification of product under Item 1B of the Central Excise Tariff Schedule.
4. Definition of "unit containers" for packaging.

Eligibility for Duty Exemption:
The case revolved around whether the food product "Paushtik" manufactured by the appellants qualified for duty exemption under Notification No. 17/70-C.E. The appellants argued that "Paushtik" was a low-cost nutrition food exclusively for free supply to school children and did not require mixing with or boiling in water. Despite their claim for exemption, both the Assistant Collector and the Appellate Collector ruled against them, citing the product's classification under Serial No. 14 of the notification's schedule.

Interpretation of Serial No. 14:
The Appellate Collector determined that "Paushtik" fell under Serial No. 14, which pertained to preparations that could be used for making beverages, invalid foods, and gruels by mixing with or boiling in milk or water. The Appellants contended that their product, being ready-to-eat and not necessitating mixing or boiling, did not align with the conditions specified in Serial No. 14. The Tribunal agreed, emphasizing that Serial No. 14 referred to products requiring mixing or boiling and did not encompass ready-to-eat items.

Classification Under Item 1B:
Another issue raised was the classification of the product under Item 1B of the Central Excise Tariff Schedule. The appellants argued that the polythene bags containing the product did not qualify as "unit containers" as required by Item 1B. However, this argument was not pivotal to the decision as the Tribunal focused on the product's exemption eligibility under Serial No. 14, thereby not delving into the container classification aspect.

Definition of "Unit Containers":
The appellants also contested that the packaging in polythene bags did not meet the criteria of "unit containers." This argument, if accepted, would have shifted the product's classification from Item 1B to Item 68 of the Tariff Schedule. Nonetheless, since the Tribunal's decision favored the appellants based on the Serial No. 14 interpretation, the issue of "unit containers" was not extensively addressed, and the appeal was allowed based on the exemption eligibility contention.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellants by accepting their argument that the product did not fall within the scope of Serial No. 14 of Notification No. 17/70. Consequently, the Tribunal directed the grant of consequential relief to the appellants, emphasizing the product's readiness-to-eat nature and its exemption from duty under the notification.