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TMI Blog1991 (12) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise, Kolhapur did not accept this and, after consulting the Chemical Examiner and issuing a show cause notice, and hearing them decided that it was correctly classifiable under Chapter Heading 2107.91. When the respondents herein went in appeal, Collector (Appeals) reversed the order and hence this appeal has been filed to the Tribunal. 3. The respondents had submitted a letter dated 14th July, 1987 to the Assistant Collector along with their Classification List in which they had given detailed justification for claiming the classification of the product under Chapter Heading 0404 and the relevant extracts from this letter are important for deciding the matter. These are as under :- "The product 'Surje' is a dietary supplement of superior proteins and is available in the pack of 210 ml for sale and the packs of 100 ml and 50 ml will be used for free samples. "We enclose herewith a specimen label of the product Surje for your kind perusal. "According to our perusal of Central Excise Tariff Act, 1985, the product Surje, a dietary supplement of superior proteins, does not have a corresponding entry for direct classification of the product. As per the Rules for the interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impart essential character to the product Surje. As whey proteins and casein peptides are solely derived from natural milk they are, therefore, covered under the Heading 04.04 in conjunction with Chapter Note 4. You will agree that as per Rule 3(a) or 3(b) of the product Surje is rightly classifiable under Heading 04.04, and therefore, there is no need to go to Rule 3(c) as per the Rules of interpretation given under the Act." 4. At the request of the Chemical Examiner, the respondents explained the method of manufacture of the product in their letter dated 23 March, 1988 along with which they forwarded an Annexure containing extracts from various printed literatures supported by photocopies of the printed literatures containing 14 exhibits from Exhibit 'A' to 'N'. It was claimed in this letter that these technical references support the fact that casein peptides and whey proteins are derived from natural milk and are the sources of superior protein, which is imparted to their product 'Surje'. 5. When the sample was sent to the Chemical Examiner, the request was for testing "for ascertaining the ingredients and percentage thereof." In his report dated 6th July, 1988, the Chemic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i.e., the natural constituents of milk which remain after the fat and casein have been removed). Whey may be in liquid, paste or solid (including frozen) form, whether or not part of the lactose or some minerals have been removed and may be concentrated (e.g., in powder) or preserved. "The heading also covers fresh or preserved products consisting of milk constituents, which do not have the same composition as the natural product, provided they are not specifically covered elsewhere. Thus, the heading includes products which lack one or more natural milk constituents have been added (to obtain, for example, a protein-rich product). "Apart from natural milk constituents and the additives mentioned in the General Explanatory Note to this Chapter, the products of this heading may also contain added sugar or other sweetening matter." "From the aforesaid description it is clear that the product under Heading 0404 apart from containing natural milk constituents (casein) and additives mentioned in the General Explanatory Notes (vitamins) they can also contain other constituent matter (sucrose/glycerol). Since the product manufactured by the appellants contains whey products, casein p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2107.91 - Edible preparations, not elsewhere specified or included put up in unit containers and ordinarily intended for sale. (f) 'Surje', not being basically a milk product/dairy produce and being sold as a dietary supplement containing proteins, vitamins and, in common parlance as a tonic in medical shops and not as a milk food in general stores/food parlours, it falls appropriately under sub-heading 2107.91. It is a preparation made by mixing proteins and other ingredients like vitamins, sorbitol, glycerol, sucrose etc., and contains 67% of other ingredients like vitamins, sorbitol, glycerol, water etc., not obtained from milk. 9. Arguing for the department, Shri L.C. Chakrabarty, the learned SDR, submitted that it was evident from the ingredients of Surje that Vitamins were not permissible additives in terms of Note (4) of Chapter 4 and by this criterion alone, this product would get excluded from Chapter Heading 0404. The only additives which were mentioned in Note (4) were (a) sugar or other sweetening matter or (b) flavoured or (c) containing fruit or cocoa. 10. To buttress his argument the learned SDR cited the decision of the Tribunal in the case of Dalmia Dairy In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read out Note (4) which was as under :- "4. Heading No. 0404 applies, inter alia, to butter milk, curdled milk, cream, yogurt, whey, curd, and products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter or flavoured or containing added fruit or cocoa." 15. He submitted that the expression 'natural milk constituent' had not been defined anywhere but a reference to it could be found in the Explanatory Notes of HSN on Chapter Heading 0404 which deals with whey in the following words :- "This heading covers whey (i.e., the natural constituents of milk which remain after fat and casein have been removed). 16. While referring to the principle of 'Noscitur a sociis' in interpretation of statutes, he submitted that the meaning of a word is to be judged by the company it keeps, and cited the decision of the Supreme Court in the case of Rohit Pulp & Paper Mills Ltd. v. Collector of Central Excise [1990 (47) E.L.T. 491] in which this principle was applied for interpreting the word 'coated paper' in the context in which it was used. Similarly, if the expression 'natural milk constituents' used in Note (4) extracted above is interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riff. 19. He explained with reference to ground (e) of the grounds of appeal that, being a dietary supplement, 'Surje' would fall under Section IV because of Note 1(a) to Chapter 30 alone. 20. Shri Chakrabarty thereafter cited the decision of the Tribunal in the case of Collector of Central Excise, Pune v. Frozen Foods (P) Ltd. [1987 (27) E.L.T. 195] about the classification of a product called 'SPERT' which was composed of the following ingredients :- (a) Liquid glucose - 40.30 gms. (b) Skimmed milk powder - 24.30 gms. (c) Calcium caseinate - 18.00 gms. (d) Malt extract - 5.30 gms. (e) Sugar - 10.00 gms. (f) Vitamins cand - 1.10 gms. 21. This product was not considered to be a preparation with a basis of malt extract and milk foods but a protein rich concentrated nutrient supplementary food. 22. Inviting reference to Note 5(a) of Chapter 21, Shri Chakrabarty submitted that the product 'Surje' was a protein concentrate inasmuch as 2.0 gms. of protein was contained in each 15 ml. (one table spoonful) of 'Surje' according to the indication on the label itself. 23. Arguing on behalf of the respondents, Shri V. Lakshmi Kumaran, the learned counsel, submitted that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tariff Act. He claimed that it was incorrect to say that Central Excise Tariff Act has discarded the General Explanatory Note of HSN. (d) The Governing principles of classification of goods under Chapter 4 are - (a) whether the product consists of natural milk constituents; (b) whether it has any additives which are permitted under Chapter Note or the Explanatory Notes of HSN. If the product consists of ingredients not permitted in this manner, the product would merit classification elsewhere in the tariff. (e) According to Shri Lakshmi Kumaran's interpretation, natural milk constituents will mean constituents of natural milk and not natural constituents of milk. Natural milk for the purpose of Chapter Note will mean milk from animal origin as compared to soya milk, coconut milk etc., which are all of vegetable origin. The argument that casein peptides are far remote from constituents of natural milk and hence 'Surje' is not covered under Chapter 0404 is not correct. This argument was made without prejudice to the submission that casein peptides and whey proteins are constituents of natural milk. Elaborating Shri Lakshmi Kumaran stated that whey protein is a milk constituent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given liberal interpretations to cover all products in all forms and species and the use of the word "inter alia" in Note (4) itself suggests that the heading is not exhaustive. For this purpose, he placed reliance on the judgment of the Tribunal in the case of The Western India Plywood Ltd. v. Collector of Central Excise, Cochin [1985 (19) E.L.T. 590]. He also relied on the judgment of the Supreme Court in the case of State of Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610] to support the view that the doctrine of 'nosciter a sociis' could not apply to situations of the type under consideration. In view of these arguments, Shri Lakshmi Kumaran submitted that since 'Surje' was specifically covered under Heading 0404 the question of classifying it under Heading 21.07 did not arise, because the latter heading would cover only those preparations which are not covered under any other heading. He also refuted Shri Chakrabarty's argument about the distinction between 'products' and 'preparations' by saying that the department itself had accepted in its appeal memorandum that Shrikhand and Peda are covered under Heading 0404. This was also confirmed by the tariff advice of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation, additional new ground not set out earlier could even beraised for the first time before the Tribunal. For this purpose, he referred to the decision of the Tribunal in the case of Collector of Central Excise, Calcutta v. Shalimar Paints Ltd., Howrah [1987 (29) E.L.T. 1001]. He also submitted that the Central Excise Tariff ACT would prevail over the HSN and its Explanatory Notes in the matter of classification under the Central Excise Tariff Act. 25. He refuted Shri Lakshmi Kumaran's argument that just because vitamins added in the product 'Surje' are also contained in milk, it does hot automatically follow that such a product would be covered by the words "natural milk constituents". Shri Chakrabarty contended that the respondents had to show that the vitamins in 'Surje' are natural milk constituents - a claim which was never made.,' In fact the respondents' claim is that no matter from which source the vitamins came, as long as they can show that milk also contains the same vitamins, the respondents are entitled to add such vitamins to the product.' 26. In the expression 'natural milk constituents', Shri Chakrabarty explained, the .word 'milk' was used as an adjective and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product would go out of Chapter 4 which was not part of Section IV. 29. Refuting the argument of Shri Lakshmi Kumaran about the ratio of the Supreme Court decision in the case of Collector of Central Excise v. Protein Products of India (supra) that Ossein and Gelatin obtained by Chemical treatment of bones were covered by the term "bone products", he submitted that while ossein was a straight product, 'Surje' is a composite product. He therefore, thought that the ratio of this judgment as well as that of the AP Rice Bran case (supra) were not applicable to 'Surje'. He explained that the expression used in Notification No. 55/75 which was the subject-matter of interpretation by the Supreme Court Protein Product's case, was 'bone products' and not 'natural bone products', whereas the expression used in Note 4 is 'natural milk constituents'. 30. Referring to the plea of Shri Lakshmi Kumaran that 'Surje' was a product of animal origin, Shri Chakrabarty submitted that this was not so because it is not made from animal origin, but was a composite product. He referred, for this purpose to Explanatory Note of HSN to Chapter Headings 0407 to 0410 which related to products of animal-origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in shell and egg yolks, fresh, dried, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved whether or not containing added sugar or other sweetening matter 04.09 Natural honey 04.10 Edible products of animal origin not elsewhere specified or included 35. A comparison of the two shows that - (a) Chapter 4 of HSN specifically mentions certain additional items viz., Birds eggs and Natural Honey by name and (b) Birds eggs are covered by Headings 0407 and 0408 and Natural Honey by Heading 0409, whereas these items are not specifically mentioned in Chapter 4 of Central Excise Tariff; nor are there any sub-headings for them. (c) Whereas Heading 0403 of HSN covers products like butter milk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream and there is a separate Heading 0404 for (i) whey and (ii) products consisting of natural milk constituents and yet another Heading 0410 for "edible products of animal origin not elsewhere specified", in HSN, in the Central Excise Tariff Heading 0404 practically covers all the items of these three headings of HSN viz., 0403, 0404 and 0410. Another difference which is of significa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal form. The heading is "Edible products of animal origin, not elsewhere specified or included." The Explanatory Note says that this heading covers products of animal origin suitable for human consumption not specified or included elsewhere in the Nomenclature. The examples given are those of turtles' eggs and salanganes' nests. We could include in this heading other items - birds eggs and natural honey - which find separate mention in the HSN - in the Central Excise Tariff because of the merger of Headings 0407, 0408, 0409 and 0410 into one sub-heading 0404.10 in the Central Excise Tariff. Thus, a product like 'Surje' would not be classified as an edible product of animal origin under sub-heading 0404.10 of the Central Excise Tariff and Chapter Note (4) would not extend to the edible products of animal origin. 37. This is the conclusion to which we are led by a plain comparison of the entries in the Central Excise Tariff and the HSN to which our attention was invited by the learned SDR as well as by Shri Lakshmi Kumaran. 38. We now proceed to take up the other points raised by Shri Lakshmi Kumaran during the hearing and incorporated in his written note of propositions on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng constituents of milk would come under the category of products of animal origin. While this may be generally true, what is to be remembered is that for the purpose of tariff classification under the Chapter (4), a clear distinction has been made between dairy produce which covers milk and milk products on the one hand and 'edible products of animal origin' on the other. While milk and cream, butter and cheese have been separately classified under Headings 04.01 to 04.03 of the Central Excise Tariff, the 'other dairy produce' and 'products of animal origin' have been put together under Heading 0404. Here again, Note (4) specifically refers to products like butter milk, curdled milk, cream, yogurt, whey, curd and products consisting of natural milk constituents as distinct from edible products of animal origin. This distinction for purposes of tariff classification is quite clear although, as we have indicated above, milk being a product of animal origin, it maybe otherwise considered to be product of animal origin. Once this distinction is clearly understood, it would be easy to see how the principles of 'nosciter a sociis' propounded by the Supreme Court in the case of Rohit Pul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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