TMI Blog2012 (12) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... or technical terms, then, interpretation ought to be in accordance with the scientific and technical meaning and not according to common parlance understanding. Tribunal erred in law in classifying ‘soft-serve’ under tariff sub-heading 2108.91, as “Edible preparations not elsewhere specified or included”, “not bearing a brand name”. We hold that ‘soft serve’ marketed by the assessee, during the relevant period, is to be classified under tariff sub-heading 2105.00 as “ice-cream”. Regarding alternate plea - assessee contended that in the event ‘soft serve’ was classifiable under heading 21.05, the assessee was entitled to the benefit under Notification No. 16/2003-CE (NT) dated 12th March 2003. - held that:- We are afraid we are unable to take this argument into account since such a plea was not urged before the Tribunal in the first place. Given that this is a statutory appeal under Section 35L of the Act, it is not open to either party, at this stage of the appeal, to raise a new ground which was never argued before the Tribunal. Even if we assume that this ground had been urged before the Tribunal, in our view, learned counsel’s reliance on this notification is misplac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -make vending machine; further cooled along with the infusion of air, and finally, the end product, soft serve , was drawn through the nozzle into a wafer cone or in a plastic cup and served to the customers at the outlet. 3. For the periods from April 1997 to March 2000, three show cause notices came to be issued to the assessee. These alleged that the soft serve ice-cream was classifiable under Chapter 21, relating to Miscellaneous Edible Preparations of the Tariff Act, attracting 16% duty under heading 21.05, sub-heading 2105.00 - Ice-cream and other edible ice, whether or not containing cocoa . Invoking the proviso to sub-section (1) of Section 11A of the Act, additional duty was also demanded. A proposal for imposing penalty on the assessee and on their Managing Director was also initiated. 4. While adjudicating on the first show cause notice, vide order dated 31st May, 2000, the adjudicating authority held that : soft serve was classifiable under heading 04.04. Describing the goods as other dairy produce; edible products of animal origin, not elsewhere specified or included , it held that the process undertaken by the assessee amounted to manufacture and the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in the case of Shree Baidyanath Ayurved Bhavan Limited case is not applicable to the facts of the present matter. The dispute in the said case was as to whether the Dant Manjan Lal is Ayurvedic medicine or Tooth Powder . In that context, the Supreme Court observed that resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, which does not mean that if a particular product is not ice-cream it can be classified as ice-cream because some consumers treated it as ice-cream. Accordingly, the product in question is not classifiable under Heading 21.05 of the Central Excise Tariff. 6. It is manifest that the Tribunal based its conclusion on the technical meaning and specifications of the product ice-cream , stipulated in the Prevention of Food Adulteration Act, 1955 (for short the PFA ) and rejected the common parlance test, viz. the consumers understanding of the product. Being aggrieved by the said approach, the revenue is before us in these appeals. 7.Mr. Arijit Prasad, learned counsel appearing for the revenue, submitted that the enquiries conducted by the revenue revealed that in common tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test. The main thrust of the submission of the learned counsel was that if the assessee markets soft serve as ice-cream , they will be liable to prosecution under the PFA, because the milk fat content in soft serve is less than 10%, a statutory requirement for manufacture of ice-cream . In support of the submission, learned counsel commended us to the decision of this Court in State of Maharashtra Vs. Baburao Ravaji Mharulkar Ors.(1984) 4 SCC 540, wherein it was held that a person selling ice-cream with 5% milk fat content instead of minimum 10% milk fat, was selling adulterated ice-cream and was liable to prosecution. Reliance was also placed on the decision of this Court in Akbar Badrudin Giwani Vs. Collector of Customs, Bombay (1990) 2 SCC 203, to contend that in matters pertaining to classification of a commodity, technical and scientific meaning of the product is to prevail over the commercial parlance meaning. 10. Lastly, Mr. V. Lakshmi Kumaran urged that even if we were to hold that soft serve is an ice-cream , under notification No.16/2003-CE (NT) dated 12th March, 2003, granting exemption to softy ice-cream dispensed through a vending machine, issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading 04.04 have been couched in general terms with wide amplitude. Chapter note 4 reads: 4. Heading No. 04.04 applies, inter alia, to buttermilk, 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 and includes fats and oils derived from milk (e.g. milkfat, butterfat and butteroil), dehydrated butter and ghee. 14. On the other hand, Chapter 21 of the Act is applicable to Miscellaneous Edible Preparations . Heading 21.05 refers to ice-cream and other edible ice . It is significant to note that none of the terms have been defined in the chapter. Further heading 2108.91 is a residuary entry of wide amplitude applicable to edible preparations, not elsewhere specified or included and not bearing a brand name . 15. According to the rules of interpretation for the First Schedule to the Tariff Act, mentioned in Section 2 of the Tariff Act, classification of an excisable good shall be determined according to the terms of the headings and any corresponding chapter or section notes. Where these are not clearly determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it produces manifest absurdity or unjust result. In Manmohan Das v. Bishun Das : 1 SCR 836, a Constitution Bench held as follows: The ordinary rule of construction is that a provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out. 17. Therefore, in order to find an appropriate entry for the classification of soft serve , it would be necessary to first construe the true scope of the relevant headings. As noted above, none of the terms in heading 04.04 and heading 21.05 have been defined and no technical or scientific meanings have been given in the chapter notes. Evidently, soft serve is not defined in any of the chapters aforesaid. Under these circumstances, it becomes imperative to examine if the subject good could come under the purview of any of the classification descriptions employed in the Tariff Act. Having regard to the nature of the pleadings, the issue is whether the term ice-cream in heading 21.05 includes within its ambit the product soft se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of everyday use it must be construed in its popular sense meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. 21. In Commissioner of Sales Tax, Madhya Pradesh Vs. Jaswant Singh Charan Singh (1967) 2 SCR 720, the Court had to decide whether charcoal could be classified as coal under Entry I of Part III of Schedule II of the Madhya Pradesh General Sales Tax Act, 1958. Answering the question in the affirmative, it was observed as follows: 3. Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is now well-settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense XXX XXX XXX XXXX 5. The result emerging from these de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be vegetable or fresh fruit much less a green fruit. No householder would purchase it as a fruit. Therefore, the meaning of the word brown coconut , and whether it was a green fruit, had to be understood in its ordinary commercial parlance. Accordingly it was held that brown coconut would not be considered as green fruit. 24. In Indian Aluminium Cables Ltd. Vs. Union of India Ors.(1985) 3 SCC 284, this Court observed the following: This Court has consistently taken the view that, in determining the meaning or connotation of words and expressions describing an article in a tariff schedule, one principle which is fairly well settled is that those words and expressions should be construed in the sense in which they are understood in the trade, by the dealer and the consumer. The reason is that it is they who are concerned with it and, it is the sense in which they understand it which constitutes the definitive index of the legislative intention . 25. In Collector of Central Excise, Kanpur Vs. Krishna Carbon Paper Co. (1989) 1 SCC 150, this Court has opined thus: 12. It is a well settled principle of construction, as mentioned before, that where the word has a scie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96) 9 SCC 402, at page 404 this Court while applying the common parlance test held that the appellant s product Dant Lal Manjan could not qualify as a medicament and held as follows: The Tribunal rightly points out that in interpreting statutes like the Excise Act the primary object of which is to raise revenue and for which purpose various products are differently classified, resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, that is to say the meaning attached to them by those using the product. It is for this reason that the Tribunal came to the conclusion that scientific and technical meanings would not advance the case of the appellants if the same runs counter to how the product is understood in popular parlance. 29. In Naturalle Health Products (P) Ltd. Vs. Collector of Central Excise, Hyderabad (2004) 9 SCC 136, two appeals were under consideration. One was with respect to Vicks Vapo Rub and Vicks Cough Drops while the other was with respect to Sloan's Balm and Sloan's Rub. It was observed that when there is no definition of any kind in the relevant taxing statute, the articles enumerated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles, we may now advert to the question at hand, viz. classification of soft serve under the appropriate heading. As aforesaid, the Tribunal has held that in view of the technical literature and stringent provisions of the PFA, soft serve cannot be classified as ice-cream under Entry 21.05 of the Tariff Act. We are of the opinion, that in the absence of a technical or scientific meaning or definition of the term ice-cream or soft serve , the Tribunal should have examined the issue at hand on the touchstone of the common parlance test. 33. As noted before, headings 04.04 and 21.05 have been couched in non-technical terms. Heading 04.04 reads other dairy produce; edible products of animal origin, not elsewhere specified or included whereas heading 21.05 reads ice-cream and other edible ice . Neither the headings nor the chapter notes/section notes explicitly define the entries in a scientific or technical sense. Further, there is no mention of any specifications in respect of either of the entries. Hence, we are unable to accept the argument that since soft serve is distinct from ice-cream due to a difference in its milk fat content, the same must be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice cream , would make their product stand foul of requirements of the PFA which demands that an ice-cream must have at least 10% milk fat content. 36. Such a hard and fast definition of a culinary product like ice- cream that has seen constant evolution and transformation, in our view, is untenable. Food experts suggest that the earliest form of ice cream may have been frozen syrup. According to Maguelonne Toussaint-Samat in her History of Food, They poured a mixture of snow and saltpeter over the exteriors of containers filled with syrup, for, in the same way as salt raises the boiling-point of water, it lowers the freezing-point to below zero. The author charters the evolution of ice cream in the landmark work from its primitive syrupy form to its contemporary status with more than hundred different forms, and categorizes soft serve as one such form. 37. Noted author C. Clarke states the following in The Science of Ice Cream : The legal definition of ice cream varies from country to country. In the UK ice cream is defined as a frozen food product containing a minimum of 5% fat and 7.5% milk solids other than fat (i.e. protein, sugars and minerals), which is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rentiate their products on the basis of subtle and finer characteristics; it has tried understanding a good in the way in which it is understood in common parlance. 39. Learned counsel for the assessee had strongly relied on Akbar Badrudin Giwani (supra) to buttress his claim, that in matters pertaining to classification of commodity taxation, technical and scientific meaning of the product will prevail rather than the commercial parlance, and hence on this basis, headings 04.04 and 21.05 were to be harmoniously construed so that soft serve would be classified under heading 04.04. We are afraid, reliance on this judgment is misplaced and out of context. It would be useful to draw a distinction between the contexts of Akbar Badrudin Giwani (supra) and the present factual matrix. 40. In Akbar Badrudin Giwani (supra) the issue was whether the slabs of calcareous stones (which were in commercial parlance known as marble) being imported by the Appellant were to be regarded as marble under Item No. 62 of the List of Restricted Items, Appendix 2, Part 8 of Import and Export Policy given that Item No. 25.15 (Appendix 1-B, Schedule I to the Import (Control) Order, 1955 referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l meaning of the entries does not arise at all. Hence, we are of the opinion that the ratio of Akbar Badrudin Giwani (supra) does not apply to the facts of the present case. 42. Learned counsel for the assessee had vociferously submitted that the common parlance understanding of ice-cream can be inferred by its definition as appearing under the PFA. According to Rule A 11.20.08 the milk fat content of ice-cream and softy ice-cream shall not be less than 8% by weight. Hence, according, to the learned counsel, the term ice-cream under heading 21.05 had to be understood in light of the standards provided in the PFA, more so when selling Ice-cream with fat content of less than 10% would attract criminal action, as held in Baburao Ravaji Mharulkar (supra). 43. We are unable to persuade ourselves to agree with the submission. It is a settled principle in excise classification that the definition of one statute having a different object, purpose and scheme cannot be applied mechanically to another statute. As aforesaid, the object of the Excise Act is to raise revenue for which various goods are differently classified in the Act. The conditions or restrictions contemplated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The same is reproduced below: Classification of Softy Ice Cream being sold in restaurant etc. dispensed by vending machine [ Mumbai Commissionerate IV Trade Notice No.45/2001, dt. 11.6.2001] Ice Cream dispensed by vending machine falling under chapter 21 has been made liable to nil rate of duty vide Sl. No.8 of Notification No.3/2001-CE dated 1.3.2001. Doubts have been raised as regards to the classification of softy ice cream/soft serve dispensed by vending machine and soft serve mix used for its manufacture prior to 1.3.2001. A manufacturer was obtaining soft serve mix and processing it in his restaurant for manufacture of softy ice cream. The process involved lowering of temperature so that it changes its form from liquid to semi-solid state and incorporation of air, which results in production of overrun, in Tylor Vending Machine. The product that emerges after this process is a completely different product and is ready to be consumed immediately. It has all the ingredients of an ice cream. The product is sold and consumed as ice cream. In the circumstances, it is clarified by the Board that softy ice cream is correctly classifiable under heading 21.05 of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the powers conferred by section 11C of the said Act, the Central Government hereby directs that the whole of the duty of excise payable on such softy ice cream and non alcoholic beverage dispensed through vending machines, but for the said practice, shall not be required to be paid in respect of such softy ice cream and non alcoholic beverages on which the said duty of excise was not being levied during the aforesaid period in accordance with the said practice. 48. We are afraid we are unable to take this argument into account since such a plea was not urged before the Tribunal in the first place. Given that this is a statutory appeal under Section 35L of the Act, it is not open to either party, at this stage of the appeal, to raise a new ground which was never argued before the Tribunal. Our scrutiny of the arguments advanced has to be limited only to those grounds which were argued by the parties and addressed by the Tribunal in its impugned order. Since, the impugned orders at hand do not reflect the argument raised by the learned counsel for the assessee; we do not find any justification to entertain this submission. Nonetheless, for the sake of argument, even if we as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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