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TMI Blog2007 (2) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and appropriated Rs. 15 lakhs towards value of some quantity of the impugned product seized and provisionally released earlier, under Rule 25 of the Central Excise Rules, 2002. 2. The facts of the case are that following investigation by the officers of the Commissionerate, it was tentatively found that the assessee had manufactured and cleared the product "Indian Noni" classifiable as a food preparation under CSH 210899 and 21069099 (after 28-2-2005) of the Central Excise Tariff Act without payment of duty from 2003 onwards. On receipt of the Show Cause Notice, the assessee had contested the proposals on the ground that the impugned juice was made from fruits of morinda citrifolia, garcinia cambogia and leaves of stevia. The process of manufacture involved steam boiling, filtering, deaeration and homogenization of the above ingredients and adding of preservatives citric acid, sodium benzoate and and flavours like sorbitol before packing the juice in pet bottles. No vitamins, minerals or micronutrients were added. They stated that a food supplement was a food stuff, with added vitamins whereas their product was food like any other fruit juice. They argued that the product obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l medicine in several countries used to treat various diseases. It was eaten by people in some African countries during times of famine. The other ingredient carcinia cambogia (Malabar tamarind) was grown in Asia and had several medicinal uses. Stevia, the third major ingredient, also called sweet leaf, was a sweetener widely used in several countries and was found useful in treating obesity, high blood pressure and hypertension. 4. The Commissioner recorded the process of manufacture in the impugned order as follows :- 'The basic raw materials Morinda Citrifolia (in the form of pulp or powder) and extracts of Garcinia Cambogia and Stevia are mixed together and : led in a kettle to 100 degree centigrade to obtain a decoction and the obtained decoction is passed through a pipeline into sedimentation tanks to remove the sediments and the decoction is filtered and passed into mixing tanks where preservative citric acid, sodium benzoate and sorbitol are added and mixed thoroughly and passed through a filter for proper filtration and the filtered decoction is stored in filter tanks for sometime and homogenized through a homogenizer and the homogenized liquid is filled into pet bottles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not covered under Chapter 20. Food preparations made by boiling the mixture of raw materials were not covered under Chapter 20. These were appropriately covered under Chapter Heading 21.06. 4.3 The cartons and labels advised dosages such as 5 ml twice daily for the first three days, 10 ml twice daily for the next three days and 15 to 30 ml twice daily from the 7th day onwards . This showed that the product was not fruit juice. The requirement to acclimatize the consumer's system to the drink (as advised in the "Directions for Drinking" supplied by the assessee), by the use of small incremental doses initially was not there in the case of normal fruit juices. The literature enlisted side effects which were also not attributable to normal fruit juice meant for consumption by everyone. In commercial parlance the product was not known/sold/purchased as a fruit juice but was marketed as a natural herbal food supplement. Therefore, the item was classifiable as food supplement under CH 21.06. The Commissioner cited the following notes from HSN notes under Chapter 30.04 in support of his finding that the impugned product fell under Chapter Heading 21.06. "Further this heading excludes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or included" in the residuary Chapter Heading 2106.99 upto the period 27-2-2005 and under Tariff item 2106.90.99 from 28-2-2005 onwards under the I Schedule to CETA, 1985. 4.5 The Commissioner found that the appellants had failed to observe various Central Excise formalities after crossing turnover of Rs. 40 lakhs in the years 2004-05, 2005-06, and 2006-07. He also observed that even if the item was classified as fruit juice, the same was dutiable during 2005-06. The assessee had deliberately suppressed facts relating to manufacture and clearance of dutiable goods with intent to evade payment of duty. Therefore, extended period was found invokable. The goods seized and provisionally released earlier was liable for confiscation. He found that the appellants were eligible for Cenvat credit of duty paid on the inputs. Accordingly he passed an order demanding an amount of Rs. 4,93,87,230/- being duty and cess payable on the product cleared by the assessee during the years 2004-05, 2005-06 and 2006-07 (upto 25-4-2006) under Section 11A of the Act and imposed a penalty of equal amount under Section 11AC of the Act. The order directed recovery of interest of Rs. 27,02,035/- under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssify products where the entries in the HSN and the CETA schedule were pari materia. He also cited the decision of the Apex Court in Akbar Badruddin Jiwani [1990 (47) E.L.T. 161 (S.C.)] to buttress the claim that when the rival entries were scientific in the HSN, a technical and scientific approach had to be followed. Therefore common parlance test could not be applied in the instant case. Several judgments were cited in support of the plea that specific entry had to be preferred to a residuary entry in classifying goods. 8. The appellants sought support for classification of the impugned product under Chapter heading 20.09 from the case law Forever Living Health v. CCE, Mumbai-I, 2006 (193) E.L.T. 45 (Tri.-Mumbai)]. In that case the disputed products were (i) vegetable juice and (ii) a mixture of fruit and vegetable juices. The goods had not been tested. As there was no material to conclude that vitamins were added to the products and since the product was not basically a protein, fat or carbohydrate or mix of two or more of these, the goods were decided to be not a food supplement. Therefore, the items were decided to fall under heading 2009.80 /2009.90 9. The learned SDR refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and extracts of garcinia combogia and stevia together at 100 degrees centigrade. Citric acid, sodium benzonate and sorbitol are added to the filtered decoction. The resultant product is filtered and homogenized in a homogenizer to obtain the final product. Indian Noni is rich in vitamins minerals and contained small amounts of proteins, carbohydrates and fat. 12. The assessee had claimed through its literature that the product had several curative properties against various diseases, it developed immunity in a person against major diseases and enhanced health and well being. Fruit juice is not prepared by boiling fruit extracts like in the instant case. The main raw material is not an edible fruit. Food preparations based on the essences of fruit powder mixture (Noni being predominant) are not covered under Chapter 20. 13. The peculiar consumption pattern of incremental initial doses before the consumer got used to the supplement as advised in the leaflet "Directions for Drinking" supplied by the manufacturer showed that Indian Noni is consumed as a health tonic. The consumer is advised to take the drink half an hour before on empty stomach as if it is tonic. Normal fruit juice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule." 17. In view of the two entries claiming the product for classification in either, common parlance test and trade understanding cannot be resorted to in classifying the product in the instant case. Classification has to be necessarily guided by HSN explanatory notes and common parlance test has to be discarded. 18. During the material period upto 27-2-1985, chapter heading 20 in both the CETA and HSN read as follows: 20 : "Preparations of vegetables, fruit, nuts or other parts of plants". During this period, heading 20.01 of the CETA Schedule read as under: 2001 : Preparations of vegetable, fruit, nuts, or other parts of plants, including jams, fruit jelly, marmalades, fruit or nut, puree, and fruit and nut paste, fruit ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Soft drink concentrates : 2106 90 11 Sharbat Kg 16% 2106 90 19 Other Kg 16% 2106 90 20 Pan masala Kg 37.5% 2106 90 30 Betel nut product known as "Supari" Kg 16% 2106 90 40 Sugar-syrups contaning added flavouring or colouring matter, not elsewhere specified or included; lactose syrup, glucose syrup and malto dextrine syrup Kg 16% 2106 90 50 Compound preparations for making non-alcoholic beverages Kg 16% 2106 90 60 Food flavouring material Kg 16% 2106 90 70 Churna for pan Kg 16% 2106 90 80 Custard powder Kg 16% Other 2106 90 91 Diabetic foods Kg 16% 2106 90 92 Sterilized or pasteurized miltone Kg Nil 2106 90 99 Other Kg 16% 20. The heading 21.06 of Central Excise Tariff covers different entries including diverse food preparations such as protein concentrates, pan masala, supari, choorna for pan, diabetic foods etc. The classification decided by the Commissioner is 21069099 under 'sub-heading 210690 - Other', the lone preceding sub-heading in the chapter sub-heading 21.06 being protein concentrates and textured protein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionally accepted nomenclature emerging from the HSN. This being the expressly ac knowledged basis of the structure of Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of 'Terms has a different purpose and, therefore, the of specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, in case of any difference between the meaning of the expression given in the HSN and the meaning of that term given in the Glossary of Terms of the ISI." 14. It is further observed in Para 18: "…Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian Tariff of a different intention." 21. HSN Explanatory Note (16) under sub-heading 21.06 reads as follows :- "Preparations, often referred to as food supplemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter subheading 21.06 concludes with the following note: "The heading further excludes preparations made from fruits, nuts or other edible parts of plants of heading 20.08 provided that the essential character of the preparations is given by such fruit, nuts or other edible parts of plants (heading 20.08)." 23. As per the above exclusion under Note (16) of heading 21.06, preparations made front fruit, nuts or other edible parts or plants of heading 20.08 are not covered by heading 21.06 provided that the essential character of the preparations is given by such fruit, nuts, or other edible parts of plants. This fortifies the finding that Indian Noni is a fruit juice falling under 20.09 as fruits and vegetables give essential character to the preparation. It cannot be denied that the essential character of the product is given by the fruits Noni, Garcinia and the Stevia leaves. 24. In view of our analysis and finding as above, we hold that the product in question is rightly classifiable under Chapter Heading 20.09 (upto 27- 2-2005) and under Heading 20099000 of the Central Excise Tariff for the remaining period. The appeal therefore succeeds and is allowed. 25. Since we have a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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