TMI Blog2018 (1) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the general word 'others' cannot be understood as enlarging the scope of the entry, but is one restricting the inclusion to 'vanaspati' alone which is a hydrogenated vegetable oil. Though the inclusion of vanaspati does not restrict the more general commodities included in the entry; there cannot be a further expansion or enlargement inferred. Clause (b) of item 3 of the General Rules for the Interpretation of the Schedule under the First Schedule - Import Tariff would be applicable only if the commodity 'cannot be classified by reference to (a)', which is the specific words used in that sub-clause. Clause (a) provides for classification under the heading which gives a specific description which has to be preferred, to headings providing a more general description. HSN heading 1516 provides for inter alia hydrogenated vegetable oils which are not prepared and HSN heading 1517 provides for edible mixture or preparations inter alia of vegetable oils other than edible oils and their fractions under HSN heading 1516. 'Bakery shortening' being a preparation of hydrogenated vegetable oils, it cannot be included under HSN heading 1516 nor under the category 1516.20.91; the HSN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious periods) under the residual entry of S.R.O No. 82/2006. 3. The learned Counsel for the appellant argued in tune with the contention taken by the assessee before the Clarification Authority. Reference is made to Entry 38(18)(d) to contend that, if at all, it is not vanaspati, it would fall under the 'other' category, as mentioned in the Entry, again, exigible to tax only @ 5%. The Clarification Order is challenged on the ground that it has relied on the judgment of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), which had ignored the decision of a co-ordinate Bench of the same Tribunal, taking a contrary stand with respect to the clarification of 'bakery shortening'. It is also argued that M/s Shree Gopal Vanaspati Ltd. v. C.C.(ICD), New Delhi - 2014 (4) ECS (224) (Tri-Del.), the decision relied on by the Tribunal, has relied on the dictionary definition, when there was a statutory definition available under the Food Safety and Standards Act, 2006 ('FSS Act' for short). It is also submitted that the explanatory notes to the HSN numbers, as extracted in M/s Shree Gopal Vanaspathy Ltd. is not available in any text, despite fervent s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .20.91 and there is no scope for inclusion of the product having the essential characteristics of 'vanaspati' in the residual entry under S.R.O. No.82/2006. It is also argued that when two interpretations are possible, the one favouring the assessee should be adopted. 6. The learned Government Pleader would, however, specifically refer to the Rules of Interpretation under the Customs Act, to contend that Section 3(b) would be applicable only when Section 3(a) is not attracted. Section 3(a) speaks of the heading which provides the specific description which has to be preferred, to headings providing a more general description. Attention is drawn to the HSN headings 1516 and 1517 under the Customs Act to contend that what is included in heading 1516 is only hydrogenated, inter-esterified, re-esterified or elaidinised vegetable fats and oils which are not subjected to further preparation. 'Vanaspati', being an hydrogenated vegetable oil, would fall under heading 1516. However, 'bakery shortening' is a product derived by a preparation of mixture of hydrogenated vegetable oils, as is admittedly conceded by the applicant before the Clarification Authority, as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) HSN Codes 1516 and 1517 of the Customs Tariff Act, 1975 are extracted here under : 1516 Animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, reesterified or elaidinised, whether or not refined, but not further prepared 1516 10 00 - Animal fats and oils and their fractions 1516 20 - Vegetable fats and oils and their fractions: --- Cotton Seed Oil: 1516 20 11 ---- Edible grade 1516 20 19 ---- Other --- Groundnut oil: 1516 20 21 ---- Edible grade 1516 20 29 ---- Other --- Hydrogenated castor oil (opal-wax): 1516 20 31 ---- Edible grade 1516 20 39 ---- Other --- Other: 1516 20 91 ---- Edible grade 1516 20 99 ---- Other xxx xxx xxx 1517 Margarine; edible mixture or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516 1517 10 - Margarine, excluding liquid margarine: 1517 10 10 --- Of animal origin --- Of vegetable origin: 1517 10 21 ---- Edible grade 1517 10 22 ---- Linoxyn 1517 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods. ( b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. 9. From the decisions cited at the Bar the law discernible is thus : (i). M/s.Adani Wilmar Ltd was concerned with the import of bakery shortening and the exemption claimed classifying the goods under Chapter Heading 1516.20.91. The Department re-classified the goods under Chapter Heading 1517 and denied the benefit of exemption. The Department, as in the present case, contended that bakery shortening undergoes a further preparation for the purpose of texturation and hence cannot be classified under Heading 1516 and falls under Heading 1517. The Tribunal, on a reading of the HSN notes, found that the products under heading 1516 are wholly and partly hydrogenated oils which are used as constituents in the preparation of edible fats of Chapter heading 1517. Bakery shortening , according to the Tribunal, merite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ISI Glossary of Terms in that context was found to be for a different purpose and when there is any conflict, the meaning of the item as available from the HSN was to be preferred. The subject goods were found to be diluted AVP PVA as the test reports indicated that the chemical composition remained unaltered by the dilution. The description of goods being as identical to the HSN classification, the user test was irrelevant, as held in CCE Vs. Mannampalakkal Rubber Latex Works 2015 (7) SCC 124. The Court categorically held that there was hence no scope to consign the classification to the residual entry. 10. The appellant had specifically referred to the definitions under the FSS Act to contend that vanaspati and bakery shortening are one and the same product. Hydrogenated vegetable oils are included under Regulation 2.2.6 of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 ( FSS Regulations for short). Vanaspati , according to the FSS Regulations, means any refined edible vegetable oil, subjected to a process of hydrogenation in any form or chemical or enzymatic inter-esterification. Clause 2 under Regulation 2.2.6 refers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en there is a definition in the Statute itself. In Ponds India Limited the question was as to taxation of petroleum jelly, whether it be a drug or cosmetic within the meaning of the provisions of the U.P. Trade Tax Act. The word 'drug' or 'cosmetic' had to be understood under the provisions of the Drugs and Cosmetics Act, 1940 and the statutory definition therein was specifically referred to by the Hon'ble Supreme Court. We cannot understand the dictum as laying down that the definition from a totally unconnected statute should be taken for the purpose of understanding the nature and character of the goods, which has not been specifically defined in the taxing statute. In the instant case, there is no definition of 'bakery shortening' either in the KVAT Act or in the Customs Tariff Act. The definition relied on by the appellant is under the FSS Regulations and the Vegetable Oil Order. 13. The FSS Regulations and the Vegetable Oil Order define 'bakery shortening' as vanaspati. Under the FSS Regulations, regulation 2.2 speaks of 'fats, oils and fat emulsions'. Regulation 2.2.6 speaks of hydrogenated vegetable oils, wherein both 'va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of regulation intended by the Vegetable Oil Order, the products are treated as similar. This does not necessarily bring out the identity of the products. We do not find any assistance from the definitions in the FSS Regulations or the Vegetable Oil Order. We are also of the opinion that we need not look at the dictionary meaning since, as has been held in Ponds India Limited , reference to the dictionary meaning, technical meaning, users' point of view and popular meaning etc has to be resorted to only if there is an ambiguity in the definition as per the taxing statute. 16. Before looking at the entries available under the taxing statute, we have to keep in mind the principle of taxation, that even commodities which are in common parlance or on aspects of utility similar, can be classified differently and made exigible to different rates of tax; the elbow room for which is available to the legislature. Consideration has to be made of the Entry under the KVAT Act, on the basis of the 'Rules of Interpretation of Schedules' under the KVAT Act. Rule (iii) makes it clear that commodities which are given four digit HSN number shall include all those commodities coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowed by narrower words suggesting a genus more limited than the initial general words, if taken by themselves, would indicate. The question is however, as always, one of the legislator's intention. COMMENT ON CODE S 384 Where apparently wide words are followed by terms indicating a narrower genus, this may suggest an intention to curtail the width of the initial words. Nevertheless the courts have been reluctant to treat this as an instance of the ejusdem generis principle. Craies goes so far as to state that 'There cannot be an inverse application of the rule'.3 He cites as authority a dictum of Cohen L J: 'I have never heard before of an inverse application of the ejusdem generis rule and I think it would be very dangerous here to attempt to cut down by the application of any such principle the wide words which precede '4 Maxwell agrees with Craies. The ejusdem generis principle, he says, 'applies only to general words following words which are less general'.5 He cites as authority a statement by Lord Cave LC: 'I know of no authority for applying that rule to a case where, to begin with, the whole clause is governed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vegetable oil. The aspect of preparation excludes the commodity from the chapter heading and merely because it contains vanaspati, bakery shortening cannot be included under chapter heading 1516. 20. In this context the manufacturing process of 'bakery shortening' as detailed by the petitioner himself and extracted in Annexure 6 Order is relevant, which is as follows: The first step in the making of bakery shortening is blending of various hydrogenated vegetable oils (vanaspati) and liquid refined vegetable oils to some proportions in a stainless steel blending vessel. All fractions of oil are properly melted and additives like Sesame Oil to the extent that it should give a B.T. Test of Minimum value of 2 units and Vitamin A D is added to it (this additives is statutory requirement to avoid admixing the vanaspati in ghee). The contents are kept under agitation for 45 mins to get a homogenous mass. Then the vanaspati is passed through the equipments called Votators and Crystalisers which churn the product from 45 Deg. Centigrade to 20-25 Deg. Centigrade. The chilled vanaspati from this equipment is called Bakery Shortening. Bakery shortening may be packed in 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding storage stability, creamy consistency over a wide temperature range and the ability to incorporate and hold air. Lard and other animal fats and mixtures of animal and vegetable fats also are used in shortenings. The procedure extracted herein above is similar to that admitted by the petitioner. 23. We also see from the order in M/s.Adani Wilmar Limited that the adjudicating authority has found so: Therefore, it is clear that as per explanatory notes the goods bakery shortening will fall under 1517 only and not 1516 as it has undergone further preparation for the purpose of texuration. The classification of PFA Act is not relevant for the purpose of classification under Customs Tariff Act or Excise Tariff Act. Further, both vanaspati and bakery shortening may be considered similar under PFA Act based on their usage as food products, but under Customs Act each product can have different classification based on its nature. As explained earlier shortening have undergone further preparations for food purposes as texturation (modification of the texture or crystalline structure) and Chapter 1516 excludes such items. This is in consonance with the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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