TMI Blog2021 (2) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... he products in question are not fruit or vegetable juices themselves which would be classifiable under Heading 2009. It is also not in dispute that the Customs Tariff is relevant for determining the rate of IGST payable on the imported goods. The Schedule to the Customs Tariff Act, 1975 (commonly referred to as Customs Tariff) is based on, although it is not identical to, the Harmonised System of Nomenclature (HSN)-an internationally recognised scientific method of classifying all goods. Sometimes there are differences between the HSN and the Customs Tariff in which case, the latter is relevant for determining the duty liability under the Customs Act. In view of the explanation to this effect in the IGST Notification specifying the rates of IGST chargeable on different goods, IGST is also to be charged as per the classification under the Customs Tariff. Customs Tariff, groups goods into Sections, each of which is further divided into Chapters with a two digit Chapter number. Within each Chapter, there are four digit headings which are further divided into six digit and still further divided into eight digit tariff headings - Further, in the Customs Tariff, groups of articles are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only carbonated drinks and not the fruit juices. In our view both components are important. As carbonated beverages, they can be classified under 2202 10 20/ 22021090 (as claimed by the Revenue). As fruit juice based drinks, they could as well be classified under 2202 99 20 (as claimed by the assessee). In our view neither carbonated beverage alone nor fruit juice alone gives the essential character of the products in question; both contribute to its essential character. The issue cannot be resolved as per Rule 3(a) and 3(b) of the Rules of Interpretation and therefore we need to resort to Rule 3(c). Since Customs tariff heading 22029920 comes last in the order, it prevails and the goods are classifiable under this heading. Hon ble Supreme Court in the case of Parle Agro [ 2017 (5) TMI 592 - SUPREME COURT] examined the classification of appy fizz which was a drink containing apple juice as well as carbonated water and held that the product is correctly classifiable under 22029920. While deciding the matter, the Hon ble Apex Court has referred to the Regulation 2.3.30 of FSSAI too, inter-alia, found that the product appy fizz met with the conditions in Clause 2 of this Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposal. 3. The issue which falls for consideration in this appeal is whether the goods imported by the respondent, such as, Big Cola, Big Orange Cola, Big Lemon etc., which they described as carbonated beverage with fruit juice are classifiable under Customs Tariff Heading 22021090 and 22021020 as claimed by the Revenue or are classifiable under 22029920 as claimed by the respondent/importer. 4. The respondent is an importer of branded drinks namely Big Lemon with fruit juice, Big Kids Jeera with fruit juice, Big Kids Orange with fruit juice, Big Lemon Lime with fruit juice etc. They classified these products as fruit pulp or fruit juice based drinks under Customs Tariff heading 22029920 . Goods which are imported are chargeable to customs duty as per the Custom Tariff and are also chargeable to Integrated Goods and Services Tax (IGST) as is applicable to the corresponding goods sold in India. The rates of IGST are specified by the Government by Notification No. 1/2017 - Integrated Tax (rate) dated 28/06/2017 as amended from time to time. Relevant portion of this Notification is as follows: IGST Rates for specified goods Schedules I to VI In exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods and these Rules also apply to IGST. If the imported goods are classified under Customs tariff Heading 220210 as all goods (including aerated waters), containing added sugar or other sweetening matter or flavoured , IGST @ 28 per cent is to be levied on the imported goods. On the other hand, if they are classified under Customs Tariff Heading 22029920 as fruit pulp or fruit juice based drinks , IGST @ 12 per cent is to be levied. On a specific query by the Bench, the learned Counsel for the respondent explained that they have been importing these goods in the past and have always been classifying them under 22029920 as fruit pulp or fruit juice based drinks and Customs department has been clearing them accordingly. After the present show cause notice was issued and an order confirming the demand has been passed by the Assistant Commissioner, the learned Commissioner has issued to them a Show Cause cum demand for all the previous consignments alleging suppression of facts and invoking extended period of limitation seeking to change the classification of the goods. He has passed an Order-inOriginal confirming the demand of differential duty. They are yet to file appeal aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 30% 2202 99 20 --- Fruit pulp or fruit juice based drinks 1 30% 2202 99 30 --- Beverages containing milk ................. 1 30% 2202 99 90 --- Other ............................................ 1 30% 7. Learned Assistant Commissioner held that the primary quality of the imported product is a beverage with overwhelming constituent being carbonated water with an extremely small percentage of fruit juice between 2.5% and 5% and therefore the HSN Code 22029020 under which the assessee claimed the classification is not correct. This tariff entry pertains to fruit pulp or fruit juice based drinks. As the defining character of the products is carbonated beverages and the fruit juice is a secondary character, they need to be classified under Customs Tariff Heading 22021020 in case of Lime based drinks and 22021090 in case of others. Being Aggrieved by this order, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the product contained more than 10% fruit concentrate it is a soft drink as commonly known and tax liability @ 20% has rightly been imposed. 16. Learned counsel for the parties have placed reliance on various cases which shall be referred to while considering the submissions in detail . (c) the Larger Bench of the CESTAT in the case of Brindavan Beverages Pvt. Ltd. versus Commissioner of Customs, Central Excise Service Tax, Meerut [2019 (29) G.S.T.L. 418 (Tri. LB)] also held that Nimbu Masala Soda and Nimbooz are classifiable under 22029020 as the fruit juice content of Lime in Nimbooz is not less than 5% and the total soluble solid is also not less than 10% as required under FSSAI Regulations ; (d) The FSSAI Regulations 2.3.30 pertaining to carbonated beverages or fruit drinks was amended w.e.f. 25/10/2016 whereby Clause 3A has been inserted providing for beverages containing more than 5% of fruit juice (2.5% for lime) but less than 10% (5% for Lime) would also fall under Regulation 2.3.30 as carbonated beverages with fruit juice . 8. In the present appeal, Revenue has assailed the impugned order on the following grounds:- (i) the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under 22021020. Learned Authorized Representative for the Department vehemently asserted the above arguments. 10. Rebutting the above arguments, learned Counsel for the respondent submits as follows: (1) the onus of proving that the classification adopted by the importer is incorrect, rests on the Department and the Department has not discharged this burden through any positive evidence, test report, market enquiry, by expert evidence, common parlance test, etc. to prove that the subject goods are recognised as aerated water in the market ; (2) up to 20 April 2020, the same goods were being allowed clearance by the Department under Tariff item 22099920 and it has been the long standing practice which should not be changed unless there is adequate evidence to change it ; (3) the Tariff Heading 220910 under which the Revenue seeks to classify their products, covers only beverages which are prepared with flavours. They do not cover fruit pulp or fruit juice based drinks, such as, the flavoured waters contemplated under sub-heading 220210 or containing flavoured agents which impart only the sensation and odour.Reliance is placed on the Larger Bench decision of Brindav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the test reports. There is no dispute regarding the facts of the case. The goods are sold as carbonated beverage with fruit juice . In the case of lime, the fruit juice content is 2.5% whereas in the case of other fruit, such as, apple the content is 5%. There are also products named Big Orange which has orange flavour but contains 5% apple juice and no orange juice but has only pictures of cut orange. Similarly, Big Kids Jeera does not appear to have any Jeera but only apple juice. To that extent, the representation on the labels appears to be inaccurate but this does not affect the classification of the products since there is no dispute that all these are carbonated beverages with fruit juice . The products in question are not fruit or vegetable juices themselves which would be classifiable under Heading 2009. It is also not in dispute that the Customs Tariff is relevant for determining the rate of IGST payable on the imported goods. The relevant entry in Chapter 22 of the Customs Tariff Heading Act is as follows :- Tariff Item Description of goods Unit Rate of Standard Duty Prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y liability under the Customs Act. In view of the explanation to this effect in the IGST Notification specifying the rates of IGST chargeable on different goods, IGST is also to be charged as per the classification under the Customs Tariff. Customs Tariff, groups goods into Sections, each of which is further divided into Chapters with a two digit Chapter number. Within each Chapter, there are four digit headings which are further divided into six digit and still further divided into eight digit tariff headings. 14. Further, in the Customs Tariff, groups of articles are prefixed by a Single dash (-) or Double Dash (--) or triple dash (---). Wherever there is a single dash, it is to be read as a sub-classification of the article or group of articles covered by the heading preceding it. Similarly, a double dash is to be taken as a sub-classification of the goods covered by a single dash preceding it. A triple dash is a further sub-classification of the goods covered by a double dash preceding it. 15. In this appeal, it is not in dispute that the goods in dispute fall under Tariff item 2202. Under this heading there are two groups of products with a single dash (-) the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THE INTERPRETATION OF IMPORT TARIFF Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coffee, for instance, is predominantly hot water. It also has milk, sugar and (instant) coffee powder. A couple of teaspoons of sugar makes the coffee sweet to taste but a couple of teaspoons of coffee powder makes it too strong and undrinkable. The smallest component of the drink is usually the coffee powder which imparts the drink its essential character and the predominant hot water is irrelevant. Nimbu pani has lime juice, water and sugar of which the lime juice, the smallest component defines the drink. 22. Ice-cream is neither predominantly ice nor cream nor sugar. It is predominantly (at least 50%) air.Water-melon is 99% water. Human body is also predominantly comprised of water. All matter in the universe, with the exception of that in black holes, is mainly space because the nucleus (with its protons and neutrons) is but a very small part of the atom and a few electrons are revolving around it and rest of the atom between the outer edge of atom and the nucleus is just space. Any tablet marked 5mg actually weighs several times more as 5 mg is only the active ingredient and the rest is filler material like talc, glue, etc. Yet, the tablet cannot be classified as product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be resolved as per Rule 3(a) and 3(b) of the Rules of Interpretation and therefore we need to resort to Rule 3(c) which reads as follows: 3 (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Since Customs tariff heading 22029920 comes last in the order, it prevails and the goods are classifiable under this heading. 26. We find that the Hon ble Supreme Court in the case of Parle Agro (supra) examined the classification of appy fizz which was a drink containing apple juice as well as carbonated water and held that the product is correctly classifiable under 22029920. While deciding the matter, the Hon ble Apex Court has referred to the Regulation 2.3.30 of FSSAI too, inter-alia, found that the product appy fizz met with the conditions in Clause 2 of this Regulation. Revenue s argument is that the appy fizz contained 10% of the apple juice whereas the present products contained only 5% fruit juice (2.5% in the case of lime). It is true that in view of this difference in the composition these goods do not fall under Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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