9911796707
TMI Blog1988 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... Item 68 of Central Excise Tariff. During the course of enquiry, it was found that the company had during the period from 1st March, 1975 to 18th April, 1979 manufactured non-alcoholic beverage bases without holding proper Central Excise licence and had cleared the said goods without payment of the duty due thereon and had thereby evaded the duty amounting to Rs. 3,50,963.22. According to the revenue, prima facie it appeared that the respondent had contravened the provisions of Rules 9(1), 53, 173 pp(1), 173 pp(3), 173 pp(6) and 174 of the Central Excise Rules, 1944 ('Rules' for short) inasmuch as during the period from 1st March, 1975 to 18th April, 1979 the respondent-company had manufactured without valid licences required under Section 6 of the Act read with Rule 174 of the Rules, goods not elsewhere specified and falling under Tariff Item 68 of the First Schedule of the Act, viz., non-alcoholic beverage bases. The respondent-company had further cleared the said goods without filing list of goods manufactured as required by Rule 173 pp(3) of the Rules. The respondent had cleared the said goods without preparing gate passes as required under Rule 173 pp(6) of the Rules, and had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power, namely, biscuits, pasteurised butter, pasteurised or processed cheese, aerated waters, whether or not flavoured or sweetened and whether or not containing vegetable or fruit juice or fruit pulp etc. 4. Tariff Item 68 of the First Schedule of the Act provides for duty on ''All other goods not elsewhere specified and manufactured in a factory" but excluding, inter alia, alcohol, all sorts, including alcoholic liquor for human consumption and other items not necessary for our present purpose. The exemption Notification No. 55/75-C.E., dated 1st March, 1975 reads as follows: "In exercise of powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in the Schedule annexed hereto and falling under item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable thereon. THE SCHEDULE 1. All kinds of food products and food preparations, including - (i) meat and meat products; (ii) dairy products; (iii) fruit and vegetable products; (iv) fish and sea foods; (v) bakery products; and (vi) grain mill products. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation under the Tariff Schedule. 'Food', as has been noted, has no fixed definition of universal application and its meaning varies from statute to statute. The dividing line, the learned Judge observed, between the beverage and food might be thin and in some case it might overlap. The learned judge, however, observed that it was beverage rather than food. He accordingly held that the notification exempted not food but food products and food preparations and as such coffee-chicory blend did not come within the purview of the exemption. The said decision was affirmed by the Division Bench of that Court in Brooke Bond (India) Limited v. Union of India & Others [1984 (15) ELT 32]. The Division bench after exhaustively discussing the points in controversy and after referring to several authorities referred to the decision of Justice Vivian Bose of this Court in The State of Bombay v. Virkumar Gulabchand Shah (1952 SCR 877), wherein he had observed in his own and inimitable language at pages 880-883 of the report as under :- "Much learned judicial thought has been expended upon this problem - What is and what is not food and what is and what is not a foodstuff, and the only con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context and background. Even in a popular sense, when one asks another "Have you had your food?", one means the composite preparations which normally go to constitute a meal-curry and rice, sweetmeats, pudding, cooked vegetables and so forth. One does not usually think separately of the different preparations which enter into their making, of the various condiments and spices and vitamins, any more than one would think of separating in his mind the purely nutritive elements of what is eaten from their non-nutritive adjuncts. So also, looked at from another point of view, the various adjuncts of what I may term food proper which enter into its preparation for human consumption in order to make it palatable and nutritive, can hardly be separated from the purely nutritive elements if the effect of their absence would be to render the particular commodity in its finished state unsavory and indigestible to a whole class of persons whose stomachs are accustomed to a more spicely prepared product. The proof of the pudding is, as it were, in the eating, and if the effect of eating what would otherwise be palatable and digestible and therefore nutritive is to bring on indigestion to a sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties in the making or beverages or foodstuffs for human consumption, are classifiable as food preparations. But such preparations which because of their ingredients and small proportion in which they are normally used, are clearly added for other purposes, or not classifiable as food preparations." [Underlined by us] Mr. Sorabjee also drew our attention to the explanatory note in Heading No. "21.07 of CCCN, which inter alia, as follows: "21.07 - FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR INCLUDED. Provided that they are not covered by any other heading of the Nomenclature the present heading covers: (A) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, lecithin etc.) with foodstuffs (flour, sugar, milk, milk powder, etc.) for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance keeping qualities etc.)" Clause (2) of the said explanatory notes in heading No. 20.17 of CCCN contains the following: "(2) Flavouring powders for m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is used lathe composition or preparation of human foods; and (b) any flavouring matter or condiments. Food products which are excluded from item (C) would fall under Item 68 of Central Excise Tariff read with the Notification 62/78, dated 1-3-1978 excluded as amended. The term "Food preparations" on the other hand would cover: (a) Preparation for use either directly or after processing (such as cooking, dissolving or boiling in water, milk etc.) for human consumption. (b) Preparation consisting wholly or partly of foodstuffs used in making of Beverages or food preparation for human consumption. This would also include concentrated extract for making non-alcoholic beverages. (Ref. B.T.N. heading 21.07) In this connection attention is also invited to Bangalore Collectorate trade notice No. 103/75 dated 18-6-1975. In view of that has been stated above samples at Sl. No. 1, 4, 8, 9, 13 and 15 may be deemed to fall in the category of food preparations. However, before finalising the assessment, it may be worthwhile ascertaining whether the above products are also known as food preparations in common parlance and trade. The views of the Director, Drugs & Food Laboratory, Baroda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 'food preparations' might improve taste or appearance of food products and/or food preparations, but by themselves could not be legitimately consumed directly or after processing such as cooking, dissolving, or boiling in water for human consumption independently. Mr. Singh submitted that in ordinary common and commercial parlance also the goods in question are not known as food products and/or food preparations as such, therefore, these are not to be treated as exempt under the notification. Mr. Singh submitted that when a person says "I have consumed food" he does not mean/or says that he has consumed non-alcoholic beverage bases. Therefore, those goods and not be understood as covered by the notification of exemption. It was submitted that how Government understood a matter at the time of the notification, is a relevant factor and that is a factor which one should bear in mind in view of the principles enunciated by this Court in K.P. Verghese v. Income Tax Officer, Ernakulam & Another [1982 1 SCR 629]. It is a well-settled principle of Interpretation that courts in construing a statute or notification will give much weight to the interpretation put up on it at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Another [1982 (1) SCR 129] this Court emphasised that the notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context. This Court reiterated that the expression should be construed in a manner in which similar expressions have been employed by those who framed relevant notification. The Court emphasised the need to derive the intent from a contextual scheme. In this case, therefore, it is necessary to endeavour to find out the true intent of the expressions "food products and food preparations" having regard to the object and the purpose for which the exemption is granted bearing in mind the context and also taking note of the material or common parlance meaning by those who deal with those goods, of course bearing in mind, that in case of doubt only it should be resolved in favour of the assessee or the dealer avoiding, however, an absurd meaning. Bearing the aforesaid principles in mind, in our opinion, the revenue is right that the non-alcoholic beverage bases in India cannot be treated or understood as new 'nutritive material absorbed or taken Into the body of an organism which serves for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
