Skip to content


Collector of Central Excise Vs. Indodan Milk Products Ltd. - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1959DTri(Delhi)
AppellantCollector of Central Excise
Respondentindodan Milk Products Ltd.
Excerpt:
.....1-b of the central excise tariff and, if so, whether it is covered by the expression "ready-to-serve beverages" occurring in s.no. 9 of exemption notification no. 17/70-c.e., dated 1-3-1970.2. the facts in brief are that the respondent company cation lists on 30-6-79 and 21-6-80 declaring "milkafe' under ilerri 1-b and claiming exemption under the aforesaid notification. the classification suggested by them was approved provisionally under rule 9-b of the central excise rules, 1944. later, after hearing the respondent company, the asstt. collector held that though the product fell under item 1-b, it was a ready-to-serve beverage and hence not exempt under the notification. in appeal, the appellate collector held that it was not a ready-to-serve beverage and hence it was entitled to.....
Judgment:
1. The point at dispute in this case is whether 'Milkafe'-a product manufactured by the respondent company and consisting of 3 to 4 per cent coffee, 40 per cent sugar, 28 per cent milk solids and fat and the rest moisture-is a prepared food falling under item 1-B of the Central Excise Tariff and, if so, whether it is covered by the expression "ready-to-serve beverages" occurring in S.No. 9 of exemption notification No. 17/70-C.E., dated 1-3-1970.

2. The facts in brief are that the respondent company cation lists on 30-6-79 and 21-6-80 declaring "Milkafe' under ilerri 1-B and claiming exemption under the aforesaid notification. The classification suggested by them was approved provisionally under Rule 9-B of the Central Excise Rules, 1944. Later, after hearing the respondent company, the Asstt. Collector held that though the product fell under item 1-B, it was a ready-to-serve beverage and hence not exempt under the notification. In appeal, the Appellate Collector held that it was not a ready-to-serve beverage and hence it was entitled to the exemption. The Govt. of India was tentatively of the view that the aforesaid Order-in-Appeal of the Appellate Collector was not correct, proper and legal and initiated review proceedings under the then Section 36(2) of the Central Excises and Salt Act, 1944 by issuing a show cause notice dated 25-9-82. The proceedings commenced with the issue of this show cause notice have since been transferred to this Tribunal and have been taken up as the present appeal of the Department. The Department's representative stated that the respondent company themselves described 'Milkafe' as a food preparation and as a drink in the label of the product as well as in their reply to the Assistant Collector. They stated clearly in the said reply that the product was intended for use as a beverage. The label described the product as a "rich creamy coffee drink premixed with milk and sugar".

The product required just addition of water-hot or cold according to the taste of the individual consumer. His emphasis was on the argument that just because water was required to be added to the product, the product did not cease to be a ready-to-serve beverage. Practically all the products listed at S. No. 9 of the notification, such as syrups and squashes etc., required addition of water and the case of 'Milkafe' was, therefore, not a unique one. The Appellate Collector had been led by definitions given in technical dictionaries while the matter required to be decided in the light of the popular meaning of the expression "ready-to-serve beverage". Though the Chemical Examiner who tested the sample of the product and gave his report on 21-12-79 said that the sample was not a ready-to-serve beverage, this part of the Chemical Examiner's report consisted of his own views on classification which were beyond his field of knowledge and beyond his jurisdiction as a Chemical Examiner assigned the task of analysing the composition of the sample. The quasi-judicial authorities in the Department were not bound by what the Chemical Examiner stated by way of his personal opinion on classification nor by what was stated in the Department's tariff advices and circulars.

3. The respondent company stated that the Department's Budget instructions of May 1970 and the Chemical Examiner's classification opinion were in their favour and the Department ought to have followed them. They slated that 'Milkafe'in the form in which it was marketed - a thick viscous liquid-was not drinkable and it required addition of hot or cold water and may be even addition of more milk and/or sugar depending upon the individual consumer's taste. No comparison could be drawn with other products listed at S. No. 9 because they were all specified by name and the point whether they required addition of water before their use was, therefore, not relevant in their case. In any case, S.No. 8 did not categorise the other products as "ready-to-serve beverages". They made an alternative plea for classification of 'Milkafe' under item 68 and grant of exemption for it as a food product or food preparation under notification No. 55/75-C.E., dated 1-3-75.

They also stated that the show cause notice for review was time-barred inasmuch as it was issued after the expiry of six months from the date of the Order-in-Appeal [1981 E.L.T. 421 (Delhi)- Associated Cement Companies v. U.O.I.).

4. We have carefully considered the matter. The composition of 'Milkafe' as stated in the opening para above, its description as a drink in the label of the product and the appellants' own description of the product as a food preparation leave no room for doubt that it is covered by item 1-B of the Tariff as a prepared or preserved food put up in unit containers and ordinarily intended for sale. The product cannot, therefore, be classified under the residuary item 68. The only question now remains to be determined is whether in the form it was cleared from the respondent company's factory, it could be described as a ready-to-serve beverage. The expression "ready-to-serve beverage" has a popular meaning and is well understood in common parlance as referring to beverages which one can drink straightway just after opening the bottle or can. A product like 'Milkafe' which requires some further effort to make it drinkable-heating the water or getting chilled water, adding it to the product and stirring the mix to get a homogenous liquid-cannot be called ready-to-serve beverage in that sense. We see no justification in looking to the technical dictionaries and other enactments in order to get the meaning and the scope of an expression which is well understood in common parlance, more so in the case of a product which is of common day to day use. We, therefore, hold that 'Milkafe', not being a ready-to-serve beverage, was not covered by the exclusion list of notification No. 17/70-C.E. and was, therefore, exempt from payment of duty under tariff item 1-B.5. Accordingly, we discharge the show cause notice for review issued by the Government of India.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //