1. This is a revision application (hereinafter called "appeal") filed before the Central Government which under Section 35P of the Central Excises and Salt Act, 19H, stands transferred to this Tribunal to be disposed of as if it were an appeal presented before the Tribunal.
2. The main issue in this case is whether the foodstuff "Paushtik" manufactured by the appellants is eligible for exemption from duty under Notification No. 17/70-C.E. dated 1-3-70 as amended. According to the appellants, "Paushtik" is a low cost nutrition food meant for supply to the U.P. Government for free supply to school children. It cannot be used for making beverages, invalid foods and gruels by mixing with or boiling in water, but is simply a snack not requiring any mixing.
3. In the classification list dated 10-3-78 filed by them, the appellants had indicated the classification of this product as being under Item IB of the Central Excise Tariff Schedule but claimed that it was exempted from duty (they did not specify the exemption notification, but were apparently referring to the Notification No.17/70). The Assistant Collector did not however accept the claim for exemption under the aforesaid notification. They therefore went in appeal to the Appellate Collector. That authority also held that the product was not eligible for exemption from duty under Notification No.17/70. In terms of this notification, prepared or preserved foods falling under Item No. IB, other than those specified in the schedule annexed thereto, have been exempted from the whole of the excise duty.
Serial No. 1* of the schedule to that notification reads as under :- "Preparations with a basis of flour, of starch, of malt extract, or of malted barley, and milk foods, which by simply mixing with, or boiler in milk or water, can be used for making beverages, invalid foods and gruels, whether or not containing cocoa, but excluding baby foods, that is to say, foods specially prepared for feeding of infants;" The Appellate Collector held that the product would be covered by the above Serial No. 14. In this connection he observed as follows :- "I also find that the appellants themselves have admitted in their appeal that their product is simply a ready to eat snack based on wheat, soya and fats, in which the percentage of wheat base is 75% and it could such be consumed without even mixing with a (sic) boiling in milk or water and hence it is definitely a preparation with basis of flour as indicated in S. No. 14 of the schedule annexed to Notification No. 17/70-CE dated 1-3-1970".
4. Appearing for the appellants, Shri Kohli argued that the wording of Serial No. 14 reproduced above did not cover their product which was ready to eat and did not have to be mixed or boiled with milk or water.
He stated that the fact that the product was ready to eat and did not require such mixing or boiling with milk or water had been accepted by the Appellate Collector and there was no doubt on this point.
5. Invited to reply on this point, Shri Tayal argued that the schedule to Notification No. 17/70 also listed several products which were ready to eat. According to him, therefore, the fact that a product was ready to eat did not exclude it from the scope of the dutiable products listed in the schedule.
6. We pointed out to Shri Tayal that Serial No. 14 of the schedule specifically referred to preparations which had to be mixed or boiled with milk or water, whereas such a condition was not included in the other entries in that schedule. On our enquiring whether it was his case that the product was covered by some other item of the schedule to the notification, Shri Tayal replied that the Department's case was based only on Serial No. 14 of the schedule.
7. We have given our careful thought to this point. Serial No. 14 of the schedule specifically refers to preparations with a basis of flour etc., which can be used for making beverages etc., by simply mixing with, or boiling in, milk or water. It is obvious that this entry would not cover a preparation of flour etc., which is ready to eat and does not require, mixing with, or boiling in, milk or water. The appeal therefore deserves to succeed on this point alone.
8. The appellants had also raised a point before the Appellate Collector that the product was packed in polythene bags containing 25 Kg, and these could not be termed as "unit containers" as required by the description of Item No. IB. This contention was rejected by the Appellate Collector. Shri Kohli raised this also before us. In reply to a query from us, he agreed that if this contention was accepted, the result would be that the product would fall outside the scope of Item IB and would fall within the scope of Item 68 of the Central Excise Tariff Schedule. Shri Kohli submitted that even in that case it would not be dutiable, being covered by Notification No. 55/75-C.E. dated 1-3-75, which exempted all kinds of food products and food preparations falling under Item 68.
9. Neither the appellants nor the Appellate Collector have referred to any statutory or standard definitions of the expression "unit containers". The appellants themselves had, in their classification list, shown the product as falling within Item IB. Since the appeal deserves to succeed on the basis of the appellants1 contention that the product does not come within the scope of Serial No. 14 in the schedule to Notification No. 17/70, we do not find it necessary to go into their contention that the container in which the product was sold were not "unit containers", that on this account the product would be excluded from the scope of Item IB.10. In the result, we allow the appeal, accepting the appellants' contention that the product is not covered by Serial No. 14 to Notification No. 17/70 dated 1-3-1970, and direct that consequential relief be granted to the appellants.