CX - 'Minute Maid Nimbu Fresh (MMNF)' is correctly classifiable under CSH 2202 1020 as 'Lemonade' & is not entitled for benefit of exemption notification 3/2006-CX - Duty demand upheld : CESTAT

“The order passed by the Hon’ble CESTAT suffers with many legal as well as factual infirmities. The impugned product has actual juice content of 5.7% which is reconstituted with 1% lemon juice concentrate but the same has been appreciated as 1%. At the same time, CESTAT has acknowledged that the product has solid content of juice (i.e. brix content) of 5.7% and compared it with total minimum soluble solid requirement of 10% stipulated in the Prevention of Food Adulteration Rules, 1955 and finally held that the product even does not comply with the requirements of said rules.

I wish the Hon’ble CESTAT would have made an attempt to appreciate the crucial fact that the product has total soluble sold of more than 12%, which comprises not only actual juice content but also includes sugar, acid and other soluble solid contents. The product label describes the product as “Ready to serve fruit drink” in terms of the provisions of the PFA Rules and the said classification of the product has never been challenged/disputed by the Competent Authorities constituted under the PFA Act. However, in the instant case, CESTAT has gone one step ahead and ruled not only about the classification of the product under the provisions of the Central Excise Tariff Act but has also held that the product does not comply with requirements of the PFA Rules, which is completely unwarranted and devoid of jurisdiction. It is surprising to observe that how a Tax Tribunal can be competent to decide the classification of the product under the supervening legislation governing the specifications of the product from food safety and quality perspective. Further if the classification has been clarified in CBEC circulars ( in force today) then taking a deviant view without dealing with Circular in the order is also not expected from a tribunal.

Moreover, the decision of the Hon’ble CESTAT is also highly influenced with the advertisement content of the product while dealing with the argument of the Common Parlance test, which is completely contrary to the law laid down by the Apex Court that the manner in which a product may be marketed by a manufacturer does not necessarily play a decisive role in affecting the commercial understanding of such product. What matters is the way in which the consumer perceives the product at the end of the day notwithstanding the marketing strategies. In other words, advertisement material cannot be considered for determining the real nature and character of the product for ascertaining the classification of the product under the provisions of the Central Excise Tariff.

In view of the above glaring infirmities in the order of the Hon’ble CESTAT, the issue in dispute deserves to be referred to the Larger Bench of the CESTAT as and when the matter knocks the doors of the another Bench of CESTAT having jurisdiction over the other factories of the Assessee”

These are my personal comments.

Chandra Shekhar Sharma

arun K Sharma 17/09/2014