Bombay High Court
Kaira Dist. Co-Op. Milk Producers Union ... vs U.O.I. on 1 January, 1800
Equivalent citations: 1989(41)ELT186(BOM)
JUDGMENT
1. The question which has been raised in this petition relates to the classification of a product known as Cocoa Butter in relation to the First Schedule to the Indian Tariff Act, 1934, hereinafter referred to as "the Act". It is necessary to describe the product itself, which has been done in paragraph 3 of the petition and about which there is no dispute. It has been stated in the petition that cocoa butter is a product which is obtained from cocoa beans. These beans are cleaned, roasted and cracked and the broken pieces of thee beans known as `Nibs ' are separated from the shells. The nibs themselves are ground and converted into a fine paste which is called `mass'. This `mass' when treated with chemicals and subjected to very high pressure, the excess fat it removed. The resultant substance is known as cocoa cake. The fat which is removed is known as cocoa butter. In other words, when the cocoa beans dare treated in the manner described above, two product emerge, namely the cocoa cake which is devoid of fat and cocoa butter which is thee extracted fat from the cocoa beans.
2. It has been further mentioned that the said cocoa butter is used throughout the world as an ingredient for confectionery and chocolate manufacture. The cocoa butter is also used in the pharmaceutical land cosmetic industry, though it is not directly eaten as food. In other words, cocoa butter is used in the manufacture of products which can be called food while it is not directly consumed as food, though it is not said to be inedible.
3. The authorities below, to whom I will make a reference shortly, have taken the view that cocoa butter, which is being imported by the petitioner Society engaged in the manufacture of, among other things, chocolates, is an article covered by Item 21(2) of the first Schedule to the Act. That item is: "All sorts of food not otherwise specified." The petitioner Society, however, contends that the said article, namely cocoa butter, falls under Item 15(6), namely vegetable non- essential oils not otherwise specified. the main questioned that is to be decided in this petition is whether cocoa butter is a food item at all. If it is not a food item, then the argument of the petitioner Society will have to be accepted, namely that it is a vegetable non- essential oil attracting Customs duty under Item 15(6) of the First Schedule to the Act.
4. Some facts leading to the filing of this petition ought to be mentioned. As already stated, the petitioner Society is engaged in the manufacture of chocolates, among others. For this purpose it imports cocoa butter. The Customs authorities treated the said product as one falling under Tariff Item No. 21(2) and levied Customs duty accordingly. Thereafter the petitioners filed an application on 1st of November 1975 for re-assessment of the said product under. tariff Item 156 and for refund of the excess amount recovered by the Customs authorities by treating the product as one falling under Tariff Item No. 21(2). The difference between the duty payable under Tariff Item No. 212) and the duty payable under Tariff Item No. 15(6) in so far as the product is concerned was estimated by the petitioners at Rs. 1,10,170. By his order dated 1st October 1976 the third respondent, namely the assistant Collector of Customs, rejected the contention of the petitioners that cocoa butter was not an item which could legitimately be subjected to levy of Customs duty under Tariff Item No. 21(2) of the First Schedule to the Act.
5. The petitioner preferred an appeal to t he Collector of Customs who, by his order dated 17th of January 1978, confirmed the order of the Assistant Collector below him. He held, for reasons mentioned in his order, that cocoa butter ought to be treated as a food item inviting Customs duty under Tariff Item No. 21(2). He was of the view that merely because cocoa butter is treated as vegetable non-essential oil in Central Excise Tariff, that by itself would not make the product eligible for classification as vegetable non-essential oil. This was because an argument had been advanced before the collector of Customs that the Central Excise Tariff treats cococa butter as a vegetable non-essential oil, presumably for levying countervailing duty. The Collector also referred to the Brussels Tariff Nomenclature, Section 3 of which covers animal and vegetable fats and oils. That Section, according to the Collector of Customs, clearly stated that it did not cover fat or oil and cocoa preparations under Section 4 as prepared food- stuffs. Chapter 18 of a Brussels Tariff Nomenclature describes cocoa butter and its use in chocolate making and also in confectionery, perfumery, cosmetic and pharmacy. Undoubtedly, the Collector of Customs was influenced by the fact that cocoa butter was used in the preparation of a product like chocolate, which is undoubtedly a food item, and therefore cocoa butter itself ought to be treated as an item of food.
6. The petitioner thereafter went in revision before the Central Government in the Ministry of Finance which by its order dated 26th March, 1981 refused to interfere with thee view taken by the two authorities below it. Somewhat curiously, the Central Government relied upon the definition of "food" contained in the Prevention of food Adulteration Act, which defines food to mean any article used as food or drink for human consumption and includes any article which ordinarily enters into or is used in the composition or preparation of human food or any flavoring matter or condiment. The Central Government has also mentioned in its order that vegetable non- essential oil is generally understood as edible oil extracted f rom the seeds of plants considered to be mixture of mixed glycerides having the characteristics of other that essential oil and these are non-toxic in character. The difference between vegetable non-essential oil and the essential oil is that the former are without any smell or aroma while the latter have got small or aroma. It has not been possible for me, from what has been mentioned in the paragraph dealing with the characteristics of vegetable non-essential oils and essential oils, to understand on what basis the Central Government practically on then basis of the definition contained in the Prevention of Food Adulteration Act. The petitioners have now approached this Court under Article 226 of the Constitution of India challenging thee view so taken by the three authorities under the Customs Act.
7. Mr. Taleyarkhan, the learned Advocate appearing in support of the petition, has taken me through the orders passed by the three authorities below and has, after narrating the facts which a re necessary for the disposal of this petition, contended that the view taken by the three authorities below that cocoa butter is an item of food is wholly untenable. The meaning which is commonly attributed to the word "food" ought to have been relied upon by the authorities. The resort taken by the Central government to the definition of food contained in the Prevention of food Adulteration Act is wholly unjustified. I have no hesitation in accepting this criticism levelled by Mr. Taleyarkhan against the use made by the Central Government of the definition of food contained in the Prevention of food Adulteration Act. That Act deals with entirely a different subject. It is not a part of the family of the same laws. Moreover, the definition of `food' contained in the Prevention of Food Adulteration act includes, a part from the things which are normally used for human consumption, articles which enter into or are used in the composition or preparation of human food. May be, cocoa butter is used in the composition or preparation of human food, though it is not ordinarily so used. But that itself cannot imprint it with the character of an item of food when we have deal with a subject under the provisions of a taxing statutes such as the Indian Tariff act. That resort to a definition contained in another act is not justified is now well- settled by the authority of the Supreme Court. In Sales Tax Commissioner v. Jaswant Singh, A. I. R. 1967 Supreme Court 1454, the Supreme court cautioned against resorting to the definition contained in one Act for understanding similar words contained in another Act. It was pointed out that it was a well-settled principle that in construing a word in an Act caution is necessary in adopting meaning ascribed to that word in other statues. While laying this proposition, thee Supreme Court relied upon a judgment in Macbeth v. Chislett, 1910 Appeal Cases, 220 at page 224..
8. This view has been re-affirmed in a later judgment of the Supreme Court in M/s. MSCO Pvt. Ltd. v. Union of India, . The latter judgment has been referred to by Kania J., as he then was, in Cadbury-Fry (India) Pvt. Ltd. v. Union of India (Miscellaneous Petition NO. 702 of 1971, decided on 1st/2nd September 1977). The resort made by the Central Government to the definition of the word "food" contained in the Prevention of Food Adulteration Act, therefore, is wholly erroneous. The view taken by the Central Government on the basis of this resort to the definition of the word "food" in another Act is also erroneous.
9. But thee question still remains as to whether it could be held that cocoa butter is a food item on any other ground. I am, to some extent, relieved of the necessity of entering into a detailed discussion on this subject of what a food item ought to mean. This has been discussed in great details, with respect, by Kania J. in the judgment referred to above. Kania J. referring to t he various dictionary meanings of the word "food" and after an exhaustive discussion of the question, expressed his opinion as follows:-
"in my view, these definitions are not very useful for the purposes of this case, and in any event, there is nothing in these definition to suggest that an article which is unpalatable, which no reasonable person would think of consuming directly and which by itself does not enter into the composition of anything which is immediately edible can be regarded as food."
I have already described the characteristics of cocoa butter which, though edible, is unpalatable and no reasonable person would think of consuming the same directly. If this is so, naturally the s aid item cannot be regarded as food. The authorities below the Central Government, namely the Collector of Customs and the Assistant Collector of Customs, have taken the view that cocoa butter is an item of food because it is used in the manufacture of articles of food. This approach is patently erroneous because everything that is used in the manufacture of food cannot be regarded as an item of food, though for an artificial definition contained in an Act such as the Prevention of Food Adulteration Act it may be so. It is not necessary to refer to the dictionary meanings because that has been done and discussed in a threadbare manner by Kania J. in Cabury-Fry's case referred to above . I am respectfully in full agreement with the same.
10. It may also be noted incidentally that the First Schedule to the Indian Tariff Act has been divided into several Sections, each Section having its own heading or title. Section I/V in which Item 21(2) falls is headed as follows :-
"Products of the Food-Preparing Industries; Beverages, Alcoholic Liquors and Vinegars; Tobacco".
If anything, the question will have to be considered whether cocoa butter could be regarded as a product of the food-preparing industries. The answer must necessarily be in the negative because it is nobody's case that it is a product of the food-preparing industries; it is, at best, a raw material in the manufacture of products by food-producing industries.
11. Mr. Master appearing for the respondents sought to support the orders of the authorities below on thee basis of the reasons contained in the said orders. For reasons which I have already given, the reasons given by the authorities below are not correct and the decisions based upon thee same, naturally, are liable to be set aside. Mr. Master, however, wanted to point out that the petitioner's contention that cocoa butter falls under Tariff Item NO. 15(6) of the Act cannot be accepted. I have, however, not found it necessary to go into that question because the choice before the authorities below and the choice before me is only between Item No. 15(6) and Item No. 21(2). If Mr. Master's contention is examined and if it is accepted, then cocoa butter will have to be put in the residuary item which, I am sure, is not the case of the department t least at this stage. The petitioners are willing to pay the Customs duty on the basis that cocoa butter falls under Item 15(6) of the First Schedule to the Act.
12. In the result, the petition must succeed. rule is made absolute in terms of prayer Clauses (A) & (B) except that interest shall be paid at the rate of 12% per annum from 1st of November, 1975 till payment.
13. There shall be no order as to costs.