Customs, Excise and Gold Tribunal - Tamil Nadu
Health India Laboratories vs Commissioner Of Central Excise on 13 February, 2007
Equivalent citations: 2007(116)ECC392, 2007ECR392(TRI.-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. This appeal is filed by M/s. Health India Laboratories Private Limited, Chennai (appellants or assessee) against the order of the Commissioner of Central Excise, Chennai-IV Commissionerate classifying the product "Indian Noni" manufactured by the assessee as a 'food preparation not elsewhere specified or included' under CSH 2108.99 (upto 27.2.05) and CSH 21069099 (from 28.2.05) of the Central Excise Tariff 1st schedule to the Central Excise Tariff Act, 1985. The order consequently demanded an amount of Rs. 4,93,87,230/- being duty and cess payable on the product cleared by the assessee during the years 2004-05, 2005-06 and 2006-07 (upto 25.4.2006) under Section 11A of the Central Excise Act 1944 (the Act) and imposed a penalty of equal amount under Section 11AC of the Act. The order directed recovery of interest of Rs. 27,02,035/- under Section 11AB of the Act and appropriated Rs. 15 lakhs towards value of some quantity of the impugned product seized and provisionally released earlier, under Rule 25 of the Central Excise Rules, 2002.
2. The facts of the case are that following investigation by the officers of the Commissionerate, it was tentatively found that the assessee had manufactured and cleared the product "Indian Noni" classifiable as a food preparation under CSH 210899 and 21069099 (after 28.2.05) of the Central Excise Tariff Act without payment of duty from 2003 onwards. On receipt of the Show Cause Notice, the assessee had contested the proposals on the ground that the impugned juice was made from fruits of morinda citrifolia, garcinia cambogia and leaves of stevia. The process of manufacture involved steam boiling, filtering, deaeration and homogenization of the above ingredients and adding of preservatives citric acid, sodium benzoate and flavours like sorbitol before packing the juice in pet bottles. No vitamins, minerals or micronutrients were added. They stated that a food supplement was a food stuff, with added vitamins whereas their product was food like any other fruit juice. They argued that the product obtained by preparation of vegetables, fruits, nuts or plants was covered by Chapter 20 of the CETA schedule and specifically as fruit juices of CSH 200990. As per Rule 3(a) of the Rules for Interpretation of Tariff, a specific entry had to be preferred to a residuary entry for classification of the goods. Sub Heading 2108 specifically excluded preparation of fruits and the impugned goods had received its essential character from fruits. Therefore, CSH 20099000 for mixture of juices was the appropriate heading for the impugned product. The assessee relied on HSN Explanatory Note (16) under Chapter Heading 21.06 as per which extracts from plants, fruits etc. became 'food supplement' only when vitamins were added to it. In view of Sub Heading 2009 specifically covering the impugned goods, proposal to classify the item under Chapter Heading 2106, a residuary heading was improper. The Note (16) supra contained the following statement.
The headings further excludes preparations made from fruit, nuts or other edible parts of plants of heading 20.08 provided that the essential character of the preparations is given by such fruit, nuts, or other edible parts of plants (Heading 20.08) This note also showed that the impugned goods based mostly on fruits fell under CSH 20.08. They attributed their not paying duty on the clearances of the product to their bona fide belief that the impugned product, a fruit juice, fell under Chapter Heading 20 and was exempted. They gave the list of ingredients and the composition as follows:
Sl. No. Raw material % 1 Morinda 73.00 2 Stevia
3.56 3 Garcinia 3.56 4 CMC 5.56 5 Citric Acid 10.00 6 Sodium Benzoate 1.62 7 Sorbitol/Flavouring material 2.70
3. In deciding the Show Cause Notice, the Commissioner endeavoured to find whether the correct classification of the product was as fruit juice of CSH 200190/20099000 or as food preparation of CSH 210690. The Commissioner discussed at length the various raw materials that went into the production of the impugned goods. The main ingredients were morinda citrifolia, garcinia cambogia and stevia. They were used in the form of a mixture in the ratio 73:3.56:3.56, balance being other raw materials. The Commissioner found that the main ingredient morinda citrifolia was a fruit with bitter taste and offending smell. This was not eaten by people in India but was a tribal medicine in several countries used to treat various diseases. It was eaten by people in some African countries during times of famine. The other ingredient carcinia cambogia (Malabar tamarind) was grown in Asia and had several medicinal uses. Stevia, the third major ingredient, also called sweet leaf, was a sweetener widely used in several countries and was found useful in treating obesity, high blood pressure and hypertension.
4. The Commissioner recorded the process of manufacture in the impugned order as follows:
The basic raw materials Morinda Citrifolia (in the form of pulp or powder) and extracts of Garcinia Cambogia and Stevia are mixed together and boiled in a kettle to 100 degree centigrade to obtain a decoction and the obtained decoction is passed through a pipeline into sedimentation tanks to remove the sediments and the decoction is filtered and passed into mixing tanks where preservative citric acid, sodium benzoate and sorbitol are added and mixed thoroughly and passed through a filter for proper filtration and the filtered decoction is stored in filter tanks for sometime and homogenized through a homogenizer and the homogenized liquid is filled into pet bottles through a filling tank and filling unit.
He observed that the labels (on the container and package) and the literature on the product described the same as a natural herbal food supplement and a health enhancer. The literature on the cartons and that supplied by the manufacturer described Noni as "rich in vitamins A, C, E, B, B2, B6, B12, Calcium, Iron, Niacin, Folic acid, Pamthothenic acid, Phosphorous, Magnesium, Zinc, Copper and other minerals like Chromium, Manganese, Molybdenum, Sodium, Potassium, Carbohydrates and 150 + isolated nutraceuticals". In addition, "Indian Noni" was also claimed to contain amino acids, proteins and fat.
4.1 The Commissioner listed out the multifarious curative benefits of Indian Noni and observed that the assessee and its Chairman & Managing Director, Dr. P.I. Peter had changed their stand at the time of adjudication and stated that the claims on labels and literature were only a marketing strategy. The Commissioner observed that "food" was a nutritious substance that people or animals ate or drank or that the plants absorbed in order to maintain life and growth. In common parlance, the term "food" could refer to a combination of several items such as a meal. "Fruit Juice" made from edible fruits was a part/element of food (in contrast to complete food) and was generally made from juice-bearing fruits like apple, orange, grapes etc. 4.2 "Indian Noni" could not be accepted as a mixed fruit juice. The adjudicating authority justified the above finding on the following lines. Fruit juices were not obtained by boiling fruit extracts, in the form of powder (like in the instant case). Usually pulp or powder of fruits was diluted in water to reconstitute fruit juice. In the instant case, fruit powder was boiled at 100 degrees centigrade to extract decoction which could not be called a fruit juice. Chapter Heading 2009 covered juices of fruits like orange, grape, pineapple, apple, mango etc. Indian Noni could not be called an edible fruit owing to its offensive smell which induced vomiting. By boiling, the offensive odour and taste were removed and its nutritive and prophylactic properties were captured in the decoction. The final product did not contain any form of Noni fruit, but the essence of the fruit powder mixture (containing predominantly Noni fruit powder). Food preparations based on essences of fruit powder mixture were not covered under Chapter 20. Food preparations made by boiling the mixture of raw materials were not covered under Chapter 20. These were appropriately covered under Chapter Heading 21.06.
4.3 The cartons and labels advised dosages such as 5 ml twice daily for the first three days, 10 ml twice daily for the next three days and 15 to 30 ml twice daily from the 7th day onwards. This showed that the product was not fruit juice. The requirement to acclimatize the consumer's system to the drink (as advised in the "Directions for Drinking" supplied by the assessee), by the use of small incremental doses initially was not there in the case of normal fruit juices. The literature enlisted side effects which were also not attributable to normal fruit juice meant for consumption by everyone. In commercial parlance the product was not known/sold/purchased as a fruit juice but was marketed as a natural herbal food supplement. Therefore, the item was classifiable as food supplement under CH 21.06. The Commissioner cited the following notes from HSN notes under Chapter 30.04 in support of his finding that the impugned product fell under Chapter Heading 21.06.
Further this heading excludes food supplements containing vitamins or mineral salts which are put up for the purpose of maintaining health or well-being but have no indication as to use for the prevention or treatment of any disease or ailment. These products which are usually in liquid form but may also be put up in powder or tablet form, are generally classified in heading 21.06 or Chapter 22.
He observed that the impugned product helped to maintain health and well-being and was not intended for prevention or treatment of any specific disease. The product was advertised as a food supplement containing natural vitamins and minerals and was in liquid form. Therefore, the above HSN note justified classifying the impugned product under Chapter Heading 21.06. HSN Explanatory Note under Chapter Heading 2009 allowed steam/hot water treatment, only of dried fruits (which contained juice when they were fresh) or vegetables like carrot to soften them before mechanically extracting their juice. The notes excluded "liquid products obtained by heating in water of fresh or dried fruits, which contain practically no juice; such products are generally classified in Heading 21.06.
4.4 In the instant case, it was not fruit but the fruit extract in powder form which was boiled at 100 degrees centigrade together with other fruit/leaf extract to brew a decoction for further processing. Such a decoction could not be equated with a fruit juice. As per HSN Notes under Chapter subheading 2009, juice of that heading may be concentrate in the form of crystal or powder, provided in the latter case, they were entirely or almost entirely soluble in water. Accordingly, the Noni fruit powder could be classified under Chapter Heading 20.09; however, a preparation made from the fruit powder by processes including boiling and making decoction was classifiable under Chapter Heading 21.06. Undoubtedly it had been prepared from natural sources with the fruit Noni as the main raw material. The Commissioner went on to find that 'Indian Noni' had no nexus with the fruits/fruit preparations mentioned in Chapter 20. It was an edible preparation in the nature of a tonic, a food supplement. Following the initial statements of Dr. P.I. Peter, CMD of the appellant firm, the literature and label on the product, the adjudicating authority decided that 'Indian Noni" was classifiable as "fruit preparation not elsewhere specified or included" in the residuary Chapter Heading 2106.99 upto the period 27.2.05 and under Tariff item 2106.90.99 from 28.2.2005 onwards under the I Schedule to CETA, 1985.
4.5 The Commissioner found that the appellants had failed to observe various Central Excise formalities after crossing turnover of Rs. 40 lakhs in the years 2004-05, 2005-06, and 2006-07. He also observed that even if the item was classified as fruit juice, the same was dutiable during 2005-06. The assessee had deliberately suppressed facts relating to manufacture and clearance of dutiable goods with intent to evade payment of duty. Therefore, extended period was found invokable. The goods seized and provisionally released earlier was liable for confiscation. He found that the appellants were eligible for Cenvat credit of duty paid on the inputs. Accordingly he passed an order demanding an amount of Rs. 4,93,87,230/- being duty and cess payable on the product cleared by the assessee during the years 2004-05, 2005-06 and 2006-07 (upto 25.4.2006) under Section 11A of the Act and imposed a penalty of equal amount under Section 11AC of the Act. The order directed recovery of interest of Rs. 27,02,035/- under Section 11AB of the Act and appropriated Rs. 15 lakhs towards value of seized goods provisionally released earlier, under Rule 25 of the Central Excise Rules, 2002.
5. In the appeal before the Tribunal, the appellants advanced the same arguments as they had made before the Commissioner. They cited several case law and HSN Explanatory Notes to support the plea that the impugned goods were classifiable as mixture of juices exempt from payment of duty. They pleaded that finding of the adjudicating authority that even if the product was classified under Chapter 20, still duty was leviable for the period 2005-2006, was incorrect as mixture of juices was exempted during that period vide Notification No. 1/05 dated 24/02/2005. Notification No. 6/02 at Sl. No. 9 had covered the goods falling under sub-heading 2001 prior to 28.2.2005. This exemption was continued under Notification No. 1/05 dated 24/02/05 on the advent the of eight digit tariff on 28.2.2005.
6. It was submitted that the appellants were under the bona fide belief that Indian Noni containing 80.12% of fruit and juice of leaf would fall only under the category of "mixed juices" of CSH 2009.90. Similar fruit juices with similar preservatives and flavoring agents sold in the market were not subjected to excise duty. They had not taken modvat credit on inputs nor collected duty from their customers. They had widely advertised the product and their manufacturing activity had been known to the Income Tax department, Food and Agriculture Ministry, Sales Tax authorities, State Electricity Department etc. They had paid the entire duty before the issue of Show Cause Notice. The appellants had bona fidely believed that the item was not excisable. Therefore, longer period was not invokable. They had maintained all records and accounts correctly and no registration had been taken as they were orally informed that the item had been exempted from excise duty. No penalty was also imposable under Section 11AC or Rule 25 in the circumstances. The dispute being one involving the question of classification could not attract any penalty as per various judicial authorities.
7. The representative of the appellants cited the decision of the Hon'ble Supreme Court in CCE Shillong v. Woodcraft Products to support the claim that the explanatory notes in HSN had to be adopted as a guide to classify products where the entries in the HSN and the CETA schedule were pari materia. He also cited the decision of the apex Court Akbar Badruddin Jiwani to buttress the claim that when the rival entries were scientific in the HSN, a technical and scientific approach had to be followed. Therefore common parlance test could not be applied in the instant case. Several judgments were cited in support of the plea that specific entry had to be preferred to a residuary entry in classifying goods.
8. The appellants sought support for classification of the impugned product under Chapter heading 20.09 from the case law Forever Living Health v. CCE Mumbai-I . In that case the disputed products were (i) vegetable juice and (ii) a mixture of fruit and vegetable juices. The goods had not been tested. As there was no material to conclude that vitamins were added to the products and since the product was not basically a protein, fat or carbohydrate or mix of two or more of these, the goods were decided to be not a food supplement. Therefore, the items were decided to fall under heading 2009.80/2009.90.
9. The learned SDR referred us to the decisions of the Supreme Court in CCE, Meerut v. Maharshi Ayurveda Corporation Ltd. and the decision of the Tribunal in Forever Living Health (supra). According to him the Apex Court had upheld the decision of the Tribunal classifying the goods under Chapter 20 in Maharshi Ayurveda Corporation case as the product was a mixture of parts of plants, seeds and nuts which could be consumed as such. The case on hand was not similar to that case on facts. In Forever Living Health (supra) the Tribunal had decided that 'if the entity becomes a preparation, often referred to as 'Food Supplements' based on extracts from plants/fruits concentrates etc, basically remaining Non-alcoholic as preparations obtained by compounding vegetable extracts of Heading 1302 with various chemicals, e.g. tartaric acid, citric acid etc. and result in beverages obtained by simple dilution with water, wine or alcohol for domestic use or use in industry, this being to avoid transport costs but with endorsements on labels of maintenance of general health or well being, but not for prevention or treatment of ailments etc. in such cases the preparation would get classified under Heading 2106.' According to the SDR the impugned product was similar to the one considered in Forever Living Health (supra). So the classification of the product as food preparation needed to be sustained.
10. We have carefully considered the case records and the submissions made by both sides. The issue involved in this appeal is the determination of the correct classification of the product "Indian Noni" manufactured by the appellants. In the impugned order, the Commissioner of Central Excise, decided that the product fell under CSH 2108.99 up to 27.2.2005 and 2106.9099 from 28.2.2005. Under both the entries prior to 28.2.2005, and after 28.2.2005, the classification decided is 'food preparations not elsewhere specified or included'.
11. There is no dispute as to the ingredients contained in the impugned product; 73% of the raw materials is a fruit called "morinda citrifolia", 3.56% is a sweet leaf called "stevia", another 3.56% is another fruit called "garcinia cambogia". The product also contains citric acid (10%) sodium benzoate (1.62% ), flavours such as sorbitol (2.7%), and carboxy methyl cellulose. The product is manufactured by boiling morinda citrifolia (in the form of pulp or powder) and extracts of garcinia combogia and stevia together at 100 degrees centigrade. Citric acid, sodium benzoate and sorbitol are added to the filtered decoction. The resultant product is filtered and homogenized in a homogenizer to obtain the final product. Indian Noni is rich in vitamins minerals and contained small amounts of proteins, carbohydrates and fat.
12. The assessee had claimed through its literature that the product had several curative properties against various diseases, it developed immunity in a person against major deceases and enhanced health and well being. Fruit juice is not prepared by boiling fruit extracts like in the instant case. The main raw material is not an edible fruit. Food preparations based on the essences of fruit powder mixture (Noni being predominant) are not covered under Chapter 20.
13. The peculiar consumption pattern of incremental initial doses before the consumer got used to the supplement as advised in the leaflet "Directions for Drinking" supplied by the manufacturer showed that Indian Noni is consumed as a health tonic. The consumer is advised to take the drink half an hour before food on empty stomach as if it is tonic. Normal fruit juice does not require the consumers' body to be prepared or get used to its effects. Fruit juices do not have side effects attributed to the subject goods in the literature on it. The product is known and marketed as a herbal food supplement and health enhancer and not as a fruit juice. Commercial parlance justified classification of Indian Noni as food supplement under CSH 2106. In the instant case, fruit extract in powder form is boiled with other fruit/leaf extracts to brew a decoction for further processing. Such decoction is not a fruit juice as ordinarily understood.
14. In view of the above position and the claims in the literature on the product and the deposition of Dr. P.I. Peter, CMD on the nature of the product and the way it was marketed, the Commissioner had decided that the product was "food preparations not elsewhere specified or included" falling under heading 2108.99/2106.9099. Though the Commissioner also referred to HSN notes, the classification determined by him is more on the basis of common parlance and trade usage in view of the HSN notes cited by the assessee excerpted in para 2 supra. The facts of the case apparently support the decision on that basis.
15. However, we find that the HSN explanatory notes have overriding precedence over trade parlance in deciding classification of goods involving identical Chapter Headings in Central Excise Tariff and HSN. Classification of products manufactured for the purpose of assessment under Central Excise tariff is governed by rules for interpretation of 1st Schedule to CETA, 1985. As per Rule 1 of the interpretative rules, classification shall be determined according to the terms of the headings and any relative section or chapter notes. In case classification cannot be made in terms of Rule 1, the same shall be done in accordance with the subsequent rules. In the instant case, during the material period, the chapter headings of Chapter 20 and Chapter 21 were pari material with the corresponding headings in HSN. Applying Rule 1, the impugned product appeared to fit both in the entry for mixture of juices of Chapter 20 and food supplements of Chapter 21. We have to decide which of the above is the more appropriate entry.
16. In Akbar Badruddin Jiwani v. Collector of Customs the Apex Court held:
It is well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule.
17. In view of the two entries claiming the product for classification in either, common parlance test and trade understanding cannot be resorted to in classifying the product in the instant case. Classification has to be necessarily guided by HSN explanatory notes and common parlance test has to be discarded.
18. During the material period upto 27.02.85, chapter heading 20 in both the CETA and HSN read as follows:
20: "Preparations of vegetables, fruit, nuts or other parts of plants".
During this period, heading 20.01 of the CETA Schedule read as under:
2001: Preparations of vegetable, fruit, nuts, or other parts of plants, including jams, fruit jelly, marmalades, fruit or nut, puree, and fruit and nut paste, fruit juices and vegetable juices whether or not containing added sugar or other sweetening matter.
2001.10- Put up in unit containers and bearing a brand name.
2001.90-Other.
During the remaining period covered by the notice, the subheading 20099000, "mixtures of juices", figured under chapter heading 2009.80 for "juice of any other single fruit or vegetable" under Chapter sub-heading 2009 of CETA Schedule. Sub-heading 2009 and HSN 20.09 were pari material.
During the period covered by the impugned order, Chapter 2009 of HSN read as follows:
20.09 FRUIT JUICES (INCLUDING GRAPH MUST) AND VEGETABLE JUICES, UNFERMENTED AND NOT CONTAINING ADDED SPIRIT, WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER(+).
Orange juice:
2009.11 Frozen 2009.19 Other 2009.20 Grapefruit juice 2009.30 Juice of any other single citrus fruit 2009.40 Pineapple juice 2009.50 Tomato juice 2009.60 Grape juice (including grape must) 2009.70 Apple juice 2009.80 Juice of any other single fruit or vegetable 2009.90 Mixture of juices.
19. The sub-heading 21.06 of Central Excise Tariff contains the following entries.
2106Food preparations not elsewhere specified or included.
2106 10 00
-Protein concentrates and textured protein substances kg.
16% 2106 90
- Other:
-- Soft drink concentrates:
2106 90 11
---Sharbat kg.
16% 2106 90 19
---Other kg.
16% 2106 90 20
-- Pan masala kg.
37.5% 2106 90 30
-- Betel nut product known as "Supari"
kg.
16% 2106 90 40
--Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included; lactose syrup; glucose syrup and malto dextrine syrup kg.
16% 2106 90 50
--Compound preparations for making non-alcoholic beverages kg.
16% 2106 90 60
--Food flavouring material kg.
16% 2106 90 70
--Churna for pan kg.
16% 2106 90 80
--Custard powder
--Other:
kg.
16% 2106 90 91
--Diabetic foods kg.
16% 2106 90 92
--Sterilized or pasteurized miltone kg.
Nil 2106 90 99
--Other kg.
16%
20. The heading 21.06 of Central Excise Tariff covers different entries including diverse food preparations such as protein concentrates, pan masala, supari, choorna for pan, diabetic foods etc. The classification decided by the Commissioner is 21069099 under 'sub-heading 21.06.90 -Other', the lone preceding sub-heading in the chapter subheading 21.06 being protein concentrates and textured protein substances. As per the HSN, heading 21.06.90 obviously covers only food preparations not elsewhere specified other than 'protein concentrates and textured protein substances'.
20.1. Judgments of the apex Court mandate that HSN explanatory notes have to be followed in classifying goods, especially when there are more than one entry which can accommodate the product. In the case of Commissioner of Central Excise Mumbai v. Business Forms Ltd. the Apex Court made the following observations:
2. This Court in Collector of Central Excise, Shillong v. Wood Craft Products Limited has said:
We are of the view that the Tribunal as well as the High Court fell into the error of overlooking the fact that the structure of the Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself. The definition of a term in the ISI Glossary, which has a different purpose, cannot, in case of a conflict, override the clear indication of the meaning of an identical expression in the same context in the HSN. In the HSN, block board is included within the meaning of the expression 'similar laminated wood' in the same context of classification of block board. Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the MSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian Tariff of a different intention.
Clearly, therefore, the HSN Explanatory Notes are entitled to far greater consideration than the Tribunal has given there.
20.2. The Apex Court in CCE Shillong v. Woodcraft Products (supra) made the following observations on the applicability of HSN in the classification of goods under the Tariff.
12. It is significant, as expressly stated, in the Statement of Objects and Reasons, that the Central Excise Tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to "reduce disputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the of specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, in case of any difference between the meaning of the expression given in the HSN and the meaning of that term given in the Glossary of Terms of the ISI."
14. It is further observed in Para 18:
...Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the MSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian Tariff of a different intention.
21. HSN Explanatory Note (16) under sub-heading 21.06 reads as follows:
Preparations, often referred to as food supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc. and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packaging with indications that they maintain general health or well-being. Similar preparations, however intended for the prevention or treatment of diseases or ailments are excluded (heading 30.03 or 30.04) As vitamins are not added to the impugned preparation, as per the above HSN note, the impugned product cannot be classified under sub-heading 21.06. It was decided by the Apex court in the case of Akbar Badruddin Jiwani v. CC. that in a taxing statute the words used were to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature could be given only in cases where there was no conflict between the words used in the tariff entry and any other tariff entry in the tariff schedule. A trade meaning or commercial nomenclature would be applicable if a particular product description occurred by itself in a tariff entry and there is no conflict between the tariff entry and any other entry requiring to reconcile and harmonize that tariff entry with any other entry. In view of the rival entries claiming the product, common parlance test cannot be adopted for classification in the instant case. In CCE, Shillong v. Woodcrafts Products Ltd. (supra), the Apex Court ruled that similar expressions used in the Central Excise Tariff Act, 1985 and the HSN should be construed to have the meaning expressly given to it in the HSN as far as practicable. It was also decided that HSN explanatory notes were entitled to greater consideration and were of not only persuasive value.
22. The Explanatory notes of HSN under Chapters 20 and 21 are applicable for the entire period covered by the impugned order the corresponding headings, being pari materia in both the Central Excise Tariff and HSN. It is found by the adjudicating authority that the impugned product is a natural food supplement. The Commissioner has given a finding that the item is prepared by natural sources with the fruit Noni as the main raw material. There is no finding that vitamins are added in preparing the subject product. Therefore, classification of the product under heading 21.06 is not sustainable. The explanatory notes under Chapter subheading 21.06 concludes with the following note:
The heading further excludes preparations made from fruits, nuts or other edible parts of plants of heading 20.08 provided that the essential character of the preparations is given by such fruit, nuts or other edible parts of plants (heading 20.08).
23. As per the above exclusion under Note (16) of heading 21.06, preparations made from fruit, nuts or other edible parts or plants of heading 20.08 are not covered by heading 21.06 provided that the essential character of the preparations is given by such fruit, nuts, or other edible parts of plants. This fortifies the finding that Indian Noni is a fruit juice falling under 20.09 as fruits and vegetables give essential character to the preparation. It cannot be denied that the essential character of the product is given by the fruits Noni, Garcinia and the Stevia leaves.
24. In view of our analysis and finding as above, we hold that the product in question is rightly classifiable under Chapter Heading 20.09 (upto 27.2.2005) and under Heading 20099000 of the Central Excise Tariff for the remaining period. The appeal therefore succeeds and is allowed.
25. Since we have allowed the assessee's appeal on classification, we have not considered the other issues raised in the appeal.
(Pronounced in open Court on 13.2.2007)