Customs, Excise and Gold Tribunal - Mumbai
Hindustan Lever Ltd. vs Commissioner Of C. Ex. on 6 March, 2007
ORDER
Jyoti Balasundararn, Vice-President
1. The above appeals arise out of separate adjudication orders by the Commissioner/Commissioner (Appeals) and involve common issues, hence they are heard together and disposed of by this common order. The issue relates to classification of various products manufactured by the assessee herein (as detailed in the annexure to this order) essentially covering four classes of goods and eligibility to the benefit of exemption from payment of duty in terms of Serial No. 9, 10 and 11 of the table to notification 6/2002-C.E. dated 1-3-2002 to three classes of goods viz. sauces, soups/broths and beverage powders. The third class of goods is spices falling for classification under Chapter Heading 21.03 - the assessees do not dispute the liability to pay the duty on these goods and we, therefore, uphold the duty demand of Rs. 8,14,276.44, confirmed as a result of denial of the benefit of exemption under SI. No. 10 of Notification No. 6/2002.
2. We have heard both sides.
3. The products falling in Class 1 are enumerated herein below:
Sr. No. Products
1. Pizza Gravy Sauce
2. Pizza Gravy
3. Best Foods Real Mayonnaise Sauce
4. Real Mayonnaise
5. Caterplan Mayonnaise (Real)
6. Best Food Vegetarian Mayonnaise Sauce
7. Best Food Vegetarian Mayonnaise 1 Kg
8. Veg Mayonnaise
9. Thousand Island Dressing
10. Vinaigrette Dressing.
11. Cheese Sauce with Mayo
12. Cream Cheese Dressing
13. Bestfoods Marinara Sauce
14. Best Food Ceasar's Mayonnaise Sauce
15. Bestfoods Barbecue Sauce
16. Bestfoods Honey Mustard Sauce
17. Bestfoods Bearnaise Mayonnaise Sauce
18. Italian Mayonnaise Sauce
19. Kissan Sauce Maker
20. Knorr Masala Sauce
21. Knorr Mexican Salsa Sauce
22. Knorr Schezwan Cream Sauce
23. Kissan Sauce Dip
24. Knorr Annapurna Cooking Base
25. Knorr Demi-glace Sauce Powder
26. Besi Food Tartar Sauce
27. Margarita Mayonnaise Sauce The main ingredients of this class of products are tomato paste, garlic paste, ginger, cheese powder, salt, spices etc. The appellants claim for classification of these goods under CET sub-heading 2103.10 which covers "Sauces, Ketchup and the like and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard", has been accepted by the authorities below. However, the claim of the assessees that this class of goods are "sauces or ketchup and the like and preparations therefor" eligible to exemption in terms of serial No. 10 of the table to the above notification has been disallowed on the ground that the products are 'mixed condiments and mixed seasonings' not covered there-under. The grounds for concluding that they are not sauces or ketchup are that they are not used as sauces in the conventional sense but as spread for burgers, curry base or dip and further that they have been shown as examples of "mixed condiments and mixed seasonings" in HSN Explanatory Notes Chapter Heading 21.03.
4. According to Foods & Nutrition Encyclopedia, 2nd Edition by Ensminger Konlande Robson Sauces Means:
The word sauce comes from the Latin word salsa meaning salted. A sauce can be defined as a liquid food, which is poured over a solid food. It can appear on the menu from appetizer to dessert. It can range from liquid to very thick; from no seasoning to highly seasoned; from cold to piping hot; from sour to extremely sweet; from simple to complicated and rich; and from the same every time to never the same way twice. Sauces do not take any great amount of time to make. Nevertheless, they should not be a neglected art, for, in the final analysis, the sauce often lifts up the dish it glamorizes the simplest food; it gives the recipe distinction; it increases the appetite appeal; it is the crowning touch. There are so many kinds of sauces that it is difficult to organize them into any kind of order; for instance, a white sauce can be used either for fish or for dessert, depending on the added flavourings and seasonings. Mayonnaise means:
Although mayonnaise and dressings are not called sauces, they may be so classified. Besides mixing with salad greens, mayonnaise can be mixed with minced meats, nuts, or cheese and used in sandwiches, canapes, or appetizers. Some casseroles call for the use of mayonnaise also. Salad dressings means:
Salad dressings are cooked. Because they contain considerably less oil than mayonnaise, they are lower in calories. They can be used interchangeably with mayonnaise. Gravies means:
The juices extracted from meat during the cooking process are tasty and nutritious. They can be served either just as they come from the pan, or with some added water if necessary to dissolve the browned juices, or with some of the fat skimmed off. These are called pan gravy or au jus. Those who desire thickened gravy can have it as think or as thick as desired. Do not add too much water; otherwise, the flavour will be lost. According to Webster's New Twentieth Century Dictionary Unabridged (Second Edn.) Sauce means -
1. (a) A liquid or soft dressing served with food to improve its taste,
(b) A flavoured syrup used as a topping, as on ice cream, custards, cakes, etc.
2. Something that adds interest, zest or flavour.
3. Fruit stewed, sweetened and often flavoureed, as applesauce.
4. Any green vegetable.
According to The Shorter Oxford English Dictionary Sauce means -
1. Any preparation, usu. Liquid or soft, intended to be eaten with food as a relish. Often with qualifying word denoting the predominant ingredient, as bread, egg, mint, parsley.
According to Collins English Dictionary Sauce means -
1. Any liquid or semiliquid preparation eaten with food to enhance its flavour.
2. Anything that adds piquancy.
3. Stewed fruit.
4. Vegetables eaten with meat.
According to Chambers' 20th Century Dictionary (New Den.) Sauce means -
1. A dressing poured over food: anything that gives relish.
2. Vegetables eaten with meat.
3. Stewed fruit.
4. A solution of salt etc. used in individual processes.
According to The Oxford Reference Dictionary Sauce means -
1. A liquid or soft preparation served with food to add flavour or richness.
According to the Chambers Dictionary (New Edn.) Sauce means -
1. Any dressing poured over food.
2. Any (semi-) liquid mixture in which food is cooked and/or served.
3. Anything that gives relish.
4. Vegetables eaten with meat.
5. Stewed fruit.
6. A solution of salt, etc. used in individual processes.
According to Chambers English Dictionary Sauce means -
1. A dressing poured over food.
2. Anything that gives relish.
3. Vegetables eaten with meat.
4. Stewed fruit.
5. A solution of salt, etc. used in individual processes.
According to Merriam Webster's Collegiate Dictionary (Tenth Edn.) Sauce means -
1. A condiment or relish for food, esp. fluid dressing or topping.
2. Something that adds zest or piquancy.
3. Stewed fruit eaten with other food or as a dessert.
4. To dress with relish or seasoning.
According to Webster's Encyclopedic Unabridged Dictionary of the English Language (New Revised Edn.) Sauce means
1. Any preparation, usually liquid or semi-liquid, eaten as a gravy or as a relish accompanying food.
2. Something that adds special piquancy or zest
3. Stewed fruit.
5. We are of the view that the use of the products as spreads or dips or curry base cannot detract from their being held to be sauces or ketchups, particularly when the HSN Explanatory notes to Heading 21.03 set out mayonnaise, salad dressings, Soya sauces, tomato ketchup and other sauces as examples of 'sauces and preparations therefor,' "mixed condiments and mixed seasonings." The lower authorities have clearly mis-read the HSN Explanatory Note to Heading 21.03 without noticing the fact that Note 4(A) to Chapter 21.03 which reads as under is not only illustrative of mixed condiments and mixed seasonings but also of sauces and preparations therefor:
(A) Sauces and Preparations therefor; Mixed Condiments and Mixed Seasonings This heading covers preparations, generally of a highly spiced character, used to flavour certain dishes meat, fish, salads, etc.) and made from various ingredients (eggs, vegetables, meat, fruit, flours, starches, oil, vinegar, sugar, spices, mustard, flavourings etc.). Sauces are generally in liquid form and preparations for sauces are usually in the form of powders to which only milk, water, etc. need to be added to obtain a sauce.
The heading includes certain products based on vegetables or fruit, but these differ from the preserved products in Chapter 20 (and more especially those under heading 20.01) in that they are mainly liquids, emulsions or suspensions containing very little solid matter, - see the Explanatory Note to heading 20.01 regarding these preparations.
Mixed condiments and mixed seasonings containing spices differ from the spices and mixed spices of headings 09.04 to 09.10 in that they are also contain one or more flavouring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter 9 (see the General Explanatory Note to that Chapter).
Examples of products covered by the heading are: mayonnaise, salad dressings, bearnaise, bolognaise (consisting of chopped meat, tomato puree, spices etc.) soya sauces, mushroom sauce. Worcester sauce (generally made with a base of thick soya sauce, an infusion of spices in vinegar, with added salt, sugar, caramel and mustard), tomato ketchup (a preparation made from tomato puree, sugar, vinegar, salt and spices) and other tomato sauces, celery salt (a mixture of cooking salt and finely ground celery seeds), certain mixed seasonings for sausage making and products of Chapter 22 (other than those of heading 22.09) prepared for culinary purposes and thereby rendered unsuitable for consumption as beverages (e.g. cooking wines and cooking Cognac).
6. We also find that in the case of the same assessee, vide Order No. A/2210/WZB/06 C-I/EB dated 13-11-06 [2007 (209) E.L.T. 119 (T)] the Tribunal has accepted the claim to the benefit of exemption in terms of Serial No. 10 of Notification 6/2002-CE for "Kissan Sauce Tom Tom Tomato Ketchup" holding it to be a sauce or ketchup.
7. In the light of the above discussion, we hold that all the products falling in class I are sauces or ketchups or preparations therefore and hence the benefit of exemption covered in terms of SI. No. 10 of the table to the Notification is admissible to them. Accordingly, the duty demand on this group of products is set aside as not sustainable.
8. The products falling in Class 2 are the following:
Sl. Products No.
1. Knorr Chicken Broth Powder
2. Knorr Instant Tomato Soup Powder
3. Knorr Instant Chicken Soup Powder
4. Knorr Instant Sweet Corn Veg. Soup Powder The Excise authorities have classified this group of products under CET sub-heading 2108.99 which is residuary heading covering edible preparation not elsewhere specified or included, by application of Note 2 to Chapter 21 to read in the requirement of such products being put up for retail sale, which is however not required in the case of soups and broths and preparations therefor, covered under Chapter Heading 21.04, but a requirement only if the products under Chapter Heading 21.04 are "Homogenized composite food preparations." There is no independent reason as to why the class of products which only contain salt, sugar, tomato solids (in the case of tomato soup powder), dehydrated chicken pieces (in the case of chicken soup powder) and sweet corn kernels, dehydrated vegetables (in the case of Knorr Sweet Corn Veg. Soup Powder) cannot he considered as soups or broths, and going by the ingredients of these products and the fact that they are ready to drink by dissolving in hot water, we accept the contention of the assessee that this class of products are soups falling classification under Chapter Heading 21.04 and eligible to the benefit of exemption in terms of serial No. 11 of Notification 6/2002.
9. There are two products in the last class of products i.e. class 4 Kissan Fruit Kick Orange Fruit Beverages Powder and Kissan Mr. Fruit Orange Juicy Bits, both of which contain sugar, orange juice powder, citric acid, minerals, vitamins, xanthan gum, permitted fruit colours and added flavours. In view of their ingredients they are fruit juices falling for classification under Chapter Heading 20.01 (as claimed by the assessees) which specifically covers "Preparations of vegetables, fruits and fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter", and eligible to exemption in terms of serial No. 9 of the table to notification 6/2002 which covers all goods falling under Heading 2001.10 and set aside the classification adopted by the Department under CET sub-heading 2108.99 as "edible preparations not elsewhere specified or included," and consequent demand, as not sustainable.
10. Penalties upon the assessees are set aside in view of our findings above and in view of the fact that the dispute in respices relates to classification (the alternate claim of the assessees is for classification of spices under Chapter 9), which does not warrant imposition of penalty.
11. In appeal No. E/247/03, the Revenue challenges the extension of benefit of exemption in terms of Sl. No. 10 to Notification No. 3/2001 of the following products:
1. Bestfood Tartar Sauce
2. Knorr Demi - Glace Sauce Powder
3. Margarita Mayonnaise Sauce According to the Revenue product at Sl. No. 1 is not used as a sauce or ketchup but as a dip, the product at Sl. No. 2 although used as a sauce, is not a sauce because is in powder form while the sauces are generally in liquid form and product at Sl. 3 is not used as sauce or ketchup but used as a dressing for Mc Donalds chicken Supreme Burger. In the light of our finding in para No. 4 herein above, we hold that the above 3 items are sauces or ketchups falling under CET sub-heading 2103.10 and eligible to exemption in terms of Sl. No. 10 of the table to the Notification.
12. In the result Appeal Nos. E/51, E/52, E/56, E/66 and E/1848 of 2006 are allowed in toto, Appeal Nos. E/3787/2002, E/57, E/65 and E/3262 of 2006 are partly allowed by only upholding duty demand on spices, E/1986/03 is rejected and E/247/03 filed by the Revenue is rejected.