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CASE NO.: Appeal (civil)  4369-4370 of 2000

PETITIONER: Commissioner of Central Excise, Meerut

RESPONDENT: M/s. Maharshi Ayurveda Corporation Limited

DATE OF JUDGMENT: 07/12/2005

BENCH: ASHOK BHAN & C.K. THAKKER

JUDGMENT: J U D G M E N T With Civil Appeal No.6774/2001

BHAN, J.                   These appeals have been filed by the  Commissioner of Central Excise, Meerut (for short  "the appellants") under Section 35 L (B) of the  Central Excise Act, 1944 (for short "the Act")  against the judgment and final order No.1009- 1010/99-C dated 18.11.1999 passed by the Customs,  Excise and Gold (Control) Appellate Tribunal, New  Delhi (for short "the Tribunal") in appeal  No.E/3070-71/98-C by which the Tribunal has set  aside the order passed by the Commissioner  (Appeals) and allowed the appeals filed by M/s.  Maharshi Ayurveda Corporation Limited, respondents  herein, holding that the product "Herbonic" tonic  falls under Chapter heading 2001.90 and not under  Chapter heading 2108.90.

       The issue involved in these cases is whether  the product "Herbonic" tonic is classifiable under  Central Excise Tariff Heading No.2001.90 or  2108.90.  The Tribunal classified the product under  Chapter heading 2001.90.

FACTS         Respondents are engaged in the manufacturing of  P.P. Ayurvedic Medicaments falling under Chapter  heading 3003.30 of the Schedule to the Central  Excise Tariff Act, 1985 (for short "the Tariff  Act").  The respondents had filed a classification  list effective from 25.4.1994 for the product  "Herbonic" put up ordinarily for sale in unit  containers under sub-heading 2001.90 declaring the  same to be a preparation of vegetables, nuts and  other parts of plants and fruits/seeds claiming nil  rate of duty under notification no.2/94 dated  1.3.1994 whereas as per appellants the product is a  mixture of assorted vegetables and dry fruits or  seeds and is a health vitalizer being used for all  round growth and improvement of memory and general  health of children and adults and the product  merits classification under sub-heading 2107.91  chargeable to duty at the rate of 20% ad valorem.   After the Budget of the year 1995-96 the product

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was reclassified under sub-heading 2108.90.   Appellant issued show cause notices no. C. No.  V[30]3/49/96/Div.IV/3405, C. No.  V[30]3/106/Div.IV/6332 dated 26.6.1994, C. No.  V[3000]/3/40/95-D-IV/677 dated 27.1.1995, C. No.  V[30]3/94/95/D-IV/1198 dated 20.2.1995, C No.  V[21]3/323/95/D-IV/6009 dated 16.11.1995 and C. No.  V[30]3/32/95/D-IV/6569 dated 26.12.1995 to the  respondents covering duty demand for different  periods of Rs.3,45,340.55.

       Assistant Commissioner confirmed the demand  vide order in original no.251/D/96 dated 15.10.1996  and also imposed a penalty of Rs. 10,000/- on the  respondents.  In other cases of the respondents in  respect of classification of the same product, the  Assistant Commissioner also confirmed the demand of  Rs.1,42,946.00 (Rs.68,078.20 + 74,867.80) and also  imposed a penalty of Rs.7,000/- on the respondents  vide order in original no.269-270/D/96 dated  18.11.96.

       Aggrieved by the orders of the Assistant  Commissioner, respondents filed appeals before the  Commissioner (Appeals).  The Commissioner (A)  considered the HSN and the Central Excise Tariff  thoroughly and adjudicated that the product  "Herbonic" is classifiable under Chapter 21  (2107.91/2108.90).  The Commissioner (A) thus  confirmed the order in original passed by the  Assistant Commissioner.

       Aggrieved by the order in appeal passed by the  Commissioner (A), the respondents filed appeals  before the Tribunal.  The Tribunal after  scrutinizing the submissions made by the parties  held that the product "Herbonic" is classifiable  under sub-heading 2001.90 being specific              as against entries in Chapter 21 which is a  residuary general heading.  The product in question  cannot be classified under a general heading when  it can be classified under a specific heading as  according to Rule 3(a) of the rules of  interpretation of Schedule-I, "The heading which  provides the most specific description shall be  preferred to headings providing a more general  description."

       Aggrieved against the order passed by the  Tribunal, the present appeals have been filed.   Counsels for the parties have been heard.  

       Relevant entries of Tariff Act and HSN are  Entry 20.01 under Chapter 20 reads as under:- Heading  No. Sub- heading  No. Description of goods Rate of  Duty (1) (2) (3)

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(4) 20.01

Preparations of  vegetables, fruits, nuts  or other parts of plants  including jams, fruit  jellies, marmalades,  fruit or nut puree and  fruit or nut pastes,  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 16%

2001.90 Other Nil

       Entry 21.08 under Chapter 21 which deals with  miscellaneous edible preparations reads as under:- Heading  No. Sub- heading  No. Description of goods Rate of  Duty (1) (2) (3) (4) 21.08

Edible preparations, not  elsewhere specified or  included

2108.10 - Preparations for  Lemonades     or other Beverages  intended     for use in the  manufacture of     Aerated Water 16%

2108.20 - Sharbat 16%

2108.30 - Prasad or Prasadam

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Nil

2108.40 - Sterilised or  Pasteurised    Miltone

Nil

- Other:

2108.91 - Not bearing a brand  name Nil

2108.99 - Other  16%

       Entries of Chapter 20 of harmonized commodity  description and coding system (Harmonized System of  Nomenclature called "HSN") dealing with the  preparation of vegetables, fruits, nuts or other  parts of plants which corresponds to Chapter 20.08  of the Tariff Act reads as under:- "20.08-         Fruit, Nuts and other  edible parts of plants,  otherwise prepared or  preserved, whether or not  containing added sugar or  other sweetening matter  or spirit, not elsewhere  specified or included.

2008.99        -- Other" Exclusionary Clause "And it excludes products  consisting of a mixture of plants  or parts of plants (including  seeds or fruits) of different  species or consisting of plants  or parts of plants (including  seeds or fruits) of a single or  of different species mixed with  other substances such as one or  more plant extracts, which are  not consumed as such, but which  are of a kind used for making  herbal infusions or herbal "teas"  (e.g., heading 08.13, 09.09 or  21.06)."

       Chapter 21 of HSN which deals with  miscellaneous edible preparations and which  corresponds to Chapter 21 of Tariff Act the  relevant entry of 2106.10 reads as under:- "21.06 \026     Food preparations not  elsewhere specified or  included.

2106.10 -       Protein concentrates and  textured protein substances."

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It is further provided the heading includes,  inter alia:

"(1) to (13)    xxx   xxx

(14)    Products consisting of a  mixture of plants or parts of  plants (including seeds or fruits)  of different species or consisting  of plants or parts of plants  (including seeds or fruits) of a  single or of different species  mixed with other substances such  as one or more plant extracts,  which are not consumed as such,  but which are of a kind used for  making \herbal infusions or herbal  "teas", including products which  are claimed to offer relief from  ailments or contribute to general  health and well-being."  

SUBMISSIONS Mr. Mohan Parasaran, learned Additional  Solicitor General of India submits that the heading  under Chapter 20 in the Central Excise Tariff have  been compressed and there is only one chapter  heading 2001 to 2009, accordingly a reference to  the chapter headings of HSN gives clearer picture  of the items intended to be covered under this  chapter.  In the HAS, 20.08 is the only chapter  heading which can cover the products of "Herbonic".   However, this chapter contains a specific exclusion  of products consisting of mixtures of plants and  parts of plants of different species etc.  The  structure of central excise tariff in the Central  Excise Tariff Act, 1985 is the adoption of a  detailed central excise tariff based broadly on the  system of classification derived from the  International Convention called the ’Brussels’  Convention on the Harmonised Commodity Description  and Coding System (Harmonised System of  Nomenclature called "HSN") with the necessary  modifications.  If the expression used in the  Tariff Act and HSN is the same then the meaning  which is expressly given in the HSN should be  preferred in the absence of anything to the  contrary given in the Tariff Act.  For this he has  relied upon the judgment of this Court in Collector  of Central Excise, Shillong Vs.  Wood Craft  Products Ltd. [1995 (77) E.L.T. 23] in which it has  been observed:- "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

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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  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."           It is further observed in para 18:  "...... Since the Central Excise  Tariff Act, 1985 is enacted on  the basis and pattern of the HSN,  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."           It was further contended that because  "Herbonic" is a mixture of vegetable origin and  fruit origin raw material, the same gets  specifically excluded from the provisions of  Chapter 20.08 under HSN and therefore also from  Chapter 20 of the Central Excise Tariff.  Chapter  heading 21.06 of HSN at Sl. No.14, specifically  covers mixture of plants or parts of plants of  different species with special reference to the  product, which contributes to general health and  well being.  "Herbonic" which is claimed to be a  tonic and does not have any therapeutic or  prophylactic properties is specifically covered  under Chapter heading 2106 of the HSN and Chapter  heading 21.07 or Chapter heading 21.08 (depending  on the period involved) of the Central Excise  Tariff.   According to him the correct  classification of the produce "Herbonic" should be  under Chapter 2107/2108.

As against this, learned counsel for the  respondents contends that Chapter Note 1 of Chapter  20 is a specific entry which deals with preparation  of vegetable, fruit or nuts where as Entry 21.08 in  Chapter 21 is residuary.  Since Chapter 20.01 is

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specific on such preparation the product should be  covered by this description and qualifies for  classification under Chapter heading 20.01.  As per  Rule 3(a) of the rules of interpretation of  Schedule-I, "The heading which provides the most  specific description shall be preferred to headings  providing a more general description."   Since the  respondent’s preparation is covered by entries in  Chapter 20, the same should be preferred to the  residuary clause in Chapter 21 which is of general  description.  Relying upon the judgments of this  Court in Bharat Forge & Press Industries (P) Ltd.  Vs. Collector of Central Excise, [1990 (45) E.L.T.  525}, Indian Metals & Ferro Alloys Ltd. Vs.  Collector of Central Excise, [1991 (51) E.L.T.  165}, Speedway Rubber Co. Vs. Commissioner of  Central Excise, Chandigarh, [2002 (143) E.L.T. 8}  and C.C. (General), New Delhi Vs. Gujarat Perstorp  Electronics Ltd., [2005 (186) E.L.T. 532},  it was  contended that the Heading Note which is more  specific should be preferred to the residuary  clause.  

FINDINGS  

       The product under reference is a mixture of  assorted vegetation and dry fruits and seeds.  That  different vegetations namely Khas Khas, Aswagandha  & Brahmi Booti  is turned into powder and processed  in Khas Khas and giri badam (almond) oil and then  the whole mixture is processed in sugar syrup under  vacuum and thereafter choti illayachii (cardamom)  and root kewara are added as flavour.  Since the  product "Herbonic" is mixture of different  vegetation it is rightly been classified by the  Tribunal under Chapter 20.  In Chapter 21 there is  an entry reading as "Edible preparations, not  elsewhere specified or included" under the  particular heading "Miscellaneous Edible  Preparations".  Chapter Note 9(a) of the Chapter 21  reads "Heading No. 21.08, inter alia includes: [a]  protein concentrates and textured protein  substances; [b] preparations of use, either  directly or after processing (such as cooking;  dissolving or boiling in water, milk or other  liquids), for human consumption".   Sub-heading  2107.91/2108.90 covers other edible preparations  not elsewhere specified and as such is residuary in  nature.  As per Rule 3 (a) of the rules of  interpretation of Schedule-I, the heading which  provides the specific description should be  preferred to the heading providing a general  description.                    In Bharat Forge & Press Industries (P) Ltd.  (supra) a three Judge Bench of this Court held that  if a product cannot be brought under the specific  entries in the tariff Act only then resort can be  made to a residuary entry.  It was held in para 3  as under:-

"3.   The question before us is  whether the Department is right  in claiming that the items in  question are dutiable under

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tariff entry No. 68. This, as  mentioned already, is the  residuary entry and only such  goods as cannot be brought under  the various specific entries in  the tariff should be attempted to  be brought under the residuary  entry. In other words, unless the  department can establish that the  goods in question can by no  conceivable process of reasoning  be brought under any of the  tariff items, resort cannot be  had to the residuary item."           To the same effect is the judgment in Indian  Metals & Ferro Alloys Ltd.  (supra), it was  observed in para 16 as under:-

"16. One more aspect of the issue  should be adverted to before we  conclude. The, assessee is  relying upon a specific entry in  the tariff schedule while the  department seeks to bring the  goods to charge under the  residuary Item No. 68. It is a  settled principle that unless the  department can establish that the  goods in question can, by no  conceivable process of reasoning,  be brought under any of the  specific items mentioned in the  tariff, resort cannot be had to  the residuary item : See the  Bharat Forge case (supra). This  certainly is not the position in  this case, particularly in the  light of the department’s own  understanding and interpretation  of Item 26AA."

 In Speedway Rubber Co. (supra) this Court  observed in para 23 as under:- "23.  We may notice that as per  Rule 3(a) of the Interpretation  Rules to Central Excise Tariff  Act, 1985, "The heading which  provides the most specific  description shall be preferred to  headings providing a more general  description."   In C.C. (General), New Delhi (supra) it was  observed in para 57 as under:- "57.  There is still one more  aspect which is relevant.  It  cannot be disputed and is not  disputed before us and is also  concluded by a decision of a  three Judge Bench in Associated  Cement Co. Ltd. that the basic  heading is 49.01. It deals with  "Printed books, brochures,

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leaflets and similar printed  matter, whether or not in single  sheets".  49.11 covers "Other  printed matter, including printed  pictures and photographs".  Thus,  specific or basic heading is  49.01 and residual entry is  49.11.  Priority, therefore, has  to be given to the main entry and  not the residual entry.   According to the Company, the  case is covered by the main entry  under 49.01, and in that view of  the matter, one cannot consider  the residual entry 49.11."   Since in the present case the product is  covered under specific entry under Chapter 20  resort cannot be made to the residuary entry.    

The exclusionary note in HSN of Entry 20.08 of  Chapter 20 of HSN is not applicable because it  excludes the products consisting of mixture of  plants or parts of plants (including seeds and  fruits) of different species or consisting of  plants or parts of plants which are not consumed as  such but which are of a kind used for making herbal  infusions or herbal "teas".  In the present case  the mixture prepared is of parts of plants, seeds  and nuts which can be consumed as such.  It would  therefore be not applicable. Entry 14 of Chapter  2106.90 produced above would also be not applicable  since in this case we are holding that the present  case would be governed by Chapter 20 of the Tariff  Act and not Chapter 21 of the Tariff Act.  The  Entry 14 referred to above is a part of Chapter 21  of HSN which corresponds to Chapter 21 of Tariff  Act which is not applicable to the present case.   

       In conclusion, we hold that the Tribunal is  right in holding that the product of the  respondents is covered by Chapter 20 of the Tariff  Act and not Chapter 21 of the Tariff Act.   

For the reasons stated above, we do not find  any merit in these appeals and dismiss the same  with no order as to costs.