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PETITIONER: HEALTHWAYS DAIRY PRODUCTS CO.

       Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT06/10/1975

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. ALAGIRISWAMI, A. GOSWAMI, P.K.

CITATION:  1976 AIR 2221            1976 SCR  (2)  93  1976 SCC  (2) 887  CITATOR INFO :  R          1990 SC1579  (45)

ACT:      Central   Excise   Rules,   1944,   r.   8(1)-Exemption Notification-’Condensed     Milk,’  if  includes  ’Condensed Skimmed Milk’.

HEADNOTE:      By virtue of a Notification dated March 1, 1970, issued by the  Central Government  under r.  8(1)  of  the  Central Excise Rules. 1944, preparations of milk, leviable to excise duty under  the Excise  Act, 1944,  became exempt  from  the levy. but  from that  exemption were  excluded certain  milk preparations, namely,  items 12  and l  3  of  the  Schedule annexed to the Notification. They refer to ’milk powder, but excluding such  powder specially  prepared  for  feeding  of infants’. and  ’condensed milk,  whether sweetened  or not’, respectively. The  appellant challenged  the levy  of excise duty on  condensed skimmed  milk, which  he manufactured, on the ground,  that it  fell within the exemption Notification and not within item 13 of the excluded items. The High Court dismissed the  writ petition  holding that condensed skimmed milk was also condensed milk.      Allowing the appeal to this Court, ^      HELD: (1) For the purpose of levy of excise duty or any other similar  tax the description of goods as popularly and commonly understood  has to  be taken  as the description of the same  goods in the relevant provisions of the statute or the rules. In common parlance milk means the full cream milk and it becomes skimmed milk when cream is extracted from it. [95 A-B].      (2) In  the present  case, there  are materials to show that the  Government itself  treated  ’Condensed  milk’  and ’Condensed skimmed milk’ as different milk preparations, [95 H].      (a) In  Annexure IV  to the  Hand Book  of Self-Removal Procedure under  central Excise  Rules, 1944,  published  in June 1972  by the Central Board of Excise, are items 13 and. 14 corresponding  to items  12 and 13 of the Schedule to the exemption Notification.  Against each item certain important

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raw materials  are mentioned  of which  the assessee  has to maintain accounts.  Against milk  powder, the  raw materials shown are  both fresh  milk and skimmed milk, while, against condensed milk only fresh milk is mentioned. [95 G-H].      (b)  Further,   r.  42   of  the   Prevention  of  Food Adulteration Rules, 1955, prescribes various forms of labels to be  put on  tins of condensed milk and they also refer to condensed  full   cream  milk  and  condensed  skimmed  milk separately. [96, A-D].      (3) The  fact that  the appellant  had a  manufacturing licence only  for the manufacture of condensed milk while he was in  fact manufacturing  condensed skimmed  milk will not take’  condensed   skimmed  milk   out  of   the   exemption notification and  include it in the excluded item Under s. 6 of the  Act a  licence would be required for the manufacture of condensed skimmed milk and the appellant by manufacturing condensed skimmed  milk without a licence, may be committing an offence.  But, if  condensed milk is exempt from the levy of excise  duty by the Central Government in exercise of its power under r. 8(1), the exemption cannot be affected by the provision for  taking a  licence for its manufacture. [96 F- H].      (4) The  fact that  the appellant  was showing separate prices in the list of prices for condensed milk (full cream) and  condensed   milk  (skimmed)   would  not  help  in  the determination of the question. Unless and until skimmed milk is included  in item  13 of  the exemption  Notification, it remains an  item of  goods exempt  from the  levy of  excise duty. [97 A-Bl. 94

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1257 of 1975.      Appeal by  Special Leave  from the  Judgment and  order dated the  5th May 1972 of the Allahabad High Court in Civil Misc. Writ Petition No. 5546 of 1971.      M. Natesan and N. H. Hingorani, for the Appellant.      Govind Das and Girish Chandra, for the Respondents.      The Judgment of the Court were delivered by      UNTWALIA, J.  The appellant  in this  appeal by special leave is  a registered  partnership firm  and is carrying on business  of  manufacturing    a  number  of  milk  products including Condensed  Milk and Condensed Skimmed Milk. By the Finance Act, 1969 item 1B was added to the First Schedule of The Central  Excise and  Salt Act,  1944. hereinafter called the Excise  Act, levying 10% ad valorem duty on "prepared or preserved foods  put up  in unit  containers and  ordinarily intended for sale including preparations of .. milk ... " In exercise of  the powers of the Central Government under sub- rule (1)  of Rule 8 of the Central Excise Rules, 1944 and in supersession  of   the  earlier  notifications  the  Central Government issued  Notification No. G.S.R. 339 dated the 1st March, 1970  exempting prepared  or preserved  foods falling under Item  No. 1B  of the  first Schedule of the Excise Act other than  those specified  in the  Schedule annexed to the notification   from the whole of the duty of excise leviable thereon. In the Schedule is mentioned as items 12 and 13:           "12. Milk  powder   but  excluding   such   powder                specially prepared for feeding of infants;"           ""13.Condenced milk, whether sweetened or not;" Thus preparations  of milk leviable to excise duty under the Excise Act became exempt from the levy of the duty. But from

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that  exemption  were  excluded  certain  milk  preparations mentioned in  items 12  and 13.  on and  from the 1st March, 1970 the  Excise authorities levied excise duty on condensed milk  and   condensed  skimmed   milk  manufactured  by  the petitioner treating  both of  them as included in Item 13 of the Exemption  Notification dated  the 1st  March, 1970. For sometime  the  petitioner  paid  excise  duty  not  only  on condensed milk  but also on condensed skimmed milk. Later he objected to  the payment  of such duty on the latter product on the  ground that  condensed skimmed  milk fell within the Exemption Notification  and not  within the excluded Item 13 of that  notification. The  authorities did  not accept  his stand to  be correct  and issued  two notices dated 4-8-1971 and 7-8-1971  demanding a  sum of Rs. 1,048/ and Rs. 3.064/- respectively as  duty  payable  on  condensed  skimmed  milk manufactured by  the petitioner  during certain periods. The petitioner filed  a writ  application in  the Allahabad High Court to  challenge the  (demand of excise duty on condensed skimmed milk.  A Bench  of the High Court took the view that condensed skimmed  milk was  also condensed  milk covered by the excluded Item 13 of the Exemption Notification dated the 1  st   March,  1970.  It,  therefore,  dismissed  the  writ application. Hence this appeal. 95      It is  well-established by  several authorities of this Court that  for   the purpose  of levy of excise duty or any other similar  tax the description of goods as popularly and commonly understood  has to  be taken  as the description of the same  goods in the relevant provisions of the Statute or the Rules.  In this  case there  are materials  to show that condensed milk  and condensed skimmed milk are two different items of  milk preparations.  In common  parlance milk means the full  cream milk  as milked  from the cattle. It becomes skimmed milk  when cream  i.e. fat  is extracted  from milk. Thereafter the  skimmed milk which also can be called a form of preparation  of milk is known as such. It becomes easy to digest and  is used  in preparation  of other milk products, which are  different from  the milk  products prepared  from full cream  milk. In the Hand Book on Self Removal Procedure under The  Central Excise Rules, 1944, 3rd edition published in June,  1972 by the Central Board of Excise and Customs is to be found Instruction 8(b) to say:           "Every assessee  is also  required to  maintain  a      daily account  of important  raw materials  in Form  IV      (Annexure II)  and also to submit a quarterly return in      form RT5 (Annexure III) under Rule 55 of Central Excise      Rules, 1944.  One or two important raw materials, which      have been  prescribed for  most of  the excisable goods      under Self  Re moval  Procedure, are  shown in Annexure      IV. The assessees may maintain daily account and submit      quarterly RT5 return only in respect of these specified      raw materials."      In Annexure  IV  are  to  be  found  Items  13  and  14 respectively in these terms:      "13. Milk powder  but excluding  such powder  specially           pre pared for feeding of infants"      ""14. Condensed milk whether sweetened or not."      In column  4, under the heading "names of important raw materials" against  item no.  13 is  mentioned "whole  fresh milk/skimmed milk  as the  case may  be" and against item 14 are found  the words  "fresh milk/and  sugar". It  would  be noticed that  the description in Items 13 and 14 of Annexure IV. is  identical to  that of items 12 and 13 in the list of excluded items  from the Exemption Notification. Yet in item milk powder in Annexure IV as against the names of important

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raw materials,  both "whole  fresh milk"  and "skimmed milk" are mentioned.  But as  against condensed  milk only  "fresh milk" is  mentioned. Such  a handling  of the description of the milk  products and  preparations does  indicate that the Central Government  when it mentioned condensed milk in item 13 of the notification dated the 1st March, 1970 it meant to exclude from  exemption only  condensed milk  of full  cream milk and  not  the  condensed  skimmed  milk  prepared  from skimmed milk.  The milk  preparation condensed  skimmed milk prepared  from   skimmed  milk  fell  within  the  Exemption Notification and not within excluded item 13. 96      Some support, although a feeble one, can be lent to the above view  with reference  to Rule  42 of The Prevention of Food Adulteration  Rules, 1955.  In clause  (B) of  the said Rules are  mentioned  the  forms  of  label  to  be  put  on condensed milk and the four types of labels are:           (1)  Full Cream Milk (unsweetened)           (2)  Condensed Full Cream Milk (Sweetened)           (3)  Condensed Machine-Skimmed  Milk or  Condensed                Skimmed Milk (unsweetened)           (4)  Condensed Machine-Skimmed  Milk or  Condensed                Skimmed Milk (sweetened) "      In Item  13 of  the notification  when  the  Government added the  words "whether  sweetened or  not" it did mean to classify the  condensed milk  of  sweetened  or  unsweetened variety but  did not  intend to include in item 13 condensed skimmed milk whether sweetened or unsweetened.      Learned counsel  for the  respondents pointed  out that the petitioner  had obtained  a licence  for manufacture  of condensed milk only under he Excise Act. It did not obtain a licence for  manufacture of condensed skimmed milk. Counsel, therefore, submitted that for the purpose of the levy of the excise duty  both would  be on  the  same  footing.  Learned counsel for  the appellant submitted in reply that if excise duty was  not leviable  on condensed  skimmed milk  then  no licence was  required for  its manufacture.  The position of law seems  to be  this. Under section 6 of the Excise Act no person can  engage in  the production  or manufacture of any specified goods  included in  the First  Schedule of the Act except under  the authority and in accordance with the terms and conditions  of a  licence granted under the Act. It will have been  seen,  therefore,  that  since  skimmed  milk  or condensed skimmed milk will be a milk preparation within the meaning of  item 1B  of the  First Schedule,  a  licence  to manufacture such  milk  would  be  required.  If  any  goods specified in  the First  Schedule are exempted from the levy of excise  duty by  the Central  Government in  exercise  of their power under Rule 8(1) of the Central Excise Rules that cannot affect  the  provision  or  taking  licence  for  the manufacture of  the said  goods. But in this case we are not concerned  to   find  out   whether   the   petitioner   was manufacturing condensed  skimmed milk  without a licence and if so,  whether it  was committing  any  offence.  But  even assuming   that the  petitioner had  a manufacturing licence under section 6 of the Act only for manufacture of condensed milk that by itself will not take condensed skimmed milk out of the Exemption Notification and include it in the excluded item 13.  For the  purpose of  levy of excise duty therefore condensed skimmed  milk remains  included in  the  Exemption Notification.      Learned counsel  also drew our attention to the form of price list  of the  petitioner showing  separate prices  for "Condensed milk (full 97

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cream)" and "Condensed milk (Skimmed)". ’that again is of no help for the determination of the point at issue. Unless and until skimmed  milk is  included in item 13 of the Exemption Notification of  the 1st  March 1970  it remains  an item of goods exempted from levy of excise duty.      For the  reasons stated above we allow this appeal, set aside the  judgment and  order of  the High Court and direct the respondents  B. not  to enforce  their demand  of excise duty made in the two notices dated 4-8-1971 and 7-8-1971. In the circumstances we shall make no order as to costs. V.P.S.                                       Appeal allowed. 98