1. In these two appeals, filed by Revenue the issue involved is whether the products namely "Badam Summer Sip" and "Thandai" manufactured by M/s. Haldiram India Pvt. ltd. are classifiable under sub-Heading No.2001.10 of the Schedule to the Central Excise Tariff Act, as confirmed by the Commissioner (Appeals) in the impugned order or under sub-Heading No. 2108.20 of the Tariff, as claimed by Revenue.
2. We heard Shri D.N. Choudhary, learned Senior Departmental Representative and Shri U Raja, Learned Departmental Representative for Revenue and Shri Shekhar Vyas, learned Advocate for the Respondents.
The manufacturing process of both the impugned products as described by the Respondents and agreed by the Adjudicating Authority is as under: "A. Thandai Almonds are washed and thereafter soaked in water to ease the peeling off. A mixture of Khus Khus, Magaz, saunf, white pepper and cardamom which are parts of plants are also soaked in water. Thereafter, the peeled almonds and mixture is grinded with the help of machine grinders and Nut paste is obtained. This Nut paste is thereafter cooked with sugar syrup and then it is passed through heat exchanger and is then stored in a tank where rose water and saffron are added, which after cooling is transferred into the filing tank from where it is filled in bottles.
A. Badam Summer Sip : The manufacturing process is the same as that of Thandai and only difference is that Khus Khus, Magaz saunf, white pepper and kewara water is not used." 3. The learned Senior Departmental Representative submitted that though nuts and parts of plants are used in the preparation, these products are commonly known as "Sharbats" classifiable under sub-Heading 2108.20 of the Tariff; that as per Note 6 to Chapter 21 of the Tariff, "the expression "Sherbat" means any non-alcoholic sweetened beverage or syrup containing not less than 10/% fruit juice or flavoured with non-fruit flavours, such as rose, khus, kewara but not including aerated preparation", that as both the impugned products contain the same percentage of sugar and water as is contained in Sherbat, i.e.
more than 70%, these products are made of sugar syrup only and are sherbat only; that these products also contain non-fruit flavaours and satisfies the definition of sharbat as given in Note 6 to Chapter 21 of the Tariff. He also referred to Note 9(b) to Chapter 21 which mentions that Heading No.21.08, interalia, includes "Preparations for use, either directly or after processing (such as cooking; dissolving or boiling in water, milk or other liquids), for human consumption"; that the impugned products also are preparations which are used after dissolving and thus satisfied the criterion mentioned in Note 9(b) to Chapter 21 of the Tariff. He relied upon the decision in the case of MTR Food Products v. CCE, Bangalore, 2000 (118) ELT 292 (T) wherein the Tribunal has classified the Product "badam Feast" under Heading 21.08 as the direction for its use shows that the product has to be dissolved in milk before it can be consumed as such and the item is sold in the form of powder. The learned Senior Departmental Representative Contended that when statutory definition of Sharbat is given in Chapter 21 of the Tariff, common parlance test can not be applied for determining the classification of a product; that it has been held by the Supreme Court in the case of CCE, Hyderabad v. Fenoplast (P) Ltd., 1994 (72) ELT 513 (S.C.) That "If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment, the meaning of the term in common parlance or commercial parlance has to be adopted." He also mentioned that though in special characteristics of Part II of the Food Products Order, 1955 it is mentioned that the minimum percentage of fruit juice in the final product is 25%, that, however, the general characteristics say that "any syrup/sharbat containing a minimum 10% of dry fruits shall also qualify to be called as fruit syrups"; that Part IV of the Food Products Order, 1955 also indicates that for sharbats the only substance that may be added are water, citric acid, harmless herbs, drugs, flower essence (juice at least 10%), sugar dextrose, invert sugar or liquid glucose, permitted colours and preservatives; that the percentage of juice is 10% which is very near to the percentage of almonds available in the products in question. Finally he mentioned that decision in the case of Northland industries v. CE, 1983 (37) ELT 229 and Board's Circular No.2/89 dated 10.1.89 are not applicable as the impugned products are not containing the required percentage of fruit juice (i.e. 25%).
4. On the other hand, Shri Shekhar Vyas, learned Advocate, submitted that from the manufacturing processes of the impugned products, it is apparent that these are preparations of vegetable, nuts or other parts of plants as they contain badam between 10 to 15% and the added flavours are all natural and are the parts of plants; that the preparation of vegetables nuts or other parts of plants are specifically covered under Chapter 20 of the Tariff; that Chapter 21 deals with Sharbat which are otherwise also known as Synthetic Syrup; that as per the book "Wealth of India", "synthetic syrups commonly known as Sharbats are sugar syrups containing extracts of natural materials or artificial flavours and colours ... Use of fruit juice in carbonated beverages is practically unknown in India. Both synthetic syrup and carbonated beverages are of very little nutritive value....
The natural flavours are used in concentrations ranging from 0.25% to 0.75%". He also referred to Book "Preservation of Fruits & Vegetables" and ICAR Publications according to which "Sharbat or syrup is a clear sugar syrup which has been artificially flavoured" and to the definition of Sharbat by Bureau of Indian Standards according to which "synthetic syrups shall be clear, transparent, free from scum, residue or suspended particles, shall be of a uniform colour, shall possess a pleasant paste and flavour truly characteristics of the flavouring material used." He mentioned that from these definitions, it is clear that Sharbat is basically a sugar syrup which may have different flavours by the addition of flavouring agents and it is a clear and transparent and of a uniform colours; that there could be a sharbat of almonds flavour where almonds could be used as flavouring agents and in that case, the percentage of almonds shall be entirely in the range of 0.25 to 0.75%. He further mentioned that in the Central Excise Tariff, the percentage of fruit juice is mentioned as 10% for sharbat which has been taken from Food Products Order, 1955; that thus for deciding the percentage one has to refer to Part II of FPO which deals with fruit juice and Part IV which deals with synthetic syrups or sharbats; that Chapter 21 deals with only synthetic syrups or sharbats; that Chapter 21 nowhere deals with nuts or preparation thereof whereas Chapter 20 deals with preparations of nuts; that there is no dispute that the impugned products are preparation of nuts which contain about 10-15% of almonds and accordingly Chapter 20 is more specific wherein these products should be classified. He submitted that Sharbat is prepared first by taking the sugar syrup and then the flavour is added to it whereas Thandai is made by grinding a mixture of almonds and then sugar syrup is added to it; that the essential characteristics of almonds which gives high nutritional value is not present in the case of Sharbat. He referred to the opinion given by a Technical Expert, Dr.
D.S. Chadha, Asstt. DG (PFA) according to which the impugned products are fruit syrups as they are made from Badam in the range of 10 - 15%; that the opinion of expert can not be brushed aside as held in the case of U.G. Hospitals v. Commissioner of Customs, 5. Finally, the learned Advocate submitted that the percentage of 25% is only in respect of squashes and cordials which are the preparations of fruit juice and it can not be applied to the products in question as these are preparations of dry fruits; that once it is accepted that the products are preparation of dry fruits, the relevant percentage is only 10% as mentioned in Part II of FPO; that as per decision in Northland industries, while deciding the classification of Food Products, reference may be made to Food Products Order, 1955; that the mere fact that the impugned products contain water more than 70% will not make them sharbat as the Board has classified squashes which have the same content of sugar and water as vide Circular No.2/89 dated 10.1.89 under Heading 20.01 of the Tariff; that decision in the case of MTR Food products is not applicable as the ingredients of Badam Feast, subject matter of that decision, have not been given and mainly it is milk powder.
6. We have considered the submissions of both the sides. The rival Tariff Headings read as under: 20.01 Preparations of vegetables, fruit, nuts or other parts of plants including james, fruit jellies, marmalade, fruit or nut puree and fruit or nut paste, fruit juices and vegetables juices, whether or not containing added sugar or other sweetening matter.
7. Heading 20.01 covers within its ambit preparations of nuts. The manufacturing processes as detailed by the respondents and not disputed by the Revenue clearly show that both the impugned products are preparations of Almonds (Badam) which are nuts. The Heading 20.01 further mentions that the preparations covered by the Heading may or may not contain sugar or other sweetening matter. Thus both the products which are preparations of nuts containing added sugar deserve to be classified in Heading 20.01 of the Tariff as these are specifically covered by the Heading. This was the view expressed by the appellate Tribunal in the case of Northland Industries v. CCE., 1988 (37) ELT 229 (T). The Tribunal has held that "From a bare reading of Heading No.20.01, it will be clear that preparations of fruit juices, whether or not containing added sugar or other sweetening matter was covered by it." The Tribunal has further held that "if squashes and cordials are covered by the Heading 20.01 ("fruit juices"), they would not be covered by the residuary Heading No.21.07 ("Edible preparations, not elsewhere specified or included")." In Northland Industries case, the issue involved was whether 'fruit squashes and cordial of all fruits" was classificable under Heading 20.01 or 21.07 (which is now Heading 21.08). The Revenue had relied upon Note 5 to Chapter 21 which provided that "Preparations for lemonades or other beverages, consisting, for example, of flavoured or coloured syrup, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juices and concentrated fruit juice with added ingredients." The Revenue had thus contended that all fruit beverages are covered by Heading 21.07 whether they consist of consist of concentracted fruit juice or syrup flavoured with fruit juice. The Tribunal has held that fruit squashes and cordials are preparations of fruit juices and "having regard to the fact that Heading No.21.07 is a residual Heading, we are of the opinion that the subject squashes and cordials which are preparations of fruit juices are correctly classifiable under Heading No.20.01, sub-Heading No.2001.10." The Explanatory Notes of HSN below Heading No.2106 "Food Preparations not elsewhere specified or included" clearly mentions that the Food Preparations fall under this Heading "provided that they are not covered by any other Heading of the Nomenclature." It is thus apparent that for classifying any edible preparation in Heading 21.08, it has to be shown by Revenue that the said preparation is not elsewhere specified or included. Once it is not disputed that the impugned products are preparation of nuts, they can not be taken out of Chapter 20 and classified under 21.08 which is a residuary Heading. Sharbat classifiable under sub-Heading 2108.20 has to be a Sharbat which is "not elsewhere specified or included." In view of this Note 6 to Chapter 21 does not strengthen the case of Revenue as the said Note merely defines expression "Sharbat" for the purpose of sub-Heading No.2108.20. The decision in the case of MTR Food Products, relied upon by the learned Senior Departmental Representative, is not applicable as the Tribunal in that case did not find the product "Badam Feast" as a preparation of nuts, the same being the combination of sucrose, saffron, cardamom, almond, milk powder, etc. In view of this finding the Tribunal has classified the product Badam Feast under Heading 21.08. The Revenue has also not brought on record any material to show that Badam Feast, subject matter in the case of MTR Foods, is similar to the products involved in the present matter. Accordingly we find no merit in the appeals filed by Revenue which are rejected.