By TIOL News Service

MUMBAI, SEPT 09, 2014: THE question is whether 'Minute Maid Nimbu Fresh (MMNF)’ manufactured by the appellant is classifiable under CSH 2202 9020 as a "lemon (fruit) juice based drink" & entitled for total exemption from payment of CE duty in terms of Notification No. 3/2006 C.E. dt.01.03.2006.

It is the view of the Department that the MMNF is correctly classifiable under CSH 22021020 as "Lemonade" and not entitled for the exemption. The proceedings resulted in the adjudicating authority confirming a CE duty demand of Rs.60,87,624/- along with penalties and interest.

Before the CESTAT the appellant inter alia submitted that the CE Tariff is not fully aligned with the HSN Explanatory Notes, that the drinks based on fruit juice are specifically mentioned under heading 22029020, that the Tribunal in the case of CCE Bhopal Vs. Parle Agro Pvt. Ltd. classified 'Appy Fizz' as fruit juice based drink under Tariff Item 22029020, that similar product manufactured by their competitors are also being classified under Tariff Item 22029020, and in their own factories at Ghaziabad (UP) and Guntur (AP) the jurisdictional authorities have accepted classification of fruit juice based drinks under 2202 9020.They also explained the manufacturing process of MMNF and mentioned that MMNF contains not less than 5% lemon juice and, therefore,it meets requirements of the Prevention of Food Adulteration Rules, 1955 (under the Prevention of Food Adulteration Act, 1954) Appendix-B, Entry No. A.16.10 thereto.

The adjudicating authority referred to the definition of lemonade as given in Wikipedia as a mixture of juice, sugar and un-carbonated water which may or may not contain artificial flavours. He held that once a specific heading is provided for lemonade against chapter sub-Heading 220210 20, the same has to be preferred and that the language of the CETA, 1985 has to be given precedence over the Prevention of Food Adulteration Act/Rules, 1955.

The Bench after extracting the competing entries & considering the submissions observed –

++ The argument of learned counsel is that MMNF is neither mineral water nor aerated water nor flavoured and, therefore, classification of MMNF, which contains lemon juice, under CTH 220210 does not arise. We cannot appreciate this argument and do not agree that MMNF cannot be called a flavoured drink.

++ The word flavour in normal usage of the word will naturally include both natural and synthetic flavors. Therefore, addition of lemon juice to the water without aeration can make the product to fall under 220210. The reference that only products such as Dukes lemonade, a product made by a competitor, will fall under 22021020, is not acceptable because as noted above, the drinks that fall under 220210 may be aerated or not and may be flavoured or not. Further, the “Duke lemonade” has been shown to be a trade mark in the official web-site of concerned Trade Mark Authority. Therefore, it is not conclusively proved that just because Dukes lemonade contains no fruit and is still called a lemonade it does not lead to the conclusion that the appellant’s product cannot be called a lemonade. The reliance on judgement in the case of Parle Agro Pvt. Ltd. (supra), does not support the appellant’s contention because in that case the product, that is Appy Fizz, contains a far more higher and significant percentage of apple juice i.e. 23% whereas in the case of appellants product i.e. MMNF, the juice content is admittedly only 1%.

++ In the present case, if we apply the test of commercial or common parlance, we find that the website of the appellant itself describe the MMNF as a drink which is close to house made NimbuPani and further relates that “minute Maid Nimbu Fresh offers 'Ghar Ki YaadonKaRas’ (memories of home-made lemonade) in every sip”. It would be not out of place to mention that even Encyclopaedia Britannica, which may be considered as an authentic Encyclopaedia, describes lemonade as “....made with lemon, sugar and water, is a popular warm-weather beverage....” The argument of the appellant that Lemonade is not a fruit based drink fruit fails. Our view is further supported by HSN notes on which Central Excise Tariff is based.

++ We note that the product described in the Prevention of Food Adulteration Rules 1955, is Lime and not lemon. The two words are described differently in Chamber’s 21st Century Dictionary. However, even ignoring this point we note that the requirement of Prevention of Food Adulteration Rules 1955 is that the total soluble solid should not be less than 10%. Whereas the appellants technical note describes above states that the solid content of the juice is measure in terms of brix and the lemon juice brix is at 6 degree i.e. 6%. We have also seen the labels on the bottles of the MMNF which also indicate the brix content as 5.7%. Under these Rules too, the appellant’s product does not meet the criteria of fruit juice base drink since it does not have the required brix content. The lemon juice concentrate in the MMNF is only 1% which falls below the limit of 5% specified in PFA Rules. The MMNF thus squarely falls under CTH 22021020.

On the submission made that the classification of the impugned product should be uniform in all jurisdictions, the Bench observed –

++ We do appreciate and agree on this. However, as may be seen above, we have analyzed the issue from all angles namely, common parlance, manufacturing process, the juice concentrate percentage, prevention of Food Adulteration Rules 1955, HSN Notes and have come to the conclusion that CTH 22021020 is a more specific heading describing the essential character of the product an in accordance with Rules 3(a) and 3(b) of the Interpretative Rules. As regards the issue of penalty, we find that the appellants had informed the Assistant Commissioner in the beginning itself vide their letter dated 05-02-2010 of their plan to manufacture MMNF and classify the same under CTH 22029020. In these circumstances, there is no scope for imposition of penalty.

In fine, the CESTAT held that the correct classification of Minute Maid Nimbu Fresh (MMNF) is 22021020& duty is payable with interest. However,the penalty imposed was set aside.

The appeal was disposed of in above terms.

In passing:  Round Two begins after a Nimbu paani sip!

(See 2014-TIOL-1707-CESTAT-MUM)