Healthways Dairy Products Co. Vs.
Union of India [1975] INSC 244 (6 October 1975)
UNTWALIA, N.L.
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 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.
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 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 some time 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 Removal 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 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 the 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 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.
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