of Central Excise, Meerut Vs. M/S. Maharshi Ayurveda Corporation Limited 
INSC 678 (7 December 2005)
BHAN & C.K. THAKKER
Civil Appeal No.6774/2001 BHAN, J.
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.
Ayurveda Corporation Limited, respondents herein, holding that the product
"Herbonic" tonic falls under Chapter heading 2001.90 and not under
Chapter heading 2108.90.
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.
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.
Budget of the year 1995-96 the product was reclassified under sub-heading
issued show cause notices no. C. No. V3/49/96/Div.IV/3405, C. No.
V3/106/Div.IV/6332 dated 26.6.1994, C. No. V/3/40/95-D-IV/677 dated
27.1.1995, C. No. V3/94/95/D-IV/1198 dated 20.2.1995, C No.
V3/323/95/D-IV/6009 dated 16.11.1995 and C. No. V3/32/95/D-IV/6569
dated 26.12.1995 to the respondents covering duty demand for different periods
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.
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
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.
for the parties have been heard.
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) (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 Nil 2108.40 -
Sterilised or Pasteurised Miltone Nil - Other:
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.
-- 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 Food preparations not
elsewhere specified or included.
Protein concentrates and textured protein substances." It is further
provided the heading includes, inter alia:
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
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 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 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.
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 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.
Collector of Central Excise, [1991 (51) E.L.T. Central Excise, Chandigarh,
[2002 (143) E.L.T. 8} 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.
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
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.
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 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,
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
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.
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.
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.
reasons stated above, we do not find any merit in these appeals and dismiss the
same with no order as to costs.