Case Law Details

Case Name : Ms. Pepsico India Holdings Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Chennai)
Appeal Number : Excise Tax Appeal No. E/41318 of 2015-DB
Date of Judgement/Order : 10/12/2019
Related Assessment Year :
Courts : All CESTAT (949) CESTAT Chennai (131)

Pepsico India Holdings Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Chennai)

The appellant is engaged in the manufacture of aerated water and beverages which are sold under the brand ‘Nimbooz’ from March 2009 onwards. The issue under consideration is classification of ‘Nimbooz’.

The fruit juice content of lime or lemon juice in MMNF, Nimbu Masala Soda or Nimbooz has been indicated to be not less than 5% and the Total Soluble solids is also not less than 10%. All the three products namely MMNF, Nimbu Masala Soda and Nimbooz, satisfy the requirements of Regulation 2.3.10 or Regulation 2.3.30. These products, therefore, would classify under Tariff Item No. 2202 9020 as fruit juice based drinks. The Mumbai Tribunal in Hindustan Coca Cola was, not justified in holding that the Regulations are not required to be examined.

The irresistible conclusion, therefore, that follows  from both the common parlance test and the supporting legislation test is, therefore, that the three products MMNF, Nimbu Masala Soda and Nimbooz would classify under Tariff Item No. 2202 9020 as fruit juice based drinks.

It can however be urged that even when lemon or lime juice is added to water as a flavouring agent, the product can still be called lemonade. Though it has to be seen whether the product is essentially waters with added flavour or whether lemon juice is the basis of the fruit drink, but the answer also lies in the definition of ‘’non-carbonated ready to serve fruit beverages” under Regulation 2.3.10 and ‘’carbonated fruit beverages and fruit drinks” under Regulation 2.3.30. It would follow from these Regulations that even when lime juice is added but the fruit content of lime or lemon juice is not less than 5%, the product would be classified as fruit juice based drinks but if the lime or lemon juice content is less than 5% , then it would classify as lemonade.

Accordingly, the reference is answered as follows:

The product “Minute Maid Nimbu Fresh (hereinafter referred to as MMNF) manufactured by Brindavan Beverages Private Limited, and 7up “Nimbooz Masala Soda” or 7up ‘’Nimbooz” manufactured by Pepsico India Holdings Private Limited are classifiable under Tariff Item 220-2 9020 of the Central Excise Tariff Schedule under the category of ‘’fruit pulp or fruit juice based drinks”.

FULL TEXT OF THE CESTAT JUDGEMENT

The appellant is engaged in the manufacture of aerated water and beverages which are sold under the brand “Nimbooz” from March 2009 onwards. The appellant since then has been classifying the goods under Chapter Sub-heading No. 2202 9020 of Central Excise Tariff Act, 1985 (CETA for short) and thereby claiming full exemption under Sl. No. 24 of Notification No. 1/2011-CE dated 01.03.2011. There is no disputes that the appellant has paid the duty at the rate of 1% ad velorem (without Cenvat Credit facility) along with Education Cess and Secondary and higher education cess as applicable and for the period 01.04.2012 to 31.03.2013 appellant had opted to pay duty on ‘’Nimbooz” at the rate of 6% ad velorem, without Cenvat Credit facility.

2. The Revenue, entertaining a doubt that the above “Nimbooz” manufactured and classified by the appellant did not fit into the general description under the Chapter sub-Heading for ‘’fruit pulp or fruit juice based drink” is a packaged nimbu pani and hence is nothing but a ‘’Lemonade” which is classifiable under 2202 1020, issued a Show Cause Notice dated 18.03.2014 proposing reclassification as ‘’Lemonade” under Chapter sub-Heading 2202 1020 and thereby demanding duty for the period 01.03.2009 to 31.03.2013 along with applicable interest and penalty. The appellant filed a detailed reply justifying its classification under 2202 9020, but the adjudicating authority, ie. Commissioner of Central Excise, Puducherry Commissionerate, vide impugned order-in Original No. 06/2015 (C) dated 20.,03.2015, however, confirmed the proposals as made in the SCN and thereby re-classified ‘’Nimbooz” as ‘’Lemonade” under Chapter sub-Heading 2202 1020. Aggrieved, the appellant-assessee has preferred this appeal.

3. Heard Shri D. Santhanagopalan, Learned Advocate for the assessee and Shri. L. Nandakumar, Learned Departmental Representative, AC, for the Revenue. Learned Advocate would submit, at the outset, that the issue with regard to the classification of ‘’Nimbooz” is no more res integra as the same has been laid to rest by the decision of the Hon’ble Larger Bench of Allahabad Tribunal in the appellant’s own case, in a batch of Excise Appeal Nos. 50661 of 2015, 50662 of 2015 and 70012 of 2015. Learned Advocate referred to the findings of the Hon’ble Larger Bench of the Tribunal which after careful analysis of the entire issue involved vis-à-vis supporting legislations and also after considering the decision of the Hon’ble Supreme Court in the case of Commissioner of Central Excise, Bhopal Vs. Parle Agro Pvt. Ltd. – 2008 (226) ELT 194 (Tri.-Del.) has held as under:-

“64. The fruit juice content of lime or lemon juice in MMNF, Nimbu Masala Soda or Nimbooz has been indicated to be not less than 5% and the Total Soluble solids is also not less than 10%. All the three products namely MMNF, Nimbu Masala Soda and Nimbooz, satisfy the requirements of Regulation 2.3.10 or Regulation 2.3.30. These products, therefore, would classify under Tariff Item No. 2202 9020 as fruit juice based drinks. The Mumbai Tribunal in Hindustan Coca Cola was, not justified in holding that the Regulations are not required to be examined.

65. The irresistible conclusion, therefore, that follows  from both the common parlance test and the supporting legislation test is, therefore, that the three products MMNF, Nimbu Masala Soda and Nimbooz would classify under Tariff Item No. 2202 9020 as fruit juice based drinks.

66. It can however be urged that even when lemon or lime juice is added to water as a flavouring agent, the product can still be called lemonade. Though it has to be seen whether the product is essentially waters with added flavour or whether lemon juice is the basis of the fruit drink, but the answer also lies in the definition of ‘’non-carbonated ready to serve fruit beverages” under Regulation 2.3.10 and ‘’carbonated fruit beverages and fruit drinks” under Regulation 2.3.30. It would follow from these Regulations that even when lime juice is added but the fruit content of lime or lemon juice is not less than 5%, the product would be classified as fruit juice based drinks but if the lime or lemon juice content is less than 5% , then it would classify as lemonade.

67. Accordingly, the reference is answered as follows:

The product “Minute Maid Nimbu Fresh (hereinafter referred to as MMNF) manufactured by Brindavan Beverages Private Limited, and 7up “Nimbooz Masala Soda” or 7up ‘’Nimbooz” manufactured by Pepsico India Holdings Private Limited are classifiable under Tariff Item 220-2 9020 of the Central Excise Tariff Schedule under the category of ‘’fruit pulp or fruit juice based drinks”.

4. From the above, we note that the assertion of the learned Advocate to be correct in as much as, an identical issue has been decided by the Hon’ble Larger Bench (supra), and in view thereof, the classification declared by the appellant under the Chapter sub-heading 2202 9020 is held to be correct and hence the Revenue is not justified in reclassifying ‘’Nimbooz” as ‘’Lemonade” under Chapter sub-Heading 2202 1020. Consequently, the impugned order deserves to be set aside, which we hereby do.

5. In the result, appeal is allowed with consequential benefits, if any, as per law.

(Operative part of the order pronounced in the open Court on 10.12.2019.)

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