It means that apart from the soluble pure coffee, (coffee powder), other soluble coffee powders which are not pure coffee powders are also covered by the said sub-entry. Thus the soluble mixture of coffee by virtue of the said Explanation. Since this is an inclusive description of the words “instant coffee”, they add to the meaning of instant coffee primarily derive able from entry 2(ii). In other words, Nescafe as well as Recovery fall under entry 2(ii). The words “commercially known, show the existing product which is popular and known to the traders as well as consumers. There is no doubt that Nescafe is known all over the world as an “instant coffee”. Both the traders and the consumers identify Nescafe as an instant coffee but that does not mean that the Legislature cannot impose additional excise duty on the other varieties of coffee powders which are soluble and, Therefore, “instant” and can give instant beverage.
(1989) 24 ExCusC 237
DELHI HIGH COURT
( Before : S.B. Wad, J )
FOOD SPECIALITIES LTD. — Appellant
THE UNION OF INDIA (UOI) AND OTHERS — Respondent
C.W.P. No. 1425 of 1973
Decided on : 04-08-1989
Central Excise and Salt Act, 1944 — Section — 2(2) — Imposition of excise duty on Ricory — Writ Petition challenges the imposition of excise duty on the petitioners’ product
Government of India have considered the points raised by the petitioner in their revision application and at the time of hearing. They observe that the petitioner has urged that BRU is mixture of coffee and chicory; it is not known as instant coffee in the trade; certain affidavits from persons said to be in the trade were filed in support. Evidence was also led in to show that coffee-chicory mixture was initially developed in France during a siege in the Napoleonic days; and it is normally known as “French Coffee”. It is seen from the label of the produce that it is marked “instant”. It is prepared by adding a spoonful of the produce to a cup of hot water resulting in the production of the beverage to which is added milk and sugar as taste dictates.
Item 2 of the Central Excise Tariff reads; ‘Coffee commercially known as “instant coffee”.’ The point for determination, Therefore, is whether BRU is coffee commercially known as ‘instant coffee’. From evidence led in by the petitioner, it is clear that BRU is a coffee-chicory mixture, popularly known as ‘French Coffee’. It is marked “instant”. The Tariff covers all types of instant coffee. Government of India, Therefore, observe the BRU, which an Instant French Coffee, is an ‘instant coffee’ assessable under 2, CET.
The affidavits filed in regard to the sale of BRU merely confirm that whenever customers ask for BRU, they do so by name, when they ask for instant coffee the dealers supply ‘Nescafe’. This does not detract from the character of BRU as an instant French Coffee. In view of the foregoing, Government of India see no reason to interfere with the order-in-appeal, which is correct in law and based on the facts.
The revision application is rejected.
5. At the time of the arguments the counsel for the petitioners referred to three affidavits filed by them from retail dealers and one affidavit filed from wholesale dealer in coffee, along with their written submissions before the Central Government in their Revision Petition. The counsel submitted that it is the burden of the Revenue under the Act to establish the correct classification under which the goods fall. The respondents did not discharge that burden while the petitioners produced the said affidavits of the persons in the said business. It was submitted that on the basis of the said affidavits it should be held that Recovery is not commercially known as “instant coffee”. At that stage the counsel for the respondents filed an affidavit explaining the stand of the respondents’, annexing copy of the letter from Principal of the Institute of Hotel Management and a letter from Senior Lecturer in the Nutrition and Food Science Department. An affidavit by one Dr. J.D. Singh, Professor of Marketing at the International Management Institute, India, was also annexed with the affidavit. The counsel for the petitioners objected to the said affidavit of the respondents being taken on record at this late stage. The counsel relying on T.C. Basappa Vs. T. Nagappa and Another, & Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, , submitted that the original orders passed by the appellate authority and revisional authority must be taken as final and the respondents cannot be permitted to add or explain the said orders by filing subsequent affidavits. The counsel also objected to the said letters and affidavit filed along with the respondents’ affidavit submitting that no new evidence can be permitted at this late stage, particularly when the two lower authorities did not have the benefit of seeing them. It may be noted that the affidavits filed on behalf of the petitioners were also filed at the late stage, i.e., revision but they were not objected to by the respondents. The Central Govt. in its revisional order has referred to the said affidavits, although the submission of the counsel for the petitioners is that the substance of it Was ignored by the Central Government. The counsel for the respondents on the other hand submits that if the conclusion of the revisional authority is correct the respondents are entitled to justify the order not only on the grounds stated in the revisional order but otherwise. Having heard the counsel for the parties I hold that the respondents cannot be permitted to file new evidence at this stage. The respondents cannot be permitted to file the affidavit at this stage.
6. On the basis of the original pleadings the counsel for the petitioners submits that “Recovery” is a soluble mixture of coffee and chicory. His further submissions are that any such mixture does not remain either in the coffee or in the chicory form. Brooke Bond India Ltd. Vs. Union of India and Others, . Such a mixture is known as French Coffee. French Coffee is held by the said ruling to be excisable not under item 2 but item 68 under Central Excise tariff. The mixture of coffee and chicory in a soluble form called Recovery is not commercially known as instant coffee. Three witnesses have testified to this effect. To describe the mixture as coffee is contrary to I.S.I. specifications and the standards laid down by the Prevention of Food Adulteration Act. Construction of a tariff entry which is contrary to statutory standard is to be avoided. In the present case there is a finding of fact by the Revisional Authority that the product which the petitioners were manufacturing was French Coffee. French Coffee is admittedly excisable under the residuary entry 68.
7. The above submissions of the petitioners are misconceived and untenable. We are here concerned with the interpretation of the statutory entry 2(ii) “coffee commercially known as ‘instant coffee'”. There is no decision of any higher court constructing the said entry. The Andhra Pradesh decision Brooke Bond relates to entry 2(i) “Coffee cured” and not to the instant coffee. The Explanation 1, stated that ‘coffee’ means the seed of the coffee tree, whether with or without husk, whether cured or uncured.” If, Therefore, sub-entry (i) and sub-entry (ii) of entry 2 are contrasted, the point of distinction appears to be whether it is an instant coffee or not. The entry “Coffee cured” is restricted to the coffee seeds or coffee powder which is not instantly soluble, While sub-entry (2) speaks of coffee powder which is soluble. According to the petitioners who are manufacturers of Nescafe, Nescafe is pure coffee soluble in water and commercially known as instant coffee. The petitioners are adhering to this interpretation of sub-entry 2 of entry 2. But what is forgotten by the petitioners is Explanation 2 which reads :
For the purposes of sub-item (2), ‘instant coffee’ includes, instant coffee containing any ingredient in addition to coffee.
The said Explanation gives an inclusive description of instant coffee. It means that apart from the soluble pure coffee, (coffee powder), other soluble coffee powders which are not pure coffee powders are also covered by the said sub-entry. Thus the soluble mixture of coffee by virtue of the said Explanation. Since this is an inclusive description of the words “instant coffee”, they add to the meaning of instant coffee primarily derive able from entry 2(ii). In other words, Nescafe as well as Recovery (which is coffee with an ingredient of Chicory) fall under entry 2(ii). The words “commercially known, show the existing product which is popular and known to the traders as well as consumers. There is no doubt that Nescafe is known all over the world as an “instant coffee”. Both the traders and the consumers identify Nescafe as an instant coffee but that does not mean that the Legislature cannot impose additional excise duty on the other varieties of coffee powders which are soluble and, Therefore, “instant” and can give instant beverage. The Legislature is always free to give extended meaning to a product apart from the commercial or popular significance of it. If the Legislature does not exercise such a prerogative of addition, (or is silent), then naturally the commercial and popular meaning of a product will be decisive and will prevail. The Legislature was fully competent in the present case to add Explanation II and by inclusive description add any other soluble variety of a mixture of coffee with other ingredient, such as chicory. The Recovery may or may not fall into sub-entry (2), if a limited meaning is to be attached to the said sub-entry, namely, that it speaks of pure coffee without any addition of chicory but the product Recovery certainly falls into inclusive description of instant coffee given by Explanation II and, Therefore, is liable to pay 20 per cent ad valorem duty in addition to Rs. 100 per quintal.
8. The argument of the petitioners is mis-conceived because here we arc not concerned with the question as to whether “Recovery” as a French coffee can be called coffee or not. As pointed out earlier, the judgment of the Andhra Pradesh High Court in Brooke Bond concerns only with the coffee powder, falling under sub-entry I of entry 2. So also the said decision of Andhra Pradesh High Court docs not concern with Explanation II in regard to inclusive definition of Instant Coffee. That French Coffee cannot be called coffee under sub-entry I of entry II, as held by the said decision of the Andhra Pradesh High Court, has thus no relevance to the facts of the present case. It cannot also be argued that the revisional authority has recorded a finding of fact that the product of the petitioners is a French Coffee. On careful reading of the revisional order it is clear that such impression is created because the revisional authority was answering to the submission of the petitioners that French Coffee is excisable under entry 68 of the Tariff. Even assuming that the revisional authority has rendered a finding of fact, it cannot be treated as an admission as that is no estoppel against the statute. We are not here concerned with the question as to whether French Coffee falls under item 2 or item 68 of the tariff but as to what is the meaning of Explanation II regarding instant coffee and whether Recovery the product of the petitioners, falls under the said Explanation II to item 2 of the tariff. The next submission of the petitioners that the Recovery is not known commercially as an instant coffee as evidenced by three affidavits has also no substance in law. The argument completely ignores Explanation II and the competence of the Legislature to override the popular and commercial meaning of goods. The affidavits produced by the petitioners, (which interestingly are in the same form) are of no avail.
9. Thus it is clear that Explanation II to entry 2 brings Ricory, the mixture of coffee and recovery this obviously is a reference to chicory-Ed into class of instant coffee being a soluble mixture.
10. The I.S.I. standards have an object of specifying the standards generally. They have nothing to do with the description of goods for the purposes of excise tax liability. The object of Prevention of Food Adulteration Act is to save the society from adulterated food stuff. The terms “coffee” or “soluble coffee” would not necessarily be used in the same way by other statutes and particularly by taxing statute. The object of the taxing statute is to spread net wider and wider to make more and more goods pay the tax. It is immaterial for the tax purposes as to what is the meaning attached to coffee by I.S.I. or under the prevention of Food Adulteration Act If, however, the petitioners describe their product as a coffee is contravention of the standards prescribed by I.S.I. or by the Prevention of Food Adulteration Act, they would be liable for the legal consequences under the said Acts. From another angle also, there is no relevance of the I.S.I. or the Prevention of Food Adulteration definitions of coffee. As a matter of fact the petitioners do not describe their product as coffee or Instant Coffee but call it only Recovery.
11. For the reasons stated above, there is no merit in the contention of the petitioners. The “Recovery” is liable to pay to duty sub-item II of item 2 of the tariff and not under residuary entry 68. The writ petition is dismissed. Since the petitioners have already deposited the duty, they will not be burdened with costs. The Rule is discharged.
T.C. Basappa Vs. T. Nagappa and Another, AIR 1954 SC 440 : (1955) 1 SCR 250
Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, AIR 1978 SC 851 : (1978) 1 SCC 405 : (1978) 2 SCR 272
Brooke Bond India Ltd. Vs. Union of India and Others, (1984) 3 ECC 107 : (1984) 15 ELT 32