ORDER
Jyoti Balasundaram, Member (J)
1. The basic issue for determination in the above 3 appeals which arise out of a common order passed by the Collector of Central Excise (Appeals) is the eligibility of the product Saccharin manufactured by the appellants herein to the benefit of exemption under Notification 55/75-CE dated 1.3.75 at SI. No. 1 of the Schedule thereto which covers “all kinds of food products and food preparations including…. The authorities below have held that food products and food preparations should normally be products of food and preparations made from food which could be of two types, (1) preparations for use. either directly or after processing (such as cooking, dissolving or boiling in water, milk etc. for human consumption (2) preparations consisting wholly or partly of food stuffs, used in the making beverages or food preparation for human consumption. This could include preparations consisting of mixtures of chemicals (organic acids, calcium salts, lecithin, etc.) with food stuffs (flour, sugar, milk powder etc.) for incorporation in food preparations either as ingredients or to improve some of their characteristics. Since the product is a chemical classifiable under chapter 29 of the CETA, 1985 and is a non-nutritive sweetener, it has been held to be neither a food product nor a food preparation but only a food additive, not entitled to the benefit of the Notification.
2. We have heard Shri R. Sudhinder, learned Advocate for the appellants and Shri A.K. Agarwal, learned DR for the Revenue.
3. We observe that he product was tested by the Deputy Chief Chemist and Chief Chemist, Central Revenue Control Laboratory, who have reported that “the sample is in the form of white powder. It is Saccharin (an organic chemical). Saccharin which is available as edible grade is a non-nutritive sweetner for all low caloric foods and beverages and for pharmaceuticals, tooth paste, mouth wash and tobacco products. It is normally used by diabetics and those who need low caloric diet as a substitute for cane sugar. Its use is permitted under the Prevention of Food Adulteration Rules. 1955 for carbonated water at present. The terms “food” may be defined as “substances taken in by mouth which maintain life and growth”. Supply energy and build and replace tissue (Ref. Dictionary of Nutrition and Food Technology by Arnold E. Sunder). From the other literature available, it is further seen that use of “Saccharin” is restricted and some times prohibited also. Since the Saccharin has no food value, it may not be considered as food products and food preparation”.
3.1 There is no dispute that the product is edible and is a food additive. Food additive is defined as “a substance or mixture of substances other than the basic food stuff, which is present in food as a result of any aspect of production, processing, storage or packing. The term does not include chance contaminants”, Colours, special sweeteners, flavouring compounds and natural flavouring materials are termed as food additives (Hand Book of Food Additives by Furia, published by the Chemical Rubber Co., Cleveland, Ohio). The Prevention of Food Adulteration Act, 1954 defines food as “any article used as food or drink for human consumption other than drugs and water and includes, (a) any article which ordinarily enters into or is used in the consumption or preparation of human foods, (b) any flavouring matter or condiments and (c) any other article which the Central Government may, having regard to its use, nature, substance or quality, declare by Notification in the Official Gazette as food for the purpose of this Act”. According to the Prevention of Food Adulteration Act, 1954, Saccharin is a food. However, this by itself is not sufficient for considering it as food product or food preparation within the meaning subscribed thereto in the Notification. The expression “food products” and “food preparations occurring in Notification 55/75 has been the subject of judicial interpretation. In the case of Collector of Central Excise v. Parle Exports P. Ltd. , the question was whether non-alcoholic beverage basis were covered within the scope of “food products” and “food preparations” contained in SI. No. 1 of the Schedule to the Notification 55/75. The Court accepted the contention of the Revenue that non-alcoholic beverages bases in India cannot be treated or understood as new “nutritive material absorbed or taken in the body of an organism which serves for the purpose of growth work or repair and for the maintenance of vital process” and an averages Indian will not treat nonalcoholic beverage bases as food products or food preparations in that light. The decision of the Tribunal extending the benefit of the Notification was reversed. The Apex Court held that expressions in the Schedule and in the Notification for exemption should be understood by the language employed therein, bearing in mind the context in which the expressions occur and held that it was necessary to find out the true intent of the expressions “food products” and “food preparations”, having regard to the object and purpose for which the expression is granted, bearing in mind the context and also taking note of the literal or common parlance meaning by those who deal with those goods.
3.2 In the case of Corn. Products Co. India Ltd. v. Union of India , the Hon’ble Bombay High Court held that baking powder fell within the expression “food preparations” and was, therefore, entitled to exemption under SI. No. 1 of Notification 55/75. This judgment is pressed into service by the learned Counsel for the appellants. However, in our opinion, this judgment is distinguishable. Baking powder is a product formulated from various edible ingredients such as edible maize, starch special, soda bicarb and sodium aluminium sulphate. The High Court found that the product was being marketed by the manufacturer under the brand name “Rex” in different packings. It was found that the baking powder is extensively used in bakery preparations like biscuits, breads and also in Indian preparations like pakoda, idli, samosa, gulab jamun etc. and the use of baking powder makes the preparation light and the crisp and adds consistency to the formulation and improves the teste. Any housewife would treat baking powder as a food preparation and in trade parlance baking powder is sold and known as a food preparation. In the case before us the product is a single organic chemical–1-2 benzisothiazolin 3-one 1, 1-dioxide. The HSN Explanatory Notes to Chapter 29 under Heading 29.25 which covers carboxyimide function compounds including Saccharin and its salts, state that the preparation used in human diets, consisting of a mixture of saccharin or its salts and food stuff, such as lactose, are however excluded from Heading 29.25 and fall in Heading 21.06 (food preparations not elsewhere specified or included). While preparations consisting of saccharine or its salts and substances, other than a food stuff, such as sodium tartaric acid and sodium bicarbonate fall in Heading 38.23 (chemical products and preparations of chemical and allied industries.)
4. It is seen from the above that Saccharin per se is not a product formulated from edible ingredients. Further, the statements of two traders M/s. Vijay Variety Stores and M/s. T. Alimahomed & Co. is only to the effect that Saccharin, a food ingredient is generally available at Grocer’s shop in which other food products are also available; however, this is not sufficient to establish that Saccharin is understood in trade parlance as a food product or a food preparation and it can at best be considered as a food additive. Saccharin may improve the taste of food products or food preparations but is not itself neither a food product nor a food preparation as commonly understood. Hence, we hold that the appellants have not discharged the burden or proving that Saccharin is entitled to the benefit of Notification 55/75. Accordingly, we see no reason to interfere with the impugned order, confirm the same and reject all the three appeals.
S.K. Bhatnagar, Vice-President
1. With due respects to Hon’ble Member (Judicial), my views and orders in the matter are as follows.
2. I find that learned Counsel has been able to produce a lot of technical and other material before us which requires appraisal before a view could be formulated. The extracts of the book called “Introduction To Food Additives” by T.D. Luekey, Professor of Biochemistry, Department of Biochemistry, University of Missouri Medical School, Columbia, USA indicate inter alia, as follows:
Compounds of a single chemical family perform different functions in the food industry. Although single compounds are placed in two or more functional groupings, the functional classification is of more practical use to the feed industry.
The consumer viewpoint is less restricted than is the legal, governmental or scientific; without knowing hows or whys, he wants an attractive product which provides assurance of health. A functional classification is given.
Intentional Food Additives
The first groups of additives are intentional or direct additives. Each compound in this group is purposely added for a specific function in accordance with legal requirements. A recent listing provides a view of the number of compounds used in functional classes; preservatives. 30; antioxidants, 28; sequestrants, 44; surfactants. 85; stabilizers. 31; bleaching and maturing agents, 24; buffers, acids, alaklies. 60; colors, 35; special sweeteners, 9; nutrient supplements, 116, flavoring compounds, 720; natural flavoring materials, 357; and miscellaneous materials; 158.
Physical state modifiers, Chemical state modifiers
Sensory additives are those materials which are added to enhance, change or maintain the aroma, flavor, taste, texture, or color of foods. Here esthetic and physiological responses are more important than physical, chemical or nutritive properties.
The chemicals which are intentionally added to our food are needed to efficiently produce an abundance or high quality food efficiency.
Intentional food additives include chemicals which are used for nutritional purposes, consumer acceptance, preservation of quality and processing.
Flour requires a chemical for bleaching and aging (5); chlorine or nitrosyl chloride are commonly used. Enrichment chemicals (6) thiamin, riboflavin, niacin and iron, are added as weapons against vitamin deficiencies.
Baking powder and salt have an anticaking agent (7) calcium silicate. Its starch has been bleached (8) with potassium permanganate.
Shortening contains antioxidant (9) as butylated hydroxy toluene, to keep it from becoming yancid and at least one emulsifier (10) to improve texture, help in cake rise, etc. Among common emulsifiers are mono and diglycerides of fatty acids and lecithin.
Egg whites in commercial cakes contain other emulsifiers and (11) surface active agents such as cholic acid and triethyl citrate, Then an enzyme is used as a fermenting agent (12) to remove sugar from the white before drying.
The icing may contain the following ingredients and additives: sugar, dextrose, corn syrup, solids, wheat and cornstarch, nonfat dry milk, water, salt, shortening with freshness preserver, cocoa processed with alkali, natural flavors, artificial flavors, plant lecithins, pectin, or ceullulose gum. monoglycerides, diglycerides, polysorbate surfactants, potassium sorbate, sodium phosphate, sodium citrate or sodium stearate, citric acid and possibly article color. If a decorator bomb was used, the propellent may not be listed. Equally anonomonus are ingredients of some of the “ice creams” which may have complimented the cake. These are chemicals with which we live.
3. Again, ISI specifications for Saccharin, Food Grade (IS: 6385- 1978) (First Revision) indicates, inter alia, that Saccharin of food grade is a commercially known item and since Saccharin of Pharmaceutical grade is also known, therefore, the fact that Saccharin food grade is a distinct commodity used for food purpose is important. This ISI standard describes ‘Saccharin’ as follows:
Saccharin is a non-nutritive sweetener. It is normally used by liabetics and those who need low calorie diet as a substitute for cane sugar. It is about 500 times sweeter than sugar.
3.3. Marking–Each container shall be marked legibly to give the following information:
(a) Name of the material including the words ‘Food Grade’,
(b) Name and address of the manufacturer,
(c) Minimum net mass, and
(d) Batch or code number.
3.3.1. The container may also be marked with the ISI Certification Mark.
4. In fact, the Indian Standard on ‘Food Additives’ lists a large number of chemicals which are used as food grade food additives and the list also leads us to a conclusion that even individual chemicals can be used as food additives. Again, the technical material on ‘Saccharin’ indicates the functional use in foods as non-nutritive sweetener.
5. It is noticed that the Federal Register dated April 15, 1977 published by Department of Health, Education and Welfare, Food and Drug Administration, Washington D.C., USA, Saccharin is classified as a food ingredient and indicates that 70% of Saccharin used is consumed in food and beverages. This has not been contradicted or shown to be wrong.
6. Further Handbook of Food Additives by ‘Furia’ published by the Chemical Rubber Co., Cleveland Chio has defined it as “A food additive is a substance or mixture of substances other than a basic food stuff, which is present in food as a result of any aspect of production, proceeding, storage or packing. The term does not include chance contaminants, colours, special sweetners, flavouring compounds, and natural flavouring materials are termed as International Food Additives, Chapter 14 is devoted to sweetners where Saccharin has its own flavour characteristics, chapters 12 and 13 are devoted to flavours.” The Food Chemical Codes, 2nd Edition published by National Academy of Sciences, Washington D.C. specification of Saccharin is given. FDA recognises specification given in food chemical code as “appropriate food grade” within the meaning of food additive regulations. These specifications are adopted by Food and Drug Directorate of Canada and by Food Additive and Contaminants Committee of Great Britain. The Japanese Standards of Food Additives. 3rd Edition published by Japanese Union of Food Additives Association 1974. Specification of Saccharin is given on page 391. Uses of Saccharin are given on page 27. As per the Prevention of Food Adulteration Act, 1954 “Food” means any article used as food or drink for human consumption other than drugs and water and includes:
(a) any article which ordinarily enters into or is used in the consumption or preparation of human foods.
(b) Any flavouring matter or condiments and
(c) Any other article which the Central Govt, may having regard to its use, nature, substance or quality, declare, by notification in the Official Gazette as food for the purpose of this Act.
As per PFA Saccharin is a food.
7. Evaluation of certain Food Additives, 21st Report of Jt. FAO/ WHO Expert Committee on Food Additives and Technical Report series 617 published by World Health Organisation, Geneva, 1978, Saccharin is discussed and unconditional ADI for main 5mg/Kg. body weight was established. Perfume and Flavour Chemicals by Steffen Arctandar described all perfumes and flavor chemicals and Saccharin is given in this book.
8. In view of the above, I consider that learned Counsel’s arguments have a lot of force. He has succeeded in drawing our attention to such technical and other material which goes to show that Saccharin is a food additive although of a non-nutritive type.
9. In my opinion, there is no warrant for restricting the meaning of the words “food products and food preparations” only to those items which have some nutritive value once the technical authorities and legal provisions noted above include food additives (including those of non-nutritive type also) in their description of food or food preparations, and for central excise purposes, we have to keep this context in view. Actually, the word ‘food’ is used in many senses and has both broader and narrower connotations. In one sense, it is a nourishment, nutrient or whatever is eaten or taken as drink for the repair and growth of organisms or maintenance of life. However, in narrower sense, we distinguish even between that which is eaten (i.e. the solid or semi-solid foods) and what one drinks. Thus, we speak of ‘food’ and ‘drink’. “In a more scientific sense, whatever, when taken into an organism, serves to build up structure or supply waste may be termed ‘food’. “Thus, we speak of liquid food, plant food etc. But,-in its wider sense, food is closely synonymous with nutriment, nourishment, and sustenance. In still broader sense, “Victuals is a plain, homely word for whatever may be eaten.” However, we have to see in which sense a term is commonly used in the market and the item is required to be considered accordingly for excise purposes; and, I am of the opinion that here, it has to be taken in its widest sense as anything or everything which is consumed by human beings usually as food or with food in the normal course irrespective of whether it had a nutritive value or not and there is no cause for confining the term to only nutrient and nourishment. Saccharin of food grade is consumed by human beings as an edible substance which is used in food preparations or certain articles of food or food products and preparations including some derivitives and therefore, it is in this common sense that it is required to be applied as per the test of common parlance laid down by the Hon’ble Supreme Court in a number of judgments.
10. Also, in my opinion, the phrase ‘food grade’ is itself highly suggestive: And, ‘Saccharin-Food Grade’, known and recognised as food additive, is required to be treated as such and consequentially, the benefit of the exemption notification claimed by the appellants was required to be extended.
11. Further, 1 observe that the appellants have also made alternative submission to the effect that they will, in any event, be entitled to a set-off of duty paid on inputs, and have also referred to the question of principles of natural justice etc. However, in view of my above finding that they were required to be treated as food additives and therefore, eligible to the benefit of the notification, it is not necessary to go into these other aspects.
12. I, therefore, set aside the impugned orders and accept the appeals.
POINT OF DIFFERENCE
1. In view of difference of opinion between Hon’ble Member (Judicial) and the Vice-President, the matter is submitted to Hon’ble President for reference to a Third Member on the following point:
Whether ‘Saccharin–Food Grade’ was not entitled to the benefit of notification No. 55/75-CE dated 1.3.75 on the grounds mentioned by learned Member (Judicial) and the appeals were required to be rejected or it was entitled to the benefit of the notification and the appeals were required to be accepted for the reasons mentioned by the Vice President.
Lajja Ram: In this difference of opinion matter, the issue for consideration is whether the product ‘Saccharin–Food Grade’ was or was not entitled to the benefit of notification No. 55/75-CE dated 1.3.1975. Under notification No. 55/75-CE dated 1.3.1975 all kinds of food products and food preparations including (i) meat and meat products (ii) dairy products (iii) fruit and vegetable products(iv) fish and sea foods (v) bakery products; and (vi) grain mill products, falling under Item No. 68 of the erstwhile Central Excise Tariff were eligible for exemption from the payment of central excise duty. According to the learned Vice-President, Saccharin was a food additive and was covered within the meaning of the words ‘food products and food preparations’. On the other hand, the learned Member (J) had held that the Saccharin was not a food product or food preparation as commonly understood.
2. I have heard Shri R. Sudhinder. advocate, for the appellants. M/s. Asian Chemical Works. Shri Satnam Singh, SDR, represented the respondents/Revenue. I have carefully considered the matter and have given due consideration and thought to the submissions made by both the sides.
3. Food products and food preparations are items of daily consumption. As what constitutes the food products and food preparations has to be determined as per understanding of the common consumer. In New International Dictionary ‘Food’ is defined as under:
Food–Material consisting of carbohydrates, fats, proteins and supplementary substances (as minerals, vitamins) that is taken or absorbed into the body of an organism in order to sustain growth, repair and all vital processes and to furnish energy for all activity of the organism.
According to the Chambers Twentieth Century Dictionary, food’ means–what one feeds on: that which, being digested, nourishes the body: whatever sustains or promotes growth.
The Allahabad High Court, in the case of Commissioner of Sales Tax, U.P. v. Sunhari Lal Jain 1975 (35) STC 425 (Allahabad) had held after referring to the dictionary meaning of the term ‘food’ that interpreted in its primary sense–food must be a thing taken into the system as nourishment and not merely as a stimulant.
In the case of CCE, Bombay v. Parle Exports (P) Ltd. 1988(2) SCALE 213 at page 1381, the question for consideration before the Supreme Court was, whether non-alcoholic beverage bases are food products or food preparations covered by the exemption notification No. 55/75-CE dated 1.3.1975 which exempted all kinds of food products and food preparations falling under Item No. 68 of the erstwhile Central Excise Tariff. The Hon’ble Supreme Court observed that the food was one which nourishes and sustains human body for the purposes of growth, work or repair or for the maintenance of the vital processes.
In Corpus Juris Secundum, Volume 36, it is stated at page 1041 that “The word ‘food’ includes that which is drunk as well as that which is eaten for nourishment. As used in statutes, it may include food for animals, as well as food for human beings, although in common use the word feed is employed when referring to articles fed to animals. In the general sense of the term, food is “that which is eaten or drunk for nourishment”. It includes lard, milk, milk-chocolate, cheese, coffee…but not tobacco, whisky or saccharin “. (Refer para 22 of Brooke Bond India Ltd. v. UOI .
From all accounts one thing is clear that the food is taken for its nutritional value.
4. Saccharin is a non-nutritive sweetener. It is normally used by diabetics and those who need low calorie diet as a substitute for cane sugar. It is about 500 times sweeter than sugar. (Refer Indian Standards 6385-1978).
It is an organic chemical compound, having formula of C6H4COSO2NH. It is a pharmacopial product.
5. Under Customs Cooperation Council Nomenclature (CCCN), Saccharin was classifiable under Heading No. 29.26. Chapter 29 covered Organic Chemicals. Heading No. 29.25 covered the following:
Carboxyimide-function compounds (including ortho-benzoicsulphimide and its salts) and imine-function compounds (including hexamethylenetetramine and trimethylenetrinitramine).
Under Harmonized Commodity Description and Coding System (HSN) it is classifiable under Heading No. 29.25. Chapter 29 covered Organic Chemicals. Heading No. 29.25 covered–
29.25–Carboxyimide-Function Compounds (including Saccharin and its salts) and Imine-Function Compounds.
–Imides and their derivaties: salts thereof:
2925.11 Saccharin and its salts
2925.19 Other
2925.20 Imines and their derivaties;
salts thereof
6. Extended definition given in other enactments for the purposes of standardisation, preservation or for checking adulteration or for laying down regulations for the safety to health and protection from harmful micro-organism could not be automatically applied for tariff purposes. In the case of Ashok Griha Udyog Kendra Put. Ltd. v. CCE & C, Kanpur , Allahabad the Allahabad High Court in para 11 of their judgment had observed that the definition of food given in the Food Adulteration Act was for a different purpose and that food was different from food products and food preparations.
7. After giving careful consideration to the issue, I agree with the learned Member (J) that the saccharin was neither a food product not a food preparation.
ORDER
8. In view of the majority opinion, the appeals are rejected.