PETITIONER:
HEALTHWAYS DAIRY PRODUCTS CO.
Vs.
RESPONDENT:
UNION OF INDIA
DATE OF JUDGMENT06/10/1975
BENCH:
UNTWALIA, N.L.
BENCH:
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.
94
JUDGMENT:
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
sometime 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 Re moval 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 he 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.
98
