[Order per : M.S. Shah, J. (Oral)]. - What is challenged in this petition under Article 226 of the Constitution of India is the constitutional validity of the Central Government Notification No. 28/2007-Central Excise, dated 15-6-2007, particularly Serial No. 1 in the table in so far as in column No. 2, code 2202 90 30 is given to “Flavoured milk of animal origin” while giving the said item exemption from duty.
The dispute is about the flavoured milk being produced by the petitioners under the brand name Amul Kool/Amul Kool Cafe.
2. Mr. Paresh M. Dave for the petitioners has submitted as under :-
2.1 Earlier under the six digit code system prevailing till 27-02-2005, the flavoured milk made by the petitioners was falling under Entry 0401.11 which read as under :-
CHAPTER 4
Notes :-
1. The expression, ‘Milk’ means full cream milk or partially or completely skimmed milk.
2 ……………
| Heading No. | Sub-heading No. | Description of goods | Rate of duty |
| (1) | (2) | (3) | (4) |
| 04.01 | 0401.11 | Flavoured milk, whether sweetened or not, put up in unit containers and ordinarily intended for sale. | Nil. |
2.2 It is submitted that even under the 8 digit code introduced from 28-2-2005, flavoured milk could only fall under Chapter 4 Heading No. 0402, more particularly under sub-heading No. 0402 99 90 reading as under :-
CHAPTER 4
DAIRY PRODUCE; BIRD’S EGGS; NATURAL HONEY; EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SPECIFIED OR INCLUDED
Notes :-
1. The expression ‘milk’ means full cream milk or partially or completely skimmed milk.
| Tariff Item | Description of goods | Unit | Rate of duty |
| (1) | (2) | (3) | (4) |
| 0401 | Milk and cream, not concentrated nor containing added sugar or other sweetening matter. | | |
| 0402 | Milk and cream, concentrated or containing added sugar or other sweetening matter. | | |
| 0402 91 | Not containing added sugar or other sweetening matter. | | |
| 0402 99 | Other | | |
| 0402 99 10 | Whole milk | kg. | Nil |
| 0402 99 20 | Condensed milk | kg. | 16% |
| 0402 99 90 | Other | kg. | Nil |
2.3 Simultaneously with bringing into operation the above Tariff Amendment Act, the Central Government has issued various Notifications thereby maintaining the effective rates as they stood for various products till 28-2-2005 once again signifying that the objective of the above Tariff Amendment Act was not to change scope of any Chapter or to change classification of the excisable goods, nor was the objective to change the rate structure of the excisable goods.
2.4 According to the department, as per the show cause notice dated 16-04-2007, the Flavoured milk falls in Chapter 22 under Tariff Item No. 2202 90 30.
CHAPTER 22
Beverages, spirits and vinegar
| Tariff Item | Description of goods | Unit | Rate of duty |
| (1) | (2) | (3) | (4) |
| 2202 | Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and other non-alcoholic beverages, not including fruit or vegetable juices of Heading 2009. | | |
| 2202 90 30 | Beverages containing milk | 1 | 16% |
Mr. Dave further states that only items like Milkis and Swerve (Vanana) being made by other foreign producers can be considered as beverages containing milk because over and above milk, they contain many other ingredients and milk is only one of the ingredients. On the other hand, Amul Kool and Amul Kool Kafe are only skimmed milk with sugar and flavour and therefore they fall only under Chapter 4 providing for dairy produce where note 1 specifically defines milk as including skimmed milk.
2.5 The Notification dated 15-06-2007 reads as under :-
“In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby further amends the following notifications of the Government of India in the Ministry of Finance (Department of Revenue) specified in column (2) of the Table hereto annexed, in the manner and to the extent specified in the corresponding entry in column (3) of the said Table, namely :-
| Sr. No. | Notification No. and date | Amendments |
| (1) | (2) | (3) |
| 1. | 3/2005-Central Excise dated the 24th February, 2005 [G.S.R. 95(E), dated the 24th February, 2005] | In the said notification, in the Table, after S. No. 11 and the entries relating thereto, the following S. No. and entries shall be inserted, namely :- |
| | (1) | (2) | (3) | (4) |
| 11A. | 2202 90 30 | Flavoured milk of animal origin | Nil |
2.6 The basic Notification No. 3/2005-C.E. is a general exemption notification prescribing effective rate for various excisable goods, and it is under this general exemption notification that Sr. No. 11A has been inserted from 15-6-2007 thereby specifying nil rate of duty for flavoured milk of animal origin. As the product in question was classified as flavoured milk under SH No. 0401.11 of the Tariff as it stood till 28-2-2005 and since it is not disputed by the Revenue even at this stage that Amul Kool/Amul Kool Cafe is flavoured milk, the respondents would now treat the goods as chargeable to nil rate of duty from 15-6-2007. However, in the process, the petitioners’ right to establish classification of these goods under Chapter 4 of the Tariff as dairy produce has been defeated because the classification of this product is shown under this Notification as 2202 90 30.
2.7 The petitioners’ submission is that Section 5A of the Central Excise Act empowers the Central Government to exempt excisable goods of any specific description from the whole or any part of the duty of excise leviable thereon. The power is thus, to grant exemption of excisable goods of any specified description, but not to decide a classification of any excisable goods by way of a notification issued under this Section. The Central Government could have very well prescribed nil rate of duty for flavoured milk of animal origin without referring to its classification in the said Notification, but having prescribed these goods as falling under classification Code No. 2202 90 30 under this Notification, the Central Government has decided classification of the product by virtue of Notification under Section 5A of the Act, and therefore also, this action is also ultra vires the powers conferred upon the Government under Section 5A of the Act.
The petitioners’ submission is that if this Notification had been issued without indicating Tariff Item No. 2202 90 30, it would have been open to the petitioners to contend that the petitioners were entitled to exemption from excise duty for the entire period from 28-2-2005 to 14-6-2007 by contending that the flavoured milk is only milk with sugar and flavour and is not beverage containing milk as such. Hence, it would have been open to the petitioners to contend that the flavoured milk made by them only falls under Tariff Item No. 0402 99 90 for which Nil rate of duty is prescribed right from 28-2-2005 onwards.
2.8 However, the Central Government itself having given the classification of Tariff Item No. 2202 90 30 in the Notification dated 15-6-2007, apparently with prospective effect, no authority whether the Commissioner of Central Excise or the Appellate Tribunal could accept the petitioners’ contention that flavoured milk falls under Tariff Item No. 0402 99 90. The petitioners have, therefore, challenged the Notification dated 15-6-2007 only in so far as it purports to give classification of Tariff Item No. 2202 90 30 to “Flavoured milk of animal origin”.
2.9 In view of the above Notification, the authority which has issued the show-cause notice on 16-4-2007 would simply proceed on the basis of the said classification code given by the Central Government in the Notification dated 15-6-2007 to which the petitioners have already given reply on 10-7-2007.
3. Having heard learned counsel for the petitioners, we are of the view that looking to the subject matter of the controversy raised in the petition, this appears to be an eminently fit case where the petitioners should make a representation to the Central Government. Accordingly, if the petitioners make such a representation within one week from today, it is expected that the Central Government will decide the same as expeditiously as possible and preferably within one month from the date of receipt of the representation.
4. As regards pendency of the proceedings arising from the show-cause notice, it will be open to the petitioners to make a request before the Commissioner of Central Excise to adjourn the hearing suitably so as to await the decision of the Central Government on the representation. We are sure that such a request will be considered by the Commissioner in the proper perspective when the matter comes up for hearing before the Commissioner on 16-8-2007.
5. The petition stands disposed of in the above terms.
6. Liberty to apply in case of difficulty.
7. Direct service is permitted.