Partly skimmed milk powder is a separate marketable commodity as compared to skimmed milk powder and is not subject to levy of excise duty under sub-heading 0401.13 of Chapter 4 of the Central Excise Tariff.

Gokal Chand Mital, J.

1. Purely a legal issue arises in the writ petition, whether partly skimmed milk powder is a separate marketable commodity as compared to skimmed milk powder and whether both the commodities are subject to levy of excise duty under sub-heading 0401.13 of Chapter 4 of the Central Excise Tariff, In case partly skimmed milk powder is not leviable to central excise, question regarding the jurisdiction of the respondents to levy central excise would be the next for determination.

2. These legal issues arise on the following facts : Food Specialities Ltd. (hereinafter referred to as #24;the petitioner#25;), is manufacturing a product known as #24;Nestle Everyday Daily Whitener for tea and coffee#25; and on the packing the ingredients mentioned are #24;partly skimmed milk and Sucrose#25; and the analysis of the contents of milk fat are mentioned 19.0 per cent. A copy of the label is Annexure PI to the petition.

3. From 1-3-1983 to 28-2-1989, skimmed milk powder was exempted from excise duty. During that period excise duty was sought to be levied on the item in dispute and ultimately the petitioner succeeded that excise duty was not leviable. (See order Annexure P7). Although the contention of the petitioner was that its product was partly skimmed milk and since even on skimmed milk no excise duty was leviable, the following observations were made in the concluding part of the order:

#28;There is no distinction in the tariff itself between the completely and partly skimmed milk.#29; In spite of the aforesaid finding, the product in question was classified under sub-head 0401.13. Since no excise duty was levied on the product in dispute, it was not necessary for the petitioner to go up further in appeal on the finding that the product in dispute was covered by sub-head 0401.13.

4. When with effect from 1-3-1989, skimmed milk powder was subjected to excise duty, by making amendment in the sub-heading 0401.13, the petitioner immediately filed classification list on 3-3-1989 saying that its product was covered by sub-heading 0401.19, the residuary clause under Chapter 4 of the Central Excise Tariff, and it did not fall under sub-heading 0401.13. For this contention, detailed reasons were furnished by the petitioner. Since the product could not be taken out of the factory premises without payment of excise duty, the petitioner paid excise duty under protest and sought determination of the point raised by it. The respondents gave no decision on the matter and kept on collecting the excise duty on the basis of the earlier decision, Annexure P7, and since the petitioner was being subjected to heavy excise duty, it approached this Court through civil writ petition under Article 226 of the Constitution of India to challenge the levy of excise duty and also claimed refund of the amount of excise duty already collected by the respondents on the product in question.

5. The relevant central excise tariff relating to milk and its products as contained in Chapter 4 deserves to be reproduced :

Chapter 4 Dairy Produce, etc. 4.1 1. The expression #28;Milk#29; means full cream milk or partially or completely skimmed milk. Heading Sub-heading Description of goods Rate of duty No. No. (1) (2) (3) (4) 04.01 MILK AND CREAM, CONCENTRATED OR CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER - In or in relation to the manufacture of which any process is ordinarily carried on with the aid of power: 0401.11 - Flavoured Milk, whether sweetened or not, put up Nil in unit containers and ordinarily intended for sale. 0401.12 - Skimmed milk powder, especially prepared for Nil feeding infants. 0401.13 - Skimmed milk powder, other than powder specially 15% prepared for feeding infants, put up in unit container and ordinarily intended for sale. 0401.14 - Concentrated (condensed) milk, whether 15% sweetenedor not, put up in unit containers and ordinarily intended for sale. 0401.19 - Other Nil A reading of opening part 1 of the tariff would sh