Case: Corn Products Company India Limited Vs. Union of India

( 1 ) PETITIONER No. 1 is a company incorporated under the provisions of the Companies Act and manufactures diverse products including baking powder in their factory situated at Thane. The manufacture of baking powder is liable to payment of excise duty under Tariff Item No. 68 of the first Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as theThe central Government in exercise of powers under Rule 8 (1) of the Central Excise Rules, 1944 published exemption notification dated March 1, 1975 providing that goods of description specified in the schedule and falling under Item No. 68 of the First Schedule to the Act are exempted from payment of whole of duty of excise leviable thereon. The first entry in the schedule reads askinds 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. "( 2 ) PETITIONER No. 1 company filed classification list in form I in respect of several products manufactured and claiming exemption under exemption notification dated March 1, 1975. The assistant Collector of Central Excise by order dated April 7, 1978 held that baking powder is not a food product but an ingredient used in small quantities for flavour, colour or for other purposes and such item cannot be considered as food product and, therefore, manufacture of baking powder is not entitled to exemption under notification dated March 1, 1975. The company carried appeal before the Appellate Collector of Central Excise and Customs, Bombay, and the appeal was allowed by order dated October 3, 1979, holding that baking powder is either a food product or food preparation and manufacture of baking powder is entitled to exemption from payment of excise duty

Reasoning: ( 4 ) BAKING powder is a product formulated from various edible ingredients such as edible maize, starch special, soda bicarb and sodium aluminium sulphate. The finished product is marketed by the company in their brand name rex in different packings. Baking powder is extensively used in bakery preparations like biscuits, breads and also in Indian preparations like pakoda, idli, samosa, gulab jamun, etc. The use of baking powder makes the preparation light and crisp and adds consistency to the formulation and improves the taste. As observed by the Supreme Court, the problem must be solved in a commonsense way and the Court should ascertain as to how the expression baking powder is understood in common parlance. We have no hesitation in observing that any housewife would treat baking powder as a food preparation and in trade parlance baking powder is sold and known as a food preparation. The Legislature had clearly made distinction between the expressions food products and food preparations and, therefore, the submission of Mr. Desai, learned counsel for the revenue, that baking powder should not be treated as food preparation because baking powder is not consumed as a food item cannot be accepted. The expression food preparations need not include every item which is consumed as a food product. For illustration, Item No. vi of the schedule to the exemption notification refers to grain mill products. Now, by no stretch of imagination, it can be suggested that aata which is grain mill product can be consumed as a food product, but aata would certainly attract the expression food preparations because aata is used for the purpose of baking bread or preparing roti. In our judgment, Item No. 1 of the schedule to the exemption notification gives an inclusive definition of food products and food preparations and bare perusal of the same makes it clear that even though the item cannot be consumed as a food, still the exemption would be available if the item falls under the entry food preparations. Mr. Desai relied upon decision of the Allahabad High Court in Ashok Griha Udyog Kendra Pvt. Ltd. v. Collector of Central Excise and Customs [1982 (10) E. L. T. 309] to urge that spices are neither food products nor food preparations even though spices are used in preparation of human food for the sake of giving flavour and taste to it. The Allahabad High Court did not assign any reasons for coming to this conclusion, but merely referred to the decision of a single judge of the Andhra Pradesh High Court in Brooke Bond India Limited v. Union of India and Ors. [1980 (6) E. L. T. 65] and where it was held thatwas neither a food product nor a food preparation but is merely a beverage. We are unable, with respect, to share the view of the Allahabad High Court. It is not possible to hold that spices which are used in preparation of human food are not food preparations as understood in the exemption notification. Mr. Desai submitted that the question to be posed is whether spices and baking powder can be consumed and would constitute a meal. In our judgment, the question posed is misconceived. The question should be whether baking powder is a food preparation and which is a crucial ingredient in preparation of food products. It is not correct to suggest that unless the item can be consumed as a part of the meal, the same would not fall under the expression food preparations. The acceptance of the submission of Mr. Desai would lead to very curious result and would make the expression food preparations in the exemption notification redundant. It isrule of interpretation that no expression or part of it should be made redundant while interpreting an expression. In our judgment, baking powder would clearly fall within the expression food preparations and, therefore, the manufacture of baking powder is entitled to claim exemption under notification dated March 1, 1975.