The Hindu Business Line : Enhance your mental activity

MAHARSHI Ayurveda Corporation Ltd manufactures `Herbonic'. "An ideal family natural health drink!" as per the `product description' on http://indiaabundance.com. "Provides extra energy to meet challenges of the energy-sapping activities during the day," it adds; and ingredients include ashwagandha and brahmi', to "enhance mental and physical activity and adaptability."

Wonder if the taxman took an overdose of the tonic, because he had hauled up the company before the apex court, as one learns from a decision that is dated December 7. The dispute was not about the product's properties or constituents, but about its classification.

MAC, the company, had classified Herbonic under Chapter 20 of the Central Excise Tariff Act, declaring the product to be "a preparation of vegetables, nuts and other parts of plants and fruits/seeds," eligible for `nil rate' benefit as per a notification. But the Department said that Chapter 21 was more appropriate since the product in question was a "health vitaliser being used for all-round growth and improvement of memory and general health of children and adults," chargeable to duty at 20 per cent.

The tussle passed through different levels of appeal and landed at the tribunal where the decision went in favour of MAC. Aggrieved, the Department approached the Supreme Court. There, Mohan Parasaran, Additional Solicitor General, arguing for the Commissioner of Central Excise, Meerut, referred to the `Brussels' Convention on the Harmonised Commodity Description and Coding System, and said that Chapter 20 didn't fit because it contained a specific exclusion of products consisting of "mixtures of plants and parts of plants of different species."

True, Herbonic was "a mixture of assorted vegetation and dry fruits and seeds," said Manoj Arora, speaking for MAC. He also described the manufacturing process: vegetations such as aswagandha and brahmi booti were turned into powder and processed in khas khas and giri badam (almond) oil and then the whole mixture got processed in sugar syrup under vacuum and thereafter choti illayachi (cardamom) and roof kewara were added as flavour.

While that may be a recipe you'd like to try out, at your risk, Arora's submission was that the Department 's choice was of a residual entry, that is, "edible preparations, not elsewhere specified or included," in comparison to MAC's choice of classification that was apt.

Justices Ashok Bhan and C.K. Thakker of the Supreme Court studied the rightness of the residuary entry chosen by the Department. "Unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item," said the court, citing the Bharat Forge and Press Industries case. "The heading which provides the most specific description shall be preferred to headings providing a more general description," reiterated the court in the words of the Speedway Rubber Co verdict.

As for the exclusion that Parasaran had mentioned, the court said that the same was about mixtures "which are not consumed as such but which are of a kind used for making herbal infusions or herbal `teas'." In contrast, MAC's product, made of plants, seeds and nuts, could be consumed as such, pointed out the court, dismissing the Department 's appeal.

Much has changed in these tariff entries, as you can learn by checking www.cbec.gov.in. See if you can spot interesting snatches in the chapters, as a good substitute to any herbal blend, if you're intent on keeping your mind active. Here's a sample from Chapter 20, where the Act defines the phrase `obtained by cooking'. It means not what sits on your dining table, but what is obtained "by heat treatment at atmospheric pressure or under reduced pressure to increase the viscosity of a product through reduction of water content or other means." Even as that throws new light on kitchen work, experts may see ample leeway in the definition to feed litigation.

ExParte@TheHindu.co.in

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