# HEALTHWAYS DAIRY PRODUCTS CO v. UNION OF INDIA

- **Citation:** [1976] 2 S.C.R. 93
- **Court:** Supreme Court of India
- **Decided:** 1975-10-06
- **Case number:** Civil Appeal No. 1257 of 1975
- **Bench:** A. Alagiriswa1Mi, P. K. Goswami, N. L. Untwalia
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/healthways-dairy-products-co-v-union-of-india-6589
- **Pages:** 5

## Headnote

i
r
/
'\·
Central Excise Rules, 1944, '" 8( 1 }-Exemption Notification-'Condensed
B
Milk', if includes 'Condensed Skimmed Milk',
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 Excrse Act, 1944, became exempt from
the levy; but, from that exemption were excluded certain mil.k p~eparations,
namely, items 12 and 13 of the Schedule annexed to the Nottficahon. They
refer to 'milk powder, but excluding such powder spedally prepared ~or feeding
of infants'; and 'condensed milk, whether sweetened or not', respec!Lvely.
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 J 3 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 e:&~ise 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 ~hen cream is extracted from it. [95 A-BJ.
(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 HJ.
(a) In· Annexure IV to the Hand Book of Self-Removal Procedure under
Central Excise Rules, 1944, pubfohed 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.
Agaimt
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. [% A-DJ.
(3) The fact that the appellant had a manufacturing licence e:nly for the
manufacture of condensed milk while he was in fact manufacturing condensed
skimmed milk will not take condensed' skimmed milk out of the exemptionnotification 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 affe.cted by the provision for taking a licence
for its manufacture. {96 F-H].
c
D
E
F
G
( 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
H
not help in the determination of the question.
Unless and until ~.kim'med 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-BJ.
A
B
c
D
E
F
G
H
94
, SUPREME COURT REPORTS
(1976] 2 S.C.R.

## Text

HEALTHWAYS DAIRY PRODUCTS CO.
v.
UNION OF INDIA
October 6, 1975
93
A
;.,. •
[A. ALAGIRISWA1MI, P. K. GOSWAMI AND N. L. UNTWALIA, JJ.]
i
r
/
'\·
Central Excise Rules, 1944, '" 8( 1 }-Exemption Notification-'Condensed
B
Milk', if includes 'Condensed Skimmed Milk',
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 Excrse Act, 1944, became exempt from
the levy; but, from that exemption were excluded certain mil.k p~eparations,
namely, items 12 and 13 of the Schedule annexed to the Nottficahon. They
refer to 'milk powder, but excluding such powder spedally prepared ~or feeding
of infants'; and 'condensed milk, whether sweetened or not', respec!Lvely.
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 J 3 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 e:&~ise 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 ~hen cream is extracted from it. [95 A-BJ.
(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 HJ.
(a) In· Annexure IV to the Hand Book of Self-Removal Procedure under
Central Excise Rules, 1944, pubfohed 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.
Agaimt
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. [% A-DJ.
(3) The fact that the appellant had a manufacturing licence e:nly for the
manufacture of condensed milk while he was in fact manufacturing condensed
skimmed milk will not take condensed' skimmed milk out of the exemptionnotification 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 affe.cted by the provision for taking a licence
for its manufacture. {96 F-H].
c
D
E
F
G
( 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
H
not help in the determination of the question.
Unless and until ~.kim'med 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-BJ.
A
B
c
D
E
F
G
H
94
, SUPREME COURT REPORTS
(1976] 2 S.C.R.
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 qn 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,
194•4hereinafter 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 Exeise
Act other than those specified in the Schedule annexed to the notification from the whole of the dutv of excise 1eviable 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. Condensed 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
apnlication in the Allahabad High Court to challen!!e the demand of
excise duty on condensed skimmed milk.
A Bench of the High Court
took the ~iew that condensed skimmed milk was also condensed milk
covered bv the excluded Item 13 of the Exemption Notification dated
the 1st March. 1970.
It, therefore, dismissed the writ application.
Hence this appeal.
, •
I
"
r
HEALTHWAYS DAIRY PRODUCTS v. UNION (Untwalia, !.)
95
It is well-established by several authorities of !hi~ Court that for
the purpose of levy of excise duty or any othe_! snrular tax the description of goods as popularly and commo~y understood has ~~ be
taken as the description of the same goods m the releva~t prov1S1ons
of the Statute or the Rules. In this case there are materials t~ show
that condensed milk and condensed skimmed milk are two different
items of milk preparations.
In common parlance milk m~ans the f~ll
cream milk as milched 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 art( 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 Ill) 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 Removal 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."
A
B
c
D
In Annexure IV are to be' found Items 13 and 14 respectively
E
in these terms :
"13. Milk powder but excluding such powder specially prepared 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 "fre.sh
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 J'1arch, 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 skimm~ mil.k prepared from skimmed milk fell within the Exemption
Notification and not within excluded item 13.
F
G
H
96
SUPREME COURT REPORTS
[ 197 6] 2 S.C.R.
A
Some support, although a feeble one, can be lent to the above·
B
c
D
E
F
G
H
view with reference to Rule 42 of The Prevention of Food Adlilteration
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) "Condensed 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)"
ln 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
the 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 app~Uant submitted in reply that if
excise duty was not leviable on condensed skimmed milk then
ne>
licence was required for its manufacture. The iposition of law seems to
be this.
Under section 6 of th.e 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 ( l ) of the Central Excise Rules
.that cannot affect the provision of 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 levv of excise duty, thertfore. condensed skimmed milk
remains included in the Exemption Notificiition.
Learned counsel also drew our attention to the form of price list
of the petitioner showing separate prices for "Condensed milk (full
.,
J
I
r
I
HEALTHWAYS DAIRY PRODUCTS v. UNION (Untwalia, l.)
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 ~xempted 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
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.
B.