The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Dabur India’s imported product ‘Lemoneez’ is classifiable as fruit juice under Tariff Item 2009 31 00, attracting 12% GST, and not as a soft drink concentrate under Heading 2106 90 19 as claimed by the department.
Dabur India Limited, the appellant, had imported ‘Lemoneez’, a lemon-based concentrate from Nepal, and initially classified the product under Tariff Item 2202 99 20, which also attracted 12% IGST. Later, the department issued a show cause notice alleging that the product was misclassified and ought to be classified as a soft drink concentrate under Heading 2106 90 19, attracting 18% IGST.
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The adjudicating authority confirmed the classification proposed by the department, raised a differential duty demand of Rs. 1.05 crore, imposed penalties, and ordered confiscation of the goods with a redemption fine. A penalty was also imposed on the Customs House Agent (CHA) for allegedly failing to advise correct classification.
The appellant’s counsel argued that ‘Lemoneez’ is manufactured by blending lemon juice concentrate with water in proportions matching natural lemon juice, followed by pasteurization and addition of a minimal preservative. They submitted that the product is marketed and used as a substitute for real lemon juice in recipes and beverages, not as a drink in itself.
The product was not carbonated, did not contain citric acid, synthetic sweeteners, or flavouring agents, ingredients typical of soft drink concentrates. They cited explanatory notes to the Harmonized System and decisions from various courts to argue that such reconstituted juices fall under Heading 2009. They also argued that there was no intent to evade duty, and that both classifications attracted the same GST rate.
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The department counsel argued that the product’s multiple culinary uses indicated it was an edible preparation and not merely a juice. It argued that under the self-assessment regime, the onus was on the importer to correctly classify the product and that misclassification amounted to suppression of facts.
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The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) held that the classification of ‘Lemoneez’ must be based on its composition and manufacturing process, not on its end use. The tribunal found that the product met the standards for reconstituted juice under the Harmonized System Explanatory Notes and retained the essential characteristics of natural lemon juice.
The tribunal held that the Commissioner had selectively read the explanatory notes and misapplied the legal criteria. The tribunal further ruled that mere misclassification, in the absence of any misdescription or concealment, does not constitute suppression or wilful misstatement.
The tribunal ruled that the product was rightly classifiable under Heading 2009 31 00 as juice of a single citrus fruit. The demand for differential duty, interest, penalties, confiscation, and redemption fines was all set aside. The appeals were allowed with consequential relief.
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