HEALTHWAYS DAIRY PRODUCTS CO. versus UNION OF INDIA

Citation: [1976] 2 S.C.R. 93 · Decided: 06-10-1975 · Supreme Court of India · Bench: A. ALAGIRISWAMI · Disposal: Appeal(s) allowed

Judgment (excerpt)

HEALTHWAYS DAIRY PRODUCTS CO. 
v. 
UNION OF INDIA 
October 6, 1975 
93 
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[A. ALAGIRISWA1MI, P. K. GOSWAMI AND N. L. UNTWALIA, JJ.] 
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Central Excise Rules, 1944, '" 8( 1 }-Exemption Notification-'Condensed 
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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 mate-
rials 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 exemption-
notification 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]. 
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( 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 
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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. 
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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 Peti-
tion 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 manufactur-
ing a number of milk products including Condensed Milk and Con-
densed Skimmed Milk. 
By the Finance Act, 1969 item 1B was added 
to the First Schedule of The Central Excise and Salt Act, 
194•4-
hereinafter called the Excise Act, levying 10% ad valorem duty on 
"prepared or preserved foods put up in unit containers and ordinar

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