The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that ‘Minute Maid Nimbu Fresh’ (MMNF) is classifiable as a “fruit juice-based drink” and not as “lemonade”, thereby setting aside an excise duty demand of over ₹19 lakh raised by the department. 

The Bench P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) allowed the appeal filed by the assessee, holding that the department’s attempt to reclassify the product under a different tariff heading was contrary to the law already settled by the Tribunal’s Larger Bench. 

The appellant, a contract packaging company and franchise bottler for Coca-Cola, manufactured and cleared Minute Maid Nimbu Fresh (MMNF) by classifying it under Central Excise Tariff Heading (CETH) 22029020, covering “Fruit pulp or fruit juice-based drinks.”

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Following an investigation by the Directorate General of Central Excise Intelligence (DGCEI), the department alleged that MMNF should instead be classified under CETH 22021020 as “Lemonade.” According to the department, such classification would disentitle the manufacturer from valuation benefits available under Section 4A of the Central Excise Act, requiring excise duty to be paid on transaction value under Section 4 instead. 

Consequently, a show cause notice was issued demanding ₹19,04,433 as differential excise duty for the period 1 April 2011 to 14 July 2014, along with interest and penalty under Section 11AC of the Central Excise Act. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld the order, prompting the appeal before the CESTAT. 

The dispute before the Tribunal centered on a single legal question:

Whether ‘Minute Maid Nimbu Fresh’ should be classified as “Lemonade” under CETH 22021020 or as a “Fruit pulp or fruit juice-based drink” under CETH 22029020.

The Revenue relied on an earlier Mumbai Bench decision in Hindustan Coca-Cola Beverages Pvt. Ltd., whereas the appellant argued that the issue had already been conclusively settled by the Tribunal’s Larger Bench in Brindavan Beverages Pvt. Ltd.

The Chennai Bench noted that the controversy was no longer res integra because the Tribunal’s Larger Bench had already examined the classification of MMNF and similar beverages.

The Larger Bench had categorically held that beverages such as Minute Maid Nimbu Fresh, Nimbooz and Nimbu Masala Soda, containing not less than 5% lemon or lime juice and total soluble solids of not less than 10%, satisfy the applicable food regulations governing fruit beverages and therefore fall under Tariff Item 22029020 as fruit juice-based drinks.

The Tribunal observed that the Larger Bench had also rejected the reasoning adopted in the earlier Mumbai Bench decision that classified MMNF as lemonade. 

Following the binding Larger Bench ruling and subsequent decisions of various Tribunal Benches, the Chennai Bench concluded that the Revenue could not disturb the classification already adopted by the manufacturer.

It held that the attempt to classify MMNF under CETH 22021020 as “Lemonade” was legally unsustainable and that the product was correctly classified under CETH 22029020 as a fruit juice-based drink.

Since the very basis of the demand—the reclassification of the product—failed, the Tribunal set aside the impugned appellate order.

As a result, the demand of approximately ₹19.04 lakh, along with the associated interest and penalty, was quashed, and the appeal was allowed with all consequential benefits available under law.

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