The Food Safety Standards Authority of India (FSSAI) , established under the Food Safety Standards Authority of India Act is responsible for regulating food products in India and is governed by the guidelines issued under theact . To standardize the food regulations the government has introduced the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011. These regulations include provisions for dairy products, oils, fruits and vegetables, grains, confectionery, ice cream products, seasonings, non-dairy products and fruit and vegetable-based beverages.

 

 

The table below enumerates the microbiological requirements of Lime and Lemon in Canned, Bottled, Flexible and/or Aseptically Packed Thermally Processed Fruit Beverages / Fruit Drink/ Ready to Serve Fruit Beverages additives) and Carbonated Fruit Beverages or Fruit Drinks prepared from fruit juice and water or carbonated water and containing sugar:

 

 

 

As per the FSSAI regulations, in case the drink contains fruit content > 10% (5% in case of lemon) then such drink is to be considered as fruit-based beverages and to be classified under Central Board of Indirect Taxes & Customs heading 2202 99 20 and is taxable @ 12%.

 

 

However, if the drink contains fruit content < 5 % then the same is likely to get classified under chapter heading 2202 10 as water-based drink with flavoring attracting GST @ 28% plus compensation cess @ 12%. With respect to the drinks having fruit content & >5% but < 10% the ambiguity continued to prevail.

 

 

In 2013, ‘Nimbooz’ was launched by PepsiCo under its brand, 7Up. It was described as a beverage made of real lemon juice, with no fizz and artificial flavours. This led to a debate about its categorisation that whether Nimbooz should be considered as a lemonade or a fruit juice/fruit pulp-based juice.

 

 

The company was asked to pay the duty from February 2009 to December 2013 as lemonade. The Commissioner of Customs Central Excise and Service Tax, Hyderabad – I Commissionerate had passed an order dated 31.03.2015, according to which, differential duty amounting to Rs. 11,34,506/- on Nimbooz which was removed during the period of April 2013 to December 2013 with interest and penalty but the demand proposed beyond the normal period of limitation has not been confirmed. As a result, two appeals were filed, out of which one was filed by M/S Aradhana Foods for setting aside the order of the Commissioner. The second appeal was filed by Commissioner of Customs, Central Excise, and Service Tax, Hyderabad-I to have a portion of the Commissioner’s order set aside. Nimbooz, according to the appellants, should have been classified under CETH 2022 10 20 of the First Schedule to the Central Excise Tariff Act 1985.

 

 

Now, Aradhana Foods and Juices Pvt. Ltd (Aradhana) has approached the Hon’ble Supreme Court of India and challenged the Order of the Allahabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) wherein it was held that ‘Nimbooz’ would be classifiable under Central Excise Tariff Act as “fruit pulp or fruit juice-based drinks.”

 

 

Aradhana contended that `Nimbooz’ could be classified under the item `Lemonade’. The Department, on the other hand, argued that the product deserved classification under the category of “fruit pulp or fruit juice-based drinks.” Now the issue raised before the Apex Court for consideration is whether `Nimbooz' can be classified under item `lemonade' or `fruit pulp or fruit juice-based drinks?”

 

 

A two-judge bench of justices MR Shah and BV Nagarathna agreed to hear the petition filed for the purpose of determining the excise duty on the drink and have asked the parties to submit their counter affidavits in April 2022.