Flavoured Milk Classified Under Tariff Heading No. 0402 9990, Impugned Order Set Aside for Not Following Precedent
Issue:
Whether flavoured milk should be classified and taxed under Tariff Heading No. 0402 99 90 (milk and cream, concentrated or containing added sugar, etc.) or Tariff Heading No. 2202 9930 (other non-alcoholic beverages), and whether an order in original that fails to follow binding precedents from the High Court and Higher Tribunals is valid.
Facts:
The assessee challenged an order in original passed by the respondent authority. The core ground for the challenge was that the impugned order had failed to follow binding decisions from the High Court and Higher Tribunals. The specific dispute revolved around the classification and taxation of flavoured milk, with the assessee contending it should fall under Tariff Heading No. 0402 9990, while the respondent seemed to imply a different classification. It was explicitly noted that the High Court, in the assessee’s own case (Sri Vijaya Visakha Milk Producers Company Ltd. v. Asstt. Commissioner of Central Tax [2025] 170 taxmann.com 735 (Andhra Pradesh)), had already held that flavoured milk must be classified and taxed under Tariff Heading No. 0402 9990.
Decision:
The court, following its own binding judgment in the assessee’s previous case (Sri Vijaya Visakha Milk Producers Company Ltd.), held that flavoured milk would have to be classified and taxed under Tariff Heading No. 0402 9990. Consequently, the impugned order in original was set aside for not adhering to the established precedent.
Key Takeaways:
- Binding Precedent: This case strongly emphasizes the doctrine of stare decisis, meaning that lower authorities and even the same court in subsequent cases involving the same parties are bound by previous judicial decisions.
- Classification of Flavoured Milk: It re-confirms that flavoured milk is to be classified under Tariff Heading No. 0402 9990, which pertains to “milk and cream, concentrated or containing added sugar or other sweetening matter.” This distinguishes it from general “non-alcoholic beverages” (Tariff Heading No. 2202 9930).
- Consequences of Not Following Precedent: Any order passed by an adjudicating authority that fails to consider or follow binding judgments of higher courts or even its own court in the same assessee’s case is liable to be set aside.
- Judicial Discipline: This ruling reinforces the importance of judicial discipline among adjudicating and appellate authorities to ensure consistency and predictability in tax matters.
- Benefit to Assessee: The decision is in favor of the assessee, as it rectifies an error by the respondent authority that disregarded a binding classification, leading to the impugned order being set aside.