The complex task of vision based fruit and vegetables classification at a supermarket self-checkout poses significant challenges. These challenges include the highly variable physical features of fruit and vegetables i.e. colour, texture shape and size which are dependent upon ripeness and storage conditions in a supermarket as well as general product variation. Supermarket environments are also significantly variable with respect to lighting conditions. Attempting to build an exhaustive dataset to capture all these variations, for example a dataset of a fruit consisting of all possible colour variations, is nearly impossible. Moreover, some fruit and vegetable classes have significant similar physical features e.g. the colour and texture of cabbage and lettuce. Current state-of-the-art classification techniques such as those based on Deep Convolutional Neural Networks (DCNNs) are highly prone to errors resulting from the inter-class similarities and intra-class variations of fruit and vegetable images. The deep features of highly variable classes can invade the features of neighbouring similar classes in a learned feature space of the DCNN, resulting in confused classification hyper-planes. To overcome these limitations of current classification techniques we have proposed a class distribution-aware adaptive margins approach with cluster embedding for classification of fruit and vegetables. We have tested the proposed technique for cluster-based feature embedding and classification effectiveness. It is observed that introduction of adaptive classification margins proportional to the class distribution can achieve significant improvements in clustering and classification effectiveness. The proposed technique is tested for both clustering and classification, and promising results have been obtained.