Customs, Excise and Gold Tribunal - Tamil Nadu
Rukmani Pakkwell Traders vs Commissioner Of Central Excise on 3 January, 2008
Equivalent citations: 2008(127)ECC166, 2008(153)ECR166(TRI.-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. This appeal filed by the assessee is against a demand of duty on 'scented supari' for the period 01.04.1995 to 25.09.1995. The above product resulted from the activity of cracking of betelnut followed by roasting, coating with oil and addition of sweetening and flavouring agents. This activity was undertaken by one M/s. ARR Enterprises, from whom the assessee purchased the product in bulk and repacked and marketed. The assessee considered the repacked product to be not excisable as, according to them, the above activity did not amount to 'manufacture' as defined under Section 2(f) of the Central Excise Act. However, they were constrained to file a classification list classifying the products under SH 2106.90 under protest in May, 1994. The department did not accept their protest and hence issued a show-cause notice to vacate it. They issued a second notice demanding duty on the above item by classifying it under SH 2107.00 and denying them SSI benefit. Both the show-cause notices came to be adjudicated upon, against the assessee and the matter has ultimately reached this Tribunal.
2. Learned Counsel submits that the assessee's claim of non-excisability of the item stands accepted in the judgment of the Hon'ble Supreme Court in Crane Betel Nut power Works v. Commissioner of Customs & Central Excise, Tirupathi . In that case, the question considered by the apex court was whether mechanical crushing of betelnuts into smaller pieces and passing them through different sizes of sieves to obtain different sizes/grades followed by sweetening amounted to 'manufacture' or not. The issue was answered in paragraphs 30 and 31 of the apex court's judgment, which are reproduced below:
30. In our view, the process of manufacture employed by the appellant-company did not change the nature of the end product, which in the words of the Tribunal, was that in the end product the 'betel nut remains a betel nut'. The said observation of the Tribunal depicts the status of the product prior to manufacture and thereafter. In those circumstances, the views expressed in the D.C.M. General Mills Ltd. (supra) and the passage from the American Judgment (supra) become meaningful. The observation that manufacture implies a change, but every change of not manufacture and yet every change of an article is the result of treatment, labour and manipulation is apposite to the situation at hand. The process Involved in the manufacture of sweetened betel nut pieces does not result in the manufacture of a new product as the end product continues to retain its original character though in a modified form.
31. In our view, the Commissioner of Customs and Central Excise (Appeals) has correctly analysed the factual as well as the legal situation in arriving at the conclusion that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use.
3. Learned SDR has acknowledged the apex court's decision.
4. In view of the ruling of the apex court, we hold that the 'scented supari' cleared by the assessee during the period of dispute was not excisable, there having been no 'manufacture' in the activity performed by M/s. ARR Enterprises. In the result, the impugned order is set aside and this appeal is allowed.
(Dictated and pronounced in open court)