Customs, Excise and Gold Tribunal - Tamil Nadu
Tata Tea Ltd. vs Collector Of Central Excise on 13 March, 1990
Equivalent citations: 1990(50)ELT96(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This is an appeal against the order of the Collector of Central Excise (Appeals), Madras, dated 30-11-1987.
2. The issue that arises for consideration is whether the appellants in terms of Rule 173L of the Central Excise Rules, 1944 are eligible for the refund of duty paid on Dust Tea of the orthodox variety, which after clearance had been taken for processing in another unit of the appellants for the stated purpose of re-making.
3. The learned Advocate for the appellants pleaded that earlier the appellants had been given permission for clearance of the Dust Tea under Rule 56B to the other unit of the appellants factory for re-making the same into CTC tea by admixture of the Dust Tea with fresh lea leaves. The learned Advocate was asked to give a brief write-up of the processes carried on in the other factory and in the write-up which was obtained from the appellants Deputy General Manager, the process of the manufacture of orthodox tea has been set out. About 5 to 6% of dust grade of tea called Golden Dust is obtained in the process of manufacture of orthodox tea and, since it has a poor market, the same is transferred to CTC factory for upgrading the same into acceptable and marketable CTC grades. For this purpose it has been stated that the Golden Dust transferred from the orthodox factory to CTC factory is first pounded in a pulverising machine to conform to a 40 mesh size. This pulverised Golden Dust is then mixed with green tea leaves and water is simultaneously added to increase the moisture content to about 55% and that for every 100 kgs. of Golden Dust about 30 kgs. of withered green leaf is mixed. The resultant mixture of Golden Dust and withered leaf is then stated to be put through the CTC battery after which fermentation, drying and sifting is undertaken in exactly the same manner as for normal CTC manufacture. The learned Advocate conceded that the process of manufacture of orthodox tea and the CTC tea is different. He, however, pleaded that tea of one variety i.e. Golden Dust was being changed into another variety in the other factory. He has pleaded that on re-making the same class of goods are being obtained and in that view of the matter the appellants are entitled to the benefit of refund under Rule 173L of the Central Excise Rules, 1944, the relevant extracts of which are reproduced below for convenience of reference:
"Rule 173L. Refund of duty on goods returned to factory. - (1) The Collector may grant refund of the duty paid on manufactured excisable goods issued for home consumption from a factory, which are returned to the same or any other factory for being re-made, refined, reconditioned or subjected to any other similar process in the factory:
Provided that -
...
...
(2) The assessee shall maintain a detailed account of the returned goods and the processes to which they are subjected, after their return to the factory in the proper form. (3) No refund under sub-rule (1) shall be paid until the processes mentioned therein have been completed and an account under sub-rule (2) having been rendered to the satisfaction of the Collector within six months of the return of the goods to the factory. No refund shall be admissible in respect of the duty-paid.-
(i)...
(ii)...
(iii) on goods which are disposed of in any manner other than for production of goods of the same class;"
4. The learned Senior D.R. for the Department pleaded that no doubt earlier permission under Rule 56B had been given and since this permission given was not found to be proper, the same was revoked. This revocation, he pleaded, was done prospectively and the appellants cannot have any grievance in regard to the same. He pleaded that so far as the processes as narrated by the learned Advocate are concerned, it clearly shows that the appellants are converting orthodox variety of tea in dust form to the finished product, which goes by the name of CTC tea. He has pleaded that inasmuch as a different class of goods viz. from Dust tea to CTC tea, emerged the provisions of Rule 173L were not applicable in view of the specific provision under Rule 173L(3) (iii).
5. The learned Collector (Appeals) has held as under :
"In the present case, the golden dust, which is part of the orthodox tea, have not been returned to the factory or any other factory for being remade, reconditioned, refined or subjected to any other similar process in the factory, because dust tea has a market of its own, as has been clearly stated by the Asst. Collector. Again, golden dust tea has not been refined, reconditioned or subjected to any other similar process, but have been used in manufacture of teas of a different class known distinctly in trade as CTC tea. The learned advocate's contention that the word 'class' used in rule denotes the tariff classification is not acceptable because under one tariff heading, there maybe more than one variety and class of goods. If the golden dust tea cleared for home consumption, from the factory were found to be unsaleable and the same were refined, reconditioned in the factory, the appellants would be eligible for the provisions made under Rule 173L. But in the present case, the finding of the Asst. Collector is correct that the golden dust tea cleared on payment of duty has been used as an input or raw material for manufacture of a different class of goods i.e. CTC teas."
It is observed that the learned lower authorities have held that there was no return of the goods as such inasmuch as goods after clearance were taken to another unit of the appellants' factory and, therefore, appellants' goods did not fall within the purview of the language of Rule 173L. It has also been held that the Dust tea has been used as input for the manufacture of another variety of lea and it cannot be said that the processes as envisaged under Rule 173L have been carried out. It is observed that so far as the terms 'returned' and 're-made' as used in Rule 173L are concerned, these are the terms of general usage and these terms ought to have to be understood as in common parlance keeping in mind the context of the Central Excise procedures for removal of the goods etc. It is seen that so far as the word 'returned' is concerned the same has been defined in Webster's Ninth New Collegiate Dictionary as the act of coming back to or from a place or condition; the act of returning something to a former place, condition or ownership. Under Rule 173L refund of duty is provided for in respect of excisable goods issued for home consumption from a factory which are returned to the same or any other factory for being re-made, refined, reconditioned or subjected to any other similar process in the factory. In the context of Central Excise levy the goods before the same were cleared from the factory and before payment of duty thereon have a particular status and this status changes after payment of duty and clearance of the same from the factory. The return of the goods in the context of Rule 173L has to be read in the context of the goods the status of which on clearance had changed and which are sought to be brought back to the original status for the purpose of claiming the refund. The dictionary meaning also envisages the return of the goods to the original condition or a place. Once the goods had been cleared notwithstanding the fact that they had not moved to any other place or the premises of another buyer can be said to have been returned in terms of Rule 173L. The return does not mean that the goods first should move to another place and then from there these should be brought back. The term 'clearance of the goods' in the context of the Central Excise can only mean one thing i.e. once the goods are taken out of the factory, and these re-entered the factory premises. In this view, therefore, no fault can be found so far as the return of the goods to another factory of the appellants after the clearance of the same from the first factory is concerned for the purpose of Rule 173L. The next question for consideration is whether on 'remaking', as pleaded by the appellants, the goods of the same class emerged out of the Dust Tea. The word 're-make' has been defined in the Webster's Third New International Dictionary as under:
"To give a different form to; TRANSFORM; REVISE (re-make their plans for the week-end)."
It is observed that the term 'class' has been defined in the Webster's Ninth New Collegiate Dictionary and Webster's Third New International Dictionary as under :
"3. a group, set, or kind sharing common attributes; as (a) major category in biological taxonomy ranking above the order and below the phylum or division. (b) a collection of adjacent and discreet or continuous values of a random variable (c) Set 2, (4) a division or rating based on grade or quality."
"Class is a very general term for a group including all individuals with a common characteristics (as soon as we employ a name to connote attributes', the things... which happen to possess those attributes or constituted ipso facto a class - J.S. Mill.)."
Since the processes explained are not contested by the Revenue, it is seen that the Dust Tea is mixed with withered green leaf and then it is put through the process of CTC tea making and what emerges is a tea which is recognised as of a different variety. The term 're-make', as seen above, is of wide import and it can embrace a process of transformation, which has been carried out on tea. Therefore, we hold that the process as envisaged under Rule 173L as 're-making' has been carried on the Dust Tea. The re-making does not preclude the mixing of other ingredients so long as the class of goods manufactured remains the same. The next question that falls for our consideration is whether the same class of goods were manufactured out of the Dust tea or a different class of goods can be taken to have emerged out of the process of re-making. We observe the term 'class' is defined in the Webster's Dictionary as a general term for a group with common characteristics. In Concise Oxford Dictionary of Current English the term 'class' has been defined as group of persons or things having some characteristic in common. In the context of the Central Excise Tariff we find the item chargeable to duty is 'Tea' and no distinction is drawn between orthodox tea and CTC tea. What is taken in for tea making answers to the Tariff description 'Tea' and what emerges after re-making is also for the purpose of Tariff considered as 'tea'. The term 'class' is of wider import than the term 'variety'. Government of India in their orders in respect of The Britannia Biscuit Co. Ltd. [1980 (6) ELT J 649 (G.O.I.)] had held as under :
"Government observe that the term 'class' has not been defined in the Rule 173L. The dictionary meaning of the word 'class' as given in Webster's New International Dictionary is "a group of persons, things, qualities, or activities, having common characteristics or attributes, a set, kind, description, species, or variety". Admittedly the goods that were brought back for reprocessing were biscuits and the goods that were cleared after reprocessing were also biscuits. They thus fell under the same class of goods, namely, biscuits. The words used in proviso 3(ii) to Rule 173L are 'goods of the same class' and not goods of the same variety. Biscuits are excisable under sub-item (1) of Item 1-C., Central Excise Tariff. Within this item there are no sub-items."
Further, in the context of cigarettes in the case of Godfray Phillips India Ltd., Bombay [1982 (10) ELT 495 (G.O.I.)] the Government of India, considering the plea of the petitioners in that case that since the goods brought for re-processing and goods re-manufactured fall in the category of cigarettes it is a case of manufacture of the same class of goods under the same item of the Central Excise Tariff, have held as under :
"The Government of India observes that under Item 4-II(2) of the Central Excise Tariff the excise duty is imposed on the item termed as cigarettes. This is a particular classification and includes all kinds of cigarattes whatsoever be the brand, trade name or description. These by converting Viscount cigarettes into Cavender cigarettes the petitioner did not in any manner change the class of the goods brought back in their factory. The Government of India, therefore, observes that Rule 173L(3) does not apply in this case. One brand of cigarette is not a class of goods separate from the other brand. In fact the Tariff Item does not distinguish between one brand and another."
6. We observe that inasmuch as the appellants have manufactured tea of one variety out of the input of another variety it has to be held in the context of the above discussion and the case laws cited supra that the Dust Tea on processing has been re-made into another variety of tea yet the re-made goods belong to the same class though satisfying the requirements of Rule 173L. We, therefore, hold that appellants are entitled to the benefit of Rule 173L and they are entitled to the refund subject to the other conditions regarding account etc. as set out in the said Rule being satisfied. The appeal is thus allowed in the above terms.