Customs, Excise and Gold Tribunal - Calcutta
Kalline Tea Estate vs Commissioner Of Central Excise, ... on 10 September, 2001
Equivalent citations: 2002(139)ELT114(TRI-KOLKATA)
JUDGMENT
Archana Wadhwa
1. The appellants are engaged in the manufacture of tea (bulk tea) classifiable under sub-heading No. 0902.00 and chargeable to duty @ Rs. 2 per kg. The issue in the present appeal relates to the availability of cenvat credit of duty paid on the tea which they bring from outside for blending purposes and utilisation of the same for payment of duty on their finally cleared tea in terms of Rule 57AB(1) (b) read with rule 57AA(d) of Central Excise Rules. The Commissioner vide him impugned order has not allowed the appellant to take the cenvat credit by observing that the blending of the bought out tea with their own manufactured tea does not amount of manufacture in terms of the provisions of section 2f. For better appreciation of the controversy, I reproduce below the relevant paragraph from the order of the Commissioner:-
"I have carefully examined the provision of the relevant CENVAT Rules and the assessee's submission in this regard. It is observed here that the assessee are manufacturing black tea at their Kalline Tea Estate which they termed as "liqure tea". They intend to bring other bulk tea from outside which they termed as "flavoured tea" and to blend the same with their so called liqure tea and the resultant blended bulk tea will be cleared on payment of central excise duty by availing the benefit of Cenvat credit on duty paid on bulk tea (flavour tea) bought from outside. It may be mentioned that as per schedule to the Central Excise Tariff Act, 1985 there is no distinction between "flavour tea" or "liqure tea" and all manufactured tea are at present classified only as tea under chapter sub-heading no. 09.20. The terms coined by the said assessee as liqure tea and flavour tea may be for their commercial value but is no way related for central excise classification, assessment purpose. Both this categories of tea for all central excise purpose finished products falling under chapter heading 09.20. It is, therefore, wrong on the part of the assessee to justify the bulk tea as an input for the manufacture of bulk tea in terms of rule 57AA of the said rules. It is therefore outside the purview of definition of inputs.
The assessee in their all submission categorically admitted that tea bought from outside would be blended with their own manufactured tea and the resultant blended tea will be cleared by them on payment of duty. So, the only process that will be done with the tea bought from outside is blending with the bulk tea manufactured by them at their Kalline Tea Factory.
As per erstwhile chapter note 2 of chapter 9 of Central Excise Tariff blending etc. of teas also amounted to manufacture. However, vide Finance Bill, 1999 chapter note 2 was omitted and therefore, blending of teas now does not amount to manufacture. By this amendment the Govt. had simplified the duty structure and duty levy on tea with only specific duty of Rs.2/- per kg.. On bulk tea and exempted all other teas. The intention is to levy duty only on first stage manufacturer and no duty is chargeable on packet tea packet tea packed out of tea which has bene cleared on or after 28.2.1999 on payment of Excise duty of Rs.2/- per kg.. I therefore held that when the process of blending of teas does not come under the purview of manufacture therefore, question for deciding such goods, used for blending purpose, as inputs does not come at all under the provision of rule 57AA. The case law cited by the assessee, therefore, cannot be made applicable in their case. This is because, black tea is never used directly of indirectly for the manufacture of bulk tea. This is used only for some blending purpose and for such activity the Cenvat credit facility cannot be extended as explained in the above paras. Here, I would like to reiterate that vide Finance Bill 1999 Govt. had simplified the duty levy on tea and any activity such as blending, sorting re-packing etc. if carried out with the duty paid tea than there will be further levy of Central Excise duty and would be totally exempted."
2. From the above paragraphs it is clear that the bought out tea, which the appellants are naming as 'flavoured tea' is duty paid. The same is blended with their own manufactured liqure tea and it is the total quantity of the tea, which emerges after blending, which is being cleared by them on payment of duty. As such it is seen that what the appellants are clearing as a final product is blended tea and inputs for the same are the appellants' own manufactured tea and bought out tea. If that be so the appellants are clearly entitled to the Cenvat credit of duty paid on the inputs i.e. the bought out tea. It is also seen that by availing the credit and by paying duty on the entire quantity of the blended tea, there is no revenue loss. As such I am of the view that the appellants are entitled to the benefit of Cenvat credit and allow the appeal accordingly.
(Pronounced)