1982 (9) TMI 229 - HC - Central Excise

Summary

Issues Involved:
1. Manufacturing Process: Whether the process of mixing chicory powder with coffee powder amounts to a manufacturing process.
2. Exemption from Duty: Whether the mixture of coffee and chicory qualifies as a food product exempt from excise duty under Notification No. 55/75-C.E., dated 1-3-1975.

Detailed Analysis

Manufacturing Process
The primary issue was whether the blending of coffee powder with chicory powder constitutes a manufacturing process under Section 2(f) of the Central Excises and Salt Act, 1944. The appellants argued that the mixture does not result in a new product and should be treated as coffee under Item No. 2 of the First Schedule of the Act. The respondents contended that the process employed by the appellants results in a new and different commercial commodity, thus attracting duty under Item No. 68.

The court referred to various definitions and judicial precedents to determine what constitutes "manufacture." It concluded that the process of blending coffee and chicory by mechanical means involving power consumption does result in a new commercial product. The court emphasized that the essence of "manufacture" is the transformation of one object into another for marketability. The product known as "French Coffee" or "Coffee-Chicory Blend" was found to be a distinct commercial commodity different from its individual components, thus constituting a manufacturing process.

Exemption from Duty
The appellants claimed that the mixture of coffee and chicory is a food product and should be exempt from duty under Notification No. 55/75-C.E., dated 1-3-1975. The respondents argued that "Coffee-Chicory Blend" is not a food product within the meaning of the notification and thus not entitled to exemption.

The court examined the relevant provisions of the Central Excises and Salt Act, 1944, and the definitions provided therein. It noted that the term "food" was not specifically defined in the Act, but the legislative intent was clear from the categorization in the First Schedule. The court held that "Coffee" under Item No. 2 and "Food Products" under Item No. 1C are distinct categories. The exemption notification applies only to goods falling under Item No. 68, which does not include coffee or its mixtures.

The court further reasoned that the commodity "Coffee-Chicory Blend" could not be classified as a food product or preparation under the exemption notification. The legislative intent was to treat coffee and its mixtures separately from food products, thereby excluding them from the scope of the exemption.

Conclusion
The court dismissed the appeal, holding that:
1. The process of blending coffee and chicory constitutes a manufacturing process, resulting in a new commercial commodity.
2. The "Coffee-Chicory Blend" does not qualify as a food product exempt from duty under Notification No. 55/75-C.E., dated 1-3-1975, and is liable to excise duty under Item No. 68 of the First Schedule.

The court also refused the application for leave to appeal to the Supreme Court and denied the request for a stay of the collection of excise duty.