9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2005 (9) TMI 641 - HC - Central ExciseClassification of goods - Payment of duty - credit on inputs - produces betel nut powder known as supari - classifying the product of the Appellant under Chapter subheading No. 2107.00 instead of sub-heading No.0801.00 of the schedule to the Central Excise Tariff Act, 1985, (Tariff Act) - Process of manufacture involved or not - HELD THAT - The classification, in the present case, is required to be determined having regard to the Chapter Notes. The product of the appellant falls, within the expression Betel nut powder known as supari , as defined in Note-4 of Chapter-21, since it is not in dispute that the product is a preparation containing Betel nut. Under note 7 of Chapter-21 adoption of any other treatment to render the product marketable to the consumer is held as amounting to manufacture. In the case on hand, since Note 4 of Chapter 21 specifically states that the process indicated amounts to manufacture, the deeming provision in Section 2(f)(ii) of the Central Excise Act would apply. The products of the appellant would consequently be deemed to have undergone a process of manufacture and would be eligible to duty under sub-heading 2107-00 of Chapter 21 of the First Schedule to the Central Excise Tariff Act. The classification, of the produce in question, as provided in Rule 1 of the Rules of Interpretation of the Central Excise tariff, is determined in terms of the Chapter Notes, and thus the other Rules of Interpretation will not come Into play. Since betel nuts are not merely cut into pieces, but undergo an elaborate process wherein several additives are mixed thereto, it is clear that the explanatory notes to HSN have no application to the case on hand. As rightly held by the CESTAT, the end product of the process is different from the original material and a new and distinct product known as supari powder has emerged. We agree with the Tribunal, that on subjecting the raw material to a process of manufacture it is not necessary that there should be a transmutation since supari powder would have the character of betel nut and it cannot be said that there is no manufacture for the reason that betel nuts remain as such. The CESTAT rightly held that, while it may remain so, when other ingredients are added to it, it cannot be said that this process did not bring into existence a new and distinct commodity, that if one asked for betel nut the shop keeper would not give supari and that, in other words, betel nut was different from supari powder. The CESTAT, while holding that note 4 in Chapter 21 could not be disregarded, relied on several judgments including those of the Madhya Pradesh High Court in S.N. Sunderson (Minerals) Ltd. v. Supted. (Preventive), C.Ex. 1994 (3) TMI 111 - HIGH COURT OF MADHYA PRADESH , the Allahabad High Court in Kothari Chemicals v. Union of India 1995 (9) TMI 72 - HIGH COURT OF JUDICATURE AT ALLAHABAD , and the Karnataka High Court in Sree Ramakrishna Soapnut Works 2001 (7) TMI 153 - HIGH COURT OF KARNATAKA AT BANGALORE . In a catena of judgments of the Supreme Court, referred to above it has been held that, goods to attract excise duty, must satisfy the test of marketability. For articles to be goods, these must be known in the market as such. As rightly held by the CESTAT, if a person asks for betel nut, the shopkeepr would not give him supari powder . Marketability is essentially a question of fact (Hindustan Zinc Ltd. v. Commissioner of Central Excise, 2005 (2) TMI 118 - SC ORDER . The CESTAT, as the final fact finding Tribunal, has held that betel nut known as supari is a marketable commodity distinct from betel nuts. We also find considerable force in the submission of the learned Asst. Solicitor General that the Appellants, themselves, had paid duty prior to 1997, treating the products manufactured by it as involving a process of manufacture, under Ch. Sub-heading No. 2107 of Chapter 21. The order of the CESTAT does not call for any interference, by this Court, even on merits. The appeal fails and is accordingly dismissed.
Issues Involved:
1. Classification of the product "betel nut powder known as supari" under the Central Excise Tariff Act. 2. Determination of whether the process involved in producing "supari" constitutes "manufacture." 3. Jurisdiction of the High Court under Section 35-G of the Central Excise Act versus the Supreme Court under Section 35-L. 4. Whether a substantial question of law arises for consideration. Detailed Analysis: 1. Classification of the Product: The primary issue revolves around whether the product "betel nut powder known as supari" should be classified under Chapter sub-heading No. 2107.00 or Chapter sub-heading No. 0801.00 of the Central Excise Tariff Act. Initially, the Assistant Commissioner classified it under 2107.00, which was later overturned by the Commissioner, who classified it under 0801.00. The CESTAT reversed the Commissioner's decision, reinstating the classification under 2107.00. The High Court upheld the CESTAT's classification, noting that the product falls within the definition provided in Note-4 of Chapter-21, which includes preparations containing betel nuts with other ingredients. 2. Determination of "Manufacture": The High Court examined whether the process of producing "supari" constitutes "manufacture" under Section 2(f) of the Central Excise Act. The Commissioner had held that the process did not result in a new product and thus did not amount to manufacture. However, the CESTAT found that the end product, "supari powder," was distinct from the original betel nuts, thereby constituting manufacture. The High Court agreed with the CESTAT, emphasizing that the process detailed by the appellants involved significant changes, including drying, crushing, sieving, adding sweeteners and other ingredients, and packing, which transformed the betel nuts into a new product. 3. Jurisdiction of the High Court: The High Court addressed the preliminary objection raised by the Assistant Solicitor General regarding the maintainability of the appeal under Section 35-G. It was argued that disputes relating to the classification of goods should be appealed to the Supreme Court under Section 35-L, as they involve questions related to the rate of duty. The High Court agreed, stating that since the dispute concerned the classification of goods and the rate of duty, the appeal should lie with the Supreme Court under Section 35-L, not the High Court under Section 35-G. 4. Substantial Question of Law: The High Court considered whether a substantial question of law arose in this appeal. It concluded that the question of whether the appellant's products undergo a process of manufacture is a mixed question of fact and law. The CESTAT, as the final fact-finding authority, had exercised its discretion judicially, and its conclusions were not contrary to law. The High Court found no substantial question of law necessitating its jurisdiction under Section 35-G. Conclusion: The High Court dismissed the appeal, agreeing with the CESTAT's classification of the product under Chapter sub-heading No. 2107.00 and affirming that the process involved constituted "manufacture." The Court also held that the appeal should have been filed with the Supreme Court under Section 35-L, as it involved a question related to the rate of duty. The High Court found no substantial question of law to warrant its intervention under Section 35-G.
|
