2015 (8) TMI 297 - AT - Central Excise

Classification of goods - Manufacturing activity or not - Classification of Hajmola, Imli - Classification under Chapter 20 or Chapter 13 - Held that - Process undertaken to produce tamarind concentrate/paste does not produce any chemical change and the product at the starting point and at the end of the remains the same, but for formation of pulp and removal of added water/moisture. Hence, we find that in the production of tamarind paste/concentrate no process amounting to manufacture is involved. It is pertinent to note that the Department also held the same view in the earlier proceedings as confirmed by the learned Commissioner (Appeals) against which the Revenue is in appeal in two cases. The reason for change in the stand by the Revenue in the subsequent proceedings has not been brought out clearly. There is no change in the process and it is only the change of interpretation without any additional evidence by the Revenue which resulted in confirmation of demands for the later periods. - there is no justification for the change in the Departments view and hold that there is no process amounting to manufacture in this case. Classification of Tamarind Paste/Concentrate - Held that - It is clear from the flow chart explaining the processed undertaken by M/s Dabur there is no extraction of any material and certainly not from any vegetable source. The raw tamarind purchased is washed and boiled in a tilting pan and thereafter the water is extracted through hydraulic pressure. The resultant product is passed through Film evaporator which gives totally soluble solids. The process undertaken by M/s Dabur apparently cannot be called vegetable extraction. The process involved and the product produced cannot be covered under heading 1302, when examined alongwith Explanatory notes there is no extraction. The water used in washing and boiling the tamarind is in fact removed at thrown away as waste resulting in usable product in the form of pulp. The process thus is more of pulp preparation rather than extraction. These aspects have been examined in detail in the Commissioner (Appeals) order dated 08/05/2006. Here again the change in the view of Revenue for the later period to classify the product as vegetable extract under Heading 1302 is not explained with the reason. With the same set of facts the earlier view of classification was changed - Classification headings and the relevant explanatory notes, we find that the classification adopted prior to change over was correct and sustainable. In other words, the impugned product is correctly classifiable under Chapter 20 rather than Chapter 13 - Decided against Revenue.

Summary

Issues:
1. Classification of Tamarind Paste under Central Excise Tariff
2. Whether the process undertaken amounts to manufacture

Issue 1: Classification of Tamarind Paste under Central Excise Tariff

The Revenue argued that Tamarind Paste should be classified under Chapter 13 as vegetable extracts, contending it is a simple extract from raw Tamarind. However, M/s Dabur maintained that the product has always been classified under Chapter 20 and should not be considered a vegetable extract. The process undertaken by M/s Dabur involves washing, boiling, and extracting water from raw Tamarind, resulting in a usable pulp. This process does not align with traditional vegetable extraction methods. The Tribunal found that the product is correctly classifiable under Chapter 20 based on the process and relevant explanatory notes. The sudden change in classification by the Revenue for later periods lacked justification, and the original classification was deemed appropriate.

Issue 2: Whether the process undertaken amounts to manufacture

The key question was whether the process conducted by M/s Dabur constituted manufacturing. The Revenue argued that the transformation of raw Tamarind into Tamarind Paste amounted to manufacture. However, the Tribunal disagreed, emphasizing that for a process to qualify as manufacturing, a new product with a distinct name, character, or use must emerge. The process of boiling, washing, filtering, and concentrating the Tamarind did not alter its essential character or intended purpose. Drawing parallels to a Supreme Court case involving hing processing, it was established that no substantial chemical change occurred in the Tamarind Paste production process. The Tribunal concluded that the process did not amount to manufacturing, highlighting the lack of justification for the Revenue's altered stance and confirming that no manufacturing activity was involved in producing the Tamarind Paste.

In conclusion, the Tribunal dismissed the Revenue's appeal while allowing the appeals filed by M/s Dabur India Ltd. The classification of Tamarind Paste under Chapter 20 was upheld, and it was determined that the process undertaken by M/s Dabur did not constitute manufacturing. The judgment provided detailed reasoning based on legal principles and factual analysis, ensuring a comprehensive evaluation of the issues at hand.