1982 (3) TMI 65 - HC - Central Excise

Summary

Issues Involved:
1. Liability of mixed ground Masala to excise duty under Tariff Item 68.
2. Prematurity of writ petitions.
3. Classification of mixed ground Masalas as excisable goods.
4. Manufacturing activity involved in producing mixed ground Masalas.
5. Exemption of mixed ground Masalas under Notification No. 55/75-C.E., dated 1-3-1975.

Detailed Analysis:

1. Liability of Mixed Ground Masala to Excise Duty under Tariff Item 68:
The primary issue was whether mixed ground Masala falls under Tariff Item 68, which covers "all other goods, not elsewhere specified, manufactured in a factory." The court examined the legislative intent behind introducing Tariff Item 68, which aimed to widen the coverage of taxable goods and provide a more dependable information base for future revenue exercises. The court concluded that mixed ground Masalas are "goods" within the meaning of the Central Excises and Salt Act, 1944, as they are capable of being bought and sold in the market. Since these goods are not specified elsewhere in the First Schedule, they fall under Tariff Item 68.

2. Prematurity of Writ Petitions:
The Department argued that the writ petitions were premature as no demand notice had been served, and the petitioner had an alternative remedy by way of appeal and revision under Sections 35 and 36 of the Act. The court rejected this argument, stating that the petitioner had raised issues of constitutional violation and challenged the vires of Tariff Item 68, which could not be decided by the authorities under the Act. Thus, the writ petitions were maintainable.

3. Classification of Mixed Ground Masalas as Excisable Goods:
The petitioner contended that mixed ground Masalas are not excisable goods as they are not specified in the First Schedule. The court disagreed, stating that Tariff Item 68 serves as a residuary item to cover goods not specified elsewhere in the Schedule. The court emphasized that for an item to be excisable, it must be "goods" produced or manufactured in India and not specified elsewhere in the Schedule. Mixed ground Masalas met these criteria and were thus classified as excisable goods under Tariff Item 68.

4. Manufacturing Activity Involved in Producing Mixed Ground Masalas:
The petitioner argued that no manufacturing activity was involved in producing mixed ground Masalas. The court referred to various judicial precedents to define "manufacture," concluding that the process of mixing and grinding different spices results in a new and different article with a distinctive name, character, or use. Therefore, the production of mixed ground Masalas constitutes a manufacturing activity.

5. Exemption of Mixed Ground Masalas under Notification No. 55/75-C.E., dated 1-3-1975:
The petitioner claimed that mixed ground Masalas are exempt from excise duty as they are food products under Notification No. 55/75-C.E. The court examined the definitions of "food products" and "food preparations" and concluded that spices, including mixed ground Masalas, are not food products or food preparations. They are used to add flavor and taste to food but do not qualify for exemption under the said Notification.

Conclusion:
The court confirmed the final order of assessment dated 9-12-1980, holding that mixed ground Masalas are liable to excise duty under Tariff Item 68. The provisional assessment merged into the final order. The court also addressed the seizure of goods, noting that they had already been released under interim orders. The Department was allowed to realize the impugned excise dues payable by the petitioner after giving adjustment for amounts already realized. The writ petitions were disposed of accordingly, with parties bearing their own costs.