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Issues Involved:
1. Whether the process of converting original tea into package tea constitutes a manufacturing process under Section 2(f) of the Central Excises and Salt Act, 1944. 2. Whether the excise duty on package tea is beyond the legislative competence of the Parliament. 3. Whether the levy of higher excise duty on package tea compared to loose tea is discriminatory and violative of Article 14 of the Constitution of India. Issue-wise Detailed Analysis: 1. Manufacturing Process: The petitioners argued that converting original tea into package tea does not involve any manufacturing process as defined under Section 2(f) of the Act. They contended that no new product is created, and thus, excise duty cannot be levied on the basis of packing or blending. The respondents countered that the process of converting tea into package tea, which includes removing impurities, blending, and packing, constitutes a manufacturing process. They asserted that tea is not marketable until it undergoes these processes, making it a continuous manufacturing process. The court referred to the definition of 'tea' in Tariff Entry 3, which includes all varieties of tea and divides it into different categories for excise duty purposes. The court concluded that package tea can be classified as a different variety of tea and that different rates of excise duty can be levied on different varieties of the same product. 2. Legislative Competence: The petitioners claimed that the excise duty on package tea is beyond the legislative competence of the Parliament, as it does not involve any manufacturing process. The court examined the historical context and legislative intent behind the introduction of the concept of package tea in the Central Excises and Salt (Amendment) Act, 1953. The court found that the classification of package tea was introduced to provide relief to tea growers and consumers of unpacked tea. The court held that the Parliament is competent to levy different rates of excise duty on different varieties of tea, and the classification of package tea for excise duty purposes is valid. 3. Discrimination and Article 14: The petitioners argued that the higher rate of excise duty on package tea compared to loose tea is discriminatory and violates Article 14 of the Constitution of India. The respondents contended that the classification between package tea and loose tea is reasonable and based on practical considerations. The court noted that the classification was introduced to provide relief to tea growers and consumers of unpacked tea. The court held that the classification between package tea and loose tea, as well as between package tea in containers of different sizes, is reasonable and has a rational nexus with the object sought to be achieved. The court emphasized that the scope of classification permitted in taxation is greater and that the mere fact that excise duty is higher for some categories does not render the law invalid. Conclusion: The court concluded that the petitioners' contentions were without merit. It held that the process of converting original tea into package tea constitutes a manufacturing process, that the Parliament is competent to levy different rates of excise duty on different varieties of tea, and that the classification of package tea for excise duty purposes is reasonable and not violative of Article 14 of the Constitution of India. The petition was rejected, and the rule was discharged with costs.
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