1990 (8) TMI 168 - SC - Central Excise

Whether coloured tobacco be treated as manufactured tobacco or unmanufactured tobacco? Held that - In order to qualify that the state of colouring was a process incidental or ancillary to the completion of the end-product the finding of the Assistant Collector of Central Excise is that it was a first step. The Collector of Central Excise held it a first step. The single Bench of the High Court held it to be not a step to complete the product. The Division Bench left it at that treating it as a question of fact. In this situation and for the scanty material available on the record, we are unable to take the matter any further so as to conclude whether the step of colouring was incidental or ancillary to the completion of the manufactured product known as Zarda. Therefore, for these reasons, we find no case to upset the decision of the Allahabad High Court and leave the order dismissing the writ petition of the appellant undisturbed. Appeal dismissed.

Summary

Issues:
Interpretation of the term "manufacture" under the Central Excise Act in relation to tobacco; Whether colouring of tobacco qualifies as a process incidental or ancillary to the completion of the manufactured product known as chewing tobacco.

Analysis:
The appellant, a manufacturer of chewing tobacco, had his premises inspected by the Central Excise authorities, leading to the seizure of a quantity of tobacco. The dispute arose regarding whether the seized tobacco was manufactured or unmanufactured. The Assistant Collector of Central Excise imposed a penalty on the appellant, considering the tobacco as unmanufactured. The appellant contended that the tobacco was manufactured as it had been crushed and colored for the production of chewing tobacco. However, the authorities rejected this argument, stating that coloration was only the initial step in the manufacturing process and not sufficient to classify the tobacco as a finished product.

The appellant appealed to the Collector of Central Excise, who also ruled against the appellant, emphasizing that the tobacco needed to be in a state ready for sale to be considered a manufactured product. The High Court upheld the Collector's decision, stating that the tobacco being in the process of manufacture did not automatically make it a manufactured product. The Division Bench of the High Court further emphasized that whether colored tobacco becomes chewing tobacco is a factual question and not suitable for interference in a writ petition.

Additionally, the appellant challenged the Collector's decision before the Central Government, which affirmed the Collector's findings. The Government held that coloration alone did not constitute manufacturing under the statute. The Supreme Court, in its judgment, analyzed the definition of "manufacture" under the Central Excise Act, particularly in relation to tobacco. The Court noted conflicting views on whether coloration of tobacco was incidental to the completion of the manufactured product. Due to insufficient evidence on record, the Court declined to interfere with the decisions of the lower courts and dismissed the appeal, upholding the judgment of the Allahabad High Court.

In conclusion, the Supreme Court found no grounds to overturn the decision of the High Court, as the evidence regarding whether coloration of tobacco was incidental to the completion of chewing tobacco was inconclusive. The Court emphasized the need for clear evidence of the manufacturing process to determine the classification of the product. As a result, the appeal was dismissed with no order as to costs.