1999 (2) TMI 74 - HC - Central Excise

Summary

Issues Involved:
1. Whether the Shikakai powder is a taxable commodity under the Excise Tariff Act?
2. Whether the making of Shikakai powder amounts to manufacturing?

Summary:

Issue 1: Taxability of Shikakai Powder
The primary issue was whether Shikakai powder is liable to excise duty under the Customs Tariff for the year 1994-95. The respondents argued that Shikakai and soapnut powder are the same and exempt from tax. However, the appellants contended that Shikakai and soapnut are different commodities, with Shikakai powder falling under "Others" in Chapter 33.05 of the Customs Tariff, making it excisable. The court concluded that Shikakai and soapnut are distinct commodities with different botanical names, properties, and market recognition. Therefore, Shikakai powder is a different commodity from soapnut powder and is not exempt from tax.

Issue 2: Manufacturing Process
The second issue was whether the process of making Shikakai powder constitutes manufacturing. The appellants argued that converting Shikakai pods into powder and marketing it amounts to manufacturing, thus attracting excise duty. The respondents contended that merely making powder does not constitute manufacturing as it does not change the nature of the commodity. The court referred to various precedents, including the Supreme Court's definition of manufacturing as a process that brings into existence a new substance with a distinctive name, character, or use. The court held that making Shikakai powder involves a manufacturing process as it transforms the pods into a distinct commodity, making it excisable.

Conclusion:
The court held that Shikakai powder is a taxable commodity under the Excise Tariff Act and that the process of making Shikakai powder amounts to manufacturing. Consequently, Shikakai powder falls within the ambit of Chapter 33.05 of the Customs Tariff and is liable to excise duty. The writ appeal was allowed, and the order of the learned Single Judge was set aside.