2001 (10) TMI 186 - AT - Central Excise

Summary

Issues:
Classification of processed nuts under Central Excise Rules - Proper classification of goods under Chapter 8 - Whether the processed nuts fall under Chapter 20 - Definition of 'manufacture' under Central Excise Act - Comparison of two relevant judgments - Applicability of Bombay High Court judgment - Liability to pay duty on processed nuts.

Analysis:

1. Classification of processed nuts under Central Excise Rules: The Appellants processed Cashew nuts, Peanuts, Almonds, etc., through various methods and packed them in containers under different brand names filled with nitrogen gas. They were not registered under the Central Excise Rules. Excise Officers visited their unit and issued a show cause notice alleging duty evasion of Rs. 40,92,741 and sought penalties and confiscation.

2. Proper classification of goods under Chapter 8: The Appellants argued that the goods should be classified under Chapter 8 with a duty rate of 'nil'. The Commissioner, however, classified the goods under Chapter 20, stating that the processes undertaken on the nuts by the Appellants amounted to 'manufacture' under Section 2(f) of the Central Excise Act, resulting in a fresh levy of duty.

3. Definition of 'manufacture' under Central Excise Act: The definition of 'manufacture' is expansive and includes processes ancillary to manufacturing without defining the term 'manufacture'. The Tribunal emphasized the need to examine the changes brought about by the process in the goods to determine if a new commodity emerges commercially.

4. Comparison of two relevant judgments: The Commissioner relied on the Madras High Court judgment in a case involving roasted peanuts to support the classification of processed nuts under Chapter 20. The Appellants cited a Bombay High Court judgment involving fried and salted cashew nuts to argue against the classification change.

5. Applicability of Bombay High Court judgment: The Tribunal found that the Bombay High Court judgment was more relevant as it dealt with similar activities of frying and salting, unlike the Madras High Court judgment that focused on dry roasting. The Tribunal held that the activities of salting and roasting did not amount to 'manufacture' under the Central Excise law.

6. Liability to pay duty on processed nuts: Based on the analysis, the Tribunal concluded that the processed nuts continued to fall under Chapter 8, and there was no liability to pay duty by the Appellants. The appeal was allowed in favor of the Appellants with consequential benefits.

In summary, the judgment addressed the proper classification of processed nuts under the Central Excise Rules, the definition of 'manufacture' under the Central Excise Act, and the comparison of two relevant judgments to determine the liability to pay duty on the processed nuts. The Tribunal ruled in favor of the Appellants, holding that the activities of salting and roasting did not amount to 'manufacture,' and the nuts should remain classified under Chapter 8 without a duty levy.