2005 (4) TMI 136 - AT - Central Excise

Manufacture of Betel Nut Powder known as 'Supari' - Whether crushing of betel-nuts into smaller pieces by machines and passing them through different sizes of sieves to obtain goods of different sizes/grades and sweetening the cut pieces does amount to manufacture - HELD THAT - In our view, the end-product of the process is surely different from the original material. Definitely a new and distinct product known as 'supari powder' has emerged. Hence we are not inclined to accept the elaborate reasoning of the Commissioner (Appeals). When subjecting raw material to process of manufacture, it is not necessary that there should be a sort of transmutation. Definitely the 'supari powder' will have the characteristics of 'betel-nut'. We cannot say that there is no manufacture for the reason that the 'betel-nut' remains as 'betel-nut'. We cannot disregard Note 4 of Chapter 21. Moreover a plethora of case laws relied on by the learned Advocate appearing for the Revenue are entirely in Revenue's favour. The Tribunal in the case of National Starch Products (P) Ltd. 1996 (6) TMI 135 - CEGAT, NEW DELHI held that conversion of tamarind seed into tamarind seed powder is a process of manufacture. The Tribunal in the case of Eagles Chicory (Firm) 1986 (7) TMI 358 - CEGAT, NEW DELHI has held that the process of roasting and grinding to convert chicory roots into chicory powder amounts to manufacture. The High Court of Madhya Pradesh in case of S.N. Sunderson (Minerals) Ltd. 1994 (3) TMI 111 - HIGH COURT OF MADHYA PRADESH has held that crushing of lime stone into lime stone chips of specific size amounts to manufacture. The Allhabad High Court in the case of Kothari Chemicals 1995 (9) TMI 72 - HIGH COURT OF JUDICATURE AT ALLAHABAD has held that the process of making 'pan masala' amounts to manufacture. In view of the various decisions quoted by the learned Counsel appeared for the Revenue, we do not find any merit in the Order-in-Appeal. Hence we set aside the impugned order and allow the Revenue's appeal.

Summary

Issues:
Classification of Betel Nut Powder under Central Excise Tariff - Whether the process amounts to manufacture.

Analysis:
The case involved a dispute regarding the classification of Betel Nut Powder under the Central Excise Tariff. The Respondents claimed the product should be classified under Chapter Sub-heading 0801.00 instead of 2107.00, contending that the process of cutting betel nuts into smaller pieces and adding ingredients did not amount to manufacture. The Commissioner (Appeals) ruled in favor of the assessee, stating that the process did not result in a new product with a different character and use, thus not constituting manufacture. The Revenue challenged this decision.

The Revenue argued that Chapter Note 4 and 7 of Chapter 21 supported the classification of the product under Chapter 21, emphasizing that any process making the product marketable constituted manufacture. They cited various landmark decisions on the concept of manufacture under the Central Excise Act, asserting that the process of making Betel Nut Powder was distinct from the original betel nuts, thus qualifying as manufacture.

The Respondents countered that the product remained betel nut even after processing, and the mere mention in Chapter Note 4 did not alter its classification. They emphasized that each case should be considered based on its facts and circumstances, rejecting the generalization of case laws.

The Tribunal disagreed with the Commissioner (Appeals) and sided with the Revenue, stating that the process resulted in a new and distinct product, namely 'supari powder.' They highlighted that the characteristics of the original material remained in the final product, but the addition of ingredients created a different commodity. Citing various precedents, the Tribunal concluded that the process met the criteria for manufacture, setting aside the impugned order and allowing the Revenue's appeal.

In conclusion, the Tribunal's decision overturned the Commissioner (Appeals) ruling, establishing that the process of producing Betel Nut Powder constituted manufacture under the Central Excise Tariff, leading to its classification under Chapter 21.