1996 (6) TMI 135 - AT - Central Excise

Summary

Issues:
1. Whether the conversion of tamarind seed into tamarind seed powder constitutes a process of manufacture for the purpose of levy to duty as goods.

Analysis:
The case involved a dispute regarding the classification of tamarind seed powder and the process of converting tamarind seed into powder under the Central Excises and Salt Act, 1944. The appellants were engaged in the manufacture of tamarind seed powder through a specific process involving drying, disintegration, pulverization, sieving, and packing. The Asstt. Collector and the Collector (Appeals) both held that the transformation of tamarind seed into powder resulted in a new product with distinct characteristics and commercial use, meeting the definition of manufacture under Section 2(f) of the Act.

The appellants challenged this decision before the Appellate Tribunal CEGAT, arguing that the process did not create a new product as per the analogy of pepper and pepper powder, which are considered the same goods. However, the Tribunal differentiated the case by highlighting that tamarind seed and tamarind seed powder serve different purposes, making them distinct products. The Tribunal relied on the decision of the Apex Court in Delhi Cloth and General Mills Co. Ltd., emphasizing that the key criterion for manufacture is the creation of a new product with unique characteristics and use.

The Tribunal concluded that the conversion of tamarind seed into tamarind seed powder resulted in the production of a distinct product with different characteristics and commercial utility. The Tribunal noted that tamarind seed and tamarind seed powder were sold as separate commodities in the market, further supporting their classification as distinct goods. Therefore, the Tribunal upheld the decision of the lower authorities, ruling that the process of converting tamarind seed into powder constituted a process of manufacture under the Central Excises and Salt Act, 1944.

In light of the above analysis, the Appellate Tribunal CEGAT, New Delhi upheld the impugned order and rejected the appeal, affirming that the conversion of tamarind seed into tamarind seed powder qualifies as a process of manufacture for the purpose of levy to duty as goods under the Central Excises and Salt Act, 1944.