1998 (4) TMI 193 - AT - Central Excise

Summary

Issues:
- Determination of whether the re-processing of clotted coffee amounts to a process of manufacture.
- Assessment of duty liability on the re-processed clotted coffee.

Analysis:

1. Issue 1: Re-processing of Clotted Coffee
The Commissioner (Appeals) held that the re-processing of instant clotted coffee does not constitute a process of manufacture. The appellants re-processed damaged clotted coffee by dissolving it in hot water, spray drying it, and repackaging it. The Commissioner noted that this re-processing did not involve grinding coffee seeds, roasting, granulating, or mixing with chicory roasts, which are essential steps in manufacturing instant coffee. Consequently, it was concluded that the re-processing of clotted coffee is distinct from the manufacture of instant coffee and does not amount to a process of manufacture.

2. Issue 2: Duty Liability on Re-Processed Coffee
The revenue contended that the clotted coffee, when re-processed, absorbed the lost aroma and flavor, becoming a marketable commodity. The revenue argued that the re-processing involved recouping the lost qualities by mixing the clotted coffee with a fresh product mix of instant coffee. However, the appellants maintained that the re-processing did not result in a new product as the returned granulates were simply wetted out and dried again without adding any additional inputs to refresh the instant coffee. The Tribunal cited precedents where re-processing of goods did not lead to the creation of a new product, thereby not attracting duty liability.

3. Decision
After considering the arguments and relevant case law, the Tribunal upheld the Commissioner's decision. The Tribunal found that the re-processing of clotted coffee did not result in a new product or fresh instant coffee, aligning with previous judgments where similar re-processing activities did not attract duty liability. Therefore, the Tribunal rejected the revenue's appeal, affirming that the re-processing of clotted coffee did not amount to a process of manufacture calling for duty imposition.

In conclusion, the judgment clarified that the re-processing of damaged clotted coffee did not constitute a process of manufacture, and duty liability was not applicable as the re-processing did not result in the creation of a new product. The decision was based on the specific facts of the case and in line with established legal principles governing the classification of manufacturing processes and duty implications.