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TMI Blog1993 (7) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... s of paper, etc. It is then put into a mixer and blended with tricalcium phosphate and vitamin D. According to the appellants the tricalcium phosphate is an anticaking agent and is added to the extent of 0.6% and vitamin D is added to the extent of 0.00025% with the intention of improving the quality of dextrose. After blending the product is quality tested and packed in polythene bags of different weights and these bags are once again packed in printed cartons bearing the brand name of Glucovita Glucose D belonging to Corn Products Company (India) Ltd. The appellants filed classification list under protest classifying w.e.f. 14-6-1990 Glucovita Glucose-D under sub-heading 1702.21 which list was approved on 2-7-1990. The appellants filed a Writ Petition in the Hon ble Kerala High Court and vide Order dated 29-6-1990 the High Court directed the Department to approve the classification list after giving the appellants an opportunity of being heard on the classification list and accordingly a show cause notice was issued on 9-8-1990 alleging that the processes carried out by them amount to manufacture within the meaning of Section 2(f) of the CESA and proposing classification under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax v. Pio Food Packers 3.1986 (26) E.L.T. 3 Sterling Food v. State of Karnataka and Another 4.1988 (34) E.L.T. 416 SC Deputy Commissioner of Sales Tax v. Shiphy International 5.1991 (52) E.L.T. 296 Collector of Central Excise v. Denson Engineers 6.1990 (48) E.L.T. 458 Collector of Central Excise v. Crescent Chemicals 7.100 L-Ed. 917 (923) East Texas Motor Freight Lines v. Frozen Foods Express 8. 52 L-Ed. 336 (338) Anheuser - Busch Brewing The next submission of the learned Counsel is that process of sifting and blending in the present case is a mere physical mixture of dextrose and no chemical change or reaction is involved and hence no manufacture is involved. The learned Counsel relies upon the decisions reported in 1985 (21) E.L.T. 869 in the case of Collector of Central Excise v. Anil Chemicals and 1991 (56) E.L.T. 393 - S.D. Fine Chem v. Collector of Central Excise in support of his argument that a mere improvement in the quality or purity does not amount to manufacture. He submits that advertisement of a product and the possible use of the same as advertised are irrelevant to determine the classification. In support of this proposition he cites the decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rition. She cites relevant extracts from Normal and Therapeutic Nutrition 17th Edition by Corinne H. Robinson and others on classification/distribution and characteristics of glucose, its functions, distribution and functions of calcium and phosphorus and vitamin-D to support her contention that the addition of tricalcium and vitamin-D, albeit in miniscule proportions, is for the specific purpose of supplying vital body nutrients. According to her, sifting and blending in this case result in emergence of a new and different commercial product having a different name, character and use. She cites the following citations in support of this proposition : 1. US Appt. v. Frank Dudley - 174 US 1129 2.Adreena Industries v. Collector of Central Excise 1987 (28) E.L.T. 364 3. Pyrites Phosphates Chemicals Ltd. v. CCE, Delhi - 1983 (13) E.L.T. 1192 4. Singareni Collieries - Tribunal 1988 (37) E.L.T. 361 (T) 5.Bhadrada Chemicals v. CCE 1990 (47) E.L.T. 652 6.Ashok Griha Udyog Kendra 1982 (10) E.L.T. 309 (All) 7.Brooke Bond India Ltd. v. UOI Others 1984 (15) E.L.T. 32 (A.P.) 8.Union of India v. DCM 1977 (1) E.L.T. (J 199 9.1987 (28) E.L.T. 566 PCA v. CCE 10.Technical lit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only - for extra energy . As argued by the learned SDR, dextrose mono-hydrate is an industrial raw material for manufacture use only, as can be seen on the HDPE bags carrying the inputs. Dextrose mono hydrate finds use in confectionery infant foods, medicine, brewing and wine making, intermediate caramel colouring, baking and canning, and as a source of methane and anaerobic fermentation (as set out in the Hawley s Condensed Chemical Dictionary, 10th Edition page 500). Thus Glucose-D which is sold under a brand name for a specific purpose viz. for use as foods is apparently different from dextrose mono hydrate. The learned SDR has stand of the Department that the addition of tricalcium phosphate and Vitamin-D to the dextrose mono hydrate is for the specific purpose of adding vital body ingredients thereby altering dextrose mono hydrate (industrial grade) into a food item. 8. Relevant extracts from the book Normal and Therapeutic Nutrition , 17th Edition by Corinne H. Robinson state that Glucose is the chief end product of the digestion of the oligo and polysaccharides, in the form of carbohydrate circulating in the blood and is the primary carbohydrate utilized by the cell for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mple, a deficiency of any one of the Vitamins results in a failure of the reaction to take place at the point where that vitamin is essential and, therefore, any subsequent reactions cannot occur. 9. The chemical reactions that constitute glycolysis take place in the cytoplasmic matrix of the cell. These reactions degrade glucose to pyruvic acid in preparation for entrance into the mitochondria. They are catalyzed by a specific enzyme in each case - some of which require the presence of inorganic phosphate. 10. Distribution and functions of calcium are also set out in the above text. Of the approximately 1.200 of calcium in the adult body 99% is combined as salts that give hardness to the bones and teeth. The bones not only provide the rigid framework for the body but they also furnish the reserves of calcium to the circulation so that the concentration in the plasma can be kept constant at all times. The remaining 1% of the calcium in the adult - about 10 to 12-g is distributed throughout the extracellular and intracellular fluids of the body. It fulfils several important functions, among them being the following : (i)activates a number of enzymes. (ii)increasing the perme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assive doses of 2500 g are tolerated by certain individuals. Vitamin-D 3 functions as steroid hormones to regulate calcium and phosphorus absorption, mobilisation and mineralisation of bones and large amounts are toxic. 14. The literature referred to above shows that addition of calcium and phosphorus and Vitamin-D to Glucose is for a specific purpose that is to provide essential body nutrients and the learned SDR was, therefore, correct in submitting that the addition of tricalcium phosphate and Vitamin-D in small proportions is done with a specific purpose specially in view of the fact that tricalcium phosphate is not only an anticaking agent, but the addition of tricalcium phosphate in this case, is to serve as a nutrient supplement. The literature relied upon by the learned SDR also reveals that both deficiency as well as over-dosage of Vitamin-D adversely affects the human body and it is not that Vitamin-D can be added in a large proportion. Even a small percentage will serve the bodily requirement. 15. In the light of this factual background, let us now discuss the case law cited by the Learned Counsel for the appellant: In the case of U.O.I. v. DCM Ltd. the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of process, it must be regarded as still retaining its original identity. 15.2 The test of manufacture laid down by the Supreme Court in the case of Sterling Foods (supra) was that the test which has to be applied for the purpose of determining whether the commodity subjected to processing retains its original character and identity is as to whether the processed commodity is regarded in the trade by those who deal in it as disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 75% to 82% was held not tantamount to manufacture as mere production of same goods of higher purity is not manufacture under the CESA 1944, in the case of Anil Chemicals. The Tribunal therein held that though prilling results in a higher concentration, that alone is not relevant to determine whether a different product has emerged as a manufacture under the CESA is required to be a manufacture that creates excisable goods. The preparation of lead alloy ingots from duty paid lead and duty paid antimony to the extent of 0.85% was held not to constitute manufacture of lead ingots assessable under Tariff Item 27A because lead alloy so obtained still remains lead in view of the Explanation 1 to the TI, in the case of Hindustan Cables Ltd. v. CCE - 1985 (22) E.L.T. 180 T. In the case of East Texas Motor Freight Lines v. Frozen Food Express, the American Supreme Court held that the processing of chickens in order to make them marketable but without changing their substantial identity, did not turn chickens from agricultural commodities into manufactured commodities. In the case of SD Fine Chemicals, the Tribunal held that the process of purification of bought out chemicals by d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its will not attract any further duty liability under Central Excise Tariff item 1E, even if some other ingredients are added before repacking. This circular does not advert to the question whether mixing Dextrose Mono Hydrate with Calcium and Vitamin-D amounts to manufacture. Therefore, this circular cannot be relied upon by the appellants to support their stand that the process involved herein do not amount to manufacture. The appellants are not correct in contending that the Assistant Collector has based his decision on the end use of Glucovita Glucose D as specified in the instructions on the container. In addition to referring to the instructions he has relied upon the Circular No. 7/90 which in turn is based upon the Chief Chemist s opinion. It is a fact that the appellants have advertised the product Glucovita Glucose D as an item of food and the product is known in the market as a food item (Emphasis supplied). Therefore, the learned Counsel s reliance on the judgment of the Bombay High Court in the case of Leukoplast India (P) Ltd. v. Union of India [1985 (20) E.L.T. 70] in which the Court held that advertisements published by manufacturers of a product in order to attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icene oil with other ingredients has resulted in a distinct product namely silicene emulsion having a distinct name, character and use and so the process of mixing is manufacture within the meaning of Section 2(f) of Central Excises and Salt Act. 19.4 The Andhra Pradesh High Court in the case of Brooke Bond India Ltd. v. Union of India and Others [1984 (15) E.L.T. 32], has held that test of manufacture in all cases is to ascertain whether the result of labour is commercially a different commodity and it is irrelevant whether this result is produced by a mechanical or chemical process or otherwise and the essence of the expression `manufacture is the changing of one object into another for the purpose of making it marketable. 19.5 In the case of Singareni Collieries Co. Ltd. v. CCE [1988 (37) E.L.T. 361], the Tribunal has held that ANPO though prepared by a simple process of mixture of ammonium nitrate and fuel oil, is a distinct product having its own name, character and use and inasmuch as, the process of mixing has resulted in a product which has its own character and name, the mixing of the two products has to be held a process of manufacture resulting in emergence of a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Heading 17.02 such preparations are deemed to be manufactured by the Legislature itself and, therefore, it is not open to the appellants to dispute the preparation as not amounting to manufacture, the Hon ble Supreme Court has held in the case of Bore Industries Ltd. v. Collector of Central Excise reported in 1989 (40) E.L.T. 280 that an article is not leviable to excise merely because of its specification in the Tariff Schedule unless it is goods known to the market and that the marketability is an essential ingredient for dutiability. 21. In the result we hold that the process of sifting and blending dextrose mono hydrate with tricalcium phosphate and vitamin D amounts to manufacture within the meaning of Section 2(f) of the CESA 1944 and the resultant product, Glucovita Glucose D is classifiable under Heading 1702.21 of the CETA, 1985. We uphold the impugned order and reject the appeal. 22. [Assent per : S.K. Bhatnagar, Vice President]. - I observe that the learned Advocate, Shri Hidyatullah is correct in pleading that Glucose and Dextrose are synonymous. Chemically Glucose is C6H12O6 (also known as Cerelose, D-Glucopyranose) 22.1 Dextrose is also C6H12O6 (also known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law, different criteria and considerations have to be adopted and the actual determination depends upon one or more of a host of factors which vary from case to case. Indeed the position differs from law to law and even within the same law (such as Central Excise Tariff Act, 1985) from Section to Section and or Chapter to Chapter and at times from item to item. Thus for instance purification of water by distillation results in production of distilled water - a distinct commodity; and freezing of water results into a commodity called ice which is classifiable under different headings. In fact a perusal of Central Excise Tariff as a whole reveals the following interesting picture. 1. Chapter IX - Note 2 states that For the purposes of heading No. 09.02, blending, sorting, packing, or repacking into smaller containers shall amount to `manufacture . 2. Chapter 20 - Heading 20.01 reads as follows :- Preparations of vegetables, fruit, nuts or other parts of plants, including jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes, fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter. 3. Chapter 21 - `Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o means the prepared or processed cut-to-size tobacco which is generally blended or moisturised to a desired extent for use in the manufacture of machine-rolled cigarettes. Heading 24.04 covers Other manufactured tobacco and manufactured tobacco substitutes; homogenised or `Reconstituted tobacco; tobacco extracts and essences Smoking mixtures for pipes and cigarettes; cut-tobacco : And includes Hookah tobacco whether or not containing tobacco substitutes in any proportion : Heading 24.04.40 covers Chewing tobacco including preparations commonly known as Khara Masala Kimam , Dokta , Zarda , Sukha and Surti . Heading 2404.49 covers Snuff : Heading 2404.60 covers Preparation containing snuff of tobacco in any proportion. Chapter 25 Note 2 provides that Except where their context otherwise requires, Heading Nos. 25.01, 25.03 and 25.05 cover only products which have been washed (even with chemical substances, eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, or concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, block copolymers and graft copolymers) and polymer blends are to be classified in the heading covering polymers of that comonomer which predominates by weight over every other single comonomer,.... Note 14 states inter alia Polymer blends are to be classified in the same sub-heading as copolymers (or homopolymers, as the case may be) of the same monomers in the same proportions. Chapter 40 Note 5(b) states that The presence of the following substances in any rubber or mixture of rubbers shall not affect its classification in Heading No. 40.01 or 40.02, as the case may be, provided that such rubber or mixture of rubbers retains its essential character as a raw material : (i) emulsifiers or anti-tack agents; (ii) small amounts of breakdown products of emulsifiers; (iii) very small amounts of the following : heat-sensitive agents (generally for obtaining thermosensitive rubber latexes), cationic surface-active agents (generally for obtaining electro-positive rubber latexes), antioxidants, coagulants, crumbling agents, freeze-resisting agents, peptisers, preservatives, stabilisers, viscosity-control agents or similar special purpose additives." The examples can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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