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TMI Blog2007 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Tariff and was paying duty accordingly. However, the appellant filed a revised classification declaration under Rule 173B of the Central Excise Rules, 1944, with effect from 17th July, 1997, claiming classification of its product under Chapter Sub-heading 0801.00 of the Central Excise Tariff. It was contended that the crushing of betel nuts into smaller pieces with the help of machines and passing them through different sizes of sieves to obtain goods of different sizes/grades and sweetening the cut pieces did not amount to manufacture in view of the fact that mere crushing of betel nuts into smaller pieces did not bring into existence a different commodity which had a distinct character of its own. 3.The Assistant Collector of Central Excise, Guntur Division, who was the Adjudicating Authority, did not accept the contention of the appellant upon holding that the product manufactured by the assessee, namely, betel nut powder, was a preparation containing betel nut with other permitted ingredients which was a new product commercially known to the market with distinct name and character. On his said finding, the Adjudicating Authority rejected the claim of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded to it how can we say these processes do not bring into existence a new and distinct commodity? If we ask for betel nut, the shopkeeper will not give supari powder. In other words, the betel nut is different from the supari powder." The Tribunal accordingly allowed the appeal filed by the Revenue and set aside the order passed by the Commissioner on 6th May, 2004. 8.The appellant went up in appeal before the High Court of Andhra Pradesh under Section 35(B) of the Central Excise Act, 1944 against the said order of the Tribunal dated 12th April, 2005. The High Court confirmed the view taken by the Tribunal and after taking into consideration the process involved in converting the whole betel nuts into sweetened betel nut pieces, the High Court dismissed the appeal and chose not to interfere with the order passed by the Tribunal. 9.This appeal has been filed by the assessee-company impugning the decision of the High Court dated 15th September, 2005. 10.Appearing for the assesee-company, Mr. Soli J. Sorabjee, learned senior advocate, contended that crushing of betel nuts into smaller pieces and sweetening the same with essential/non-essential oils, menthol and sweetening ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in the case of Anheuser-Busch Brewing Association v. United States, 52 L. Ed. 336-338, which reads as follows :- "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." 15.Mr. Sorabjee submitted that the aforesaid principle had been subsequently followed by this Court in several cases and in that regard he referred to the decision of this Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. Pio Food Packers, reported in 1980 Supp. SCC 174 where the same sentiments were expressed in the matter of processing raw pineapple slices into canned slices for better marketing". This Court held that when the pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans, there is no consumption of the original pineapple fruit for the purpose of manufacture. 16.Similar views have been expressed by this Court in the case of Shyam Oil Cake Ltd. v. Collecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Central Excise Tariff Act, 1985 and an application was accordingly made to the Assistant Collector of Central Excise, Guntur for re-determination. 20.Mr. Sorabjee submitted that while the Commissioner of Customs and Central Excise (Appeals) had correctly decided the matter, both the Tribunal as also the High Court took an erroneous view that on account of processing of the betel nuts a new and distinct product had emerged, thereby attracting tax payable in respect of products classified under Chapter Heading 2107.00. Mr. Sorabjee submitted that the orders passed by the High Court as also the Tribunal were required to be set aside and that of the Commissioner of Customs and Central Excise (Appeals) was liable to be restored. 21.Appearing for the Revenue, Mr. B. Datta, learned Addl. Solicitor General, reiterated the stand taken by the Department before the Tribunal as also the High Court. He reiterated that the very process of crushing the betel nuts into different gradable sizes and adding certain ingredients to the same resulted in the manufacture of a new product which attracted Chapter Sub-heading 2107.00 of the Tariff instead of Sub-heading No. 0801.00 of the Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the activities in respect of different tariff items, Sub-clause (ii) simply states that any process, which is specified, in Section/Chapter Notes of the Schedule to the Tariff Act, shall amount to "manufacture". It was also held that under Sub-clause (ii), the Legislature intended to levy excise duty on activities that do not result in any new commodity. In other words, if a process is declared to be "manufacture" in the Section or Chapter Notes, it would come within the definition of "manufacture" under Section 2(f) and such process would become liable to excise duty. 25.Dr. Padia then referred to the decision of this Court in Kores India Ltd., Chennai v. Commissioner of Central Excise, Chennai, reported in (2005) 1 SCC 385, which involved the cutting of duty-paid typewriter/telex ribbons in jumbo rolls into standard predetermined lengths. It was held that such cutting brought into existence a commercial product having distinct name, character and use and that both the Commissioner of Central Excise and the Tribunal had rightly held that the same amounted to "manufacture" and attracted the liability to duty. 26.The next decision referred to by Dr. Padia was that this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though in a modified form. 31.In our view, the Commissioner of Customs and Central Excise (Appeals) has correctly analysed the factual as well as the legal situation in arriving at the conclusion that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use. 32.The decision of this Court in the case of O.K. Play (India) Ltd. (supra), relied on by Dr. Padia, does not also help his submission that any, form of manufacture would attract payment of excise duty, since the said decision was dealing with Note 6 to Chapter 39 of the 1985 Act where the expression "manufacture" has been categorically included, whereas in the instant case, Note 4 of Chapter 21 which deals with Betel Nut Powder, does not do so. 33.In the circumstances, we allow the appeal and set aside the orders passed by the High Court dated 15th September, 2005 and the Tribunal dated 12th April, 2005, respectively, and restore that of the Commissioner of Customs and Central Excise dated 6th May, 2004. 34.The decision in this appeal will govern Civil Appeal No. 665 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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