Manufactured tobacco product test determines zafrani zarda is outside market fee levy under the U.P. mandi law

Market fee under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 applies only to commodity that answers the statutory description of agricultural produce in the relevant marketable form. Applying the common parlance and commercial identity test, raw tobacco that undergoes processing and blending to emerge as Zafrani zarda loses its original identity and becomes a distinct manufactured product. On that footing, Zafrani zarda is not merely processed tobacco, and market fee is not leviable.

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Issues: Whether Zafrani zarda is a manufactured product or merely a processed form of tobacco for the purpose of levy of market fee under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964.

Analysis: Market fee under the Act is leviable on specified agricultural produce sold in the market area. Tobacco is specified in the Schedule, but the levy can attach only if the commodity in question answers the statutory description of agricultural produce in the form relevant for market fee. The material showed that raw tobacco undergoes a series of operations and, after blending with other ingredients, emerges as a distinct commercial product known as Zafrani zarda. The decisive test is whether the final product is a new and identifiable commodity in common parlance, as distinguished from a merely processed form of the raw material. Applying that test, the product was held to have lost its original identity and to be commercially known as a manufactured tobacco product.

Conclusion: Zafrani zarda is a manufactured product and not a processed form of tobacco. Market fee was therefore not leviable, and the appeals succeeded.

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