Manufacture by blending coffee and chicory created a distinct excisable commodity, defeating the claimed exemption.

Blending coffee powder with chicory powder to make French Coffee was treated as manufacture because the process produced a commercially distinct article with a separate identity, name, character and use; the blended product therefore fell within the residuary excise entry under Item No. 68, in favour of Revenue. The exemption for food products or food preparations under Notification No. 55/75-C.E. did not apply because coffee was specifically classified under Item No. 2 and the mixture did not satisfy the notification's description; the assessee did not discharge the burden of showing entitlement to exemption, again in favour of Revenue.

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Issues: (i) Whether blending coffee powder with chicory powder to produce "French Coffee" amounted to manufacture and resulted in a distinct excisable commodity chargeable under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944; (ii) whether the mixture was entitled to exemption as a food product or food preparation under Notification No. 55/75-C.E. dated 1-3-1975.

Issue (i): Whether blending coffee powder with chicory powder to produce "French Coffee" amounted to manufacture and resulted in a distinct excisable commodity chargeable under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944.

Analysis: The definition of manufacture in Section 2(f) was treated as an inclusive definition and the governing test was whether the process brought into existence a commercially different and distinct article having a separate identity, name, character or use. Applying the common parlance test, the Court held that coffee and chicory were separate commodities, that the blended product lost the identity of its ingredients, and that the resulting product was commercially known as "French Coffee", a different article from pure coffee.

Conclusion: The blending process amounted to manufacture and the resultant product was a distinct excisable commodity falling under Item No. 68, in favour of Revenue.

Issue (ii): Whether the mixture was entitled to exemption as a food product or food preparation under Notification No. 55/75-C.E. dated 1-3-1975.

Analysis: The exemption notification applied only to goods falling under Item No. 68 and to food products or food preparations of the kind described in the Schedule. The Court held that coffee, as specifically classified under Item No. 2, could not be treated as a food product or food preparation for the purpose of the notification, and the blended coffee-chicory product also did not answer that description. The burden of bringing the goods within the exemption was not discharged.

Conclusion: The exemption notification did not apply to the coffee-chicory mixture, in favour of Revenue.

Final Conclusion: The appeal failed because the blended product was treated as a newly manufactured, distinct excisable commodity and not as an exempt food product.

Ratio Decidendi: A process amounts to manufacture when it produces a commercially distinct commodity with a different identity, and a product specifically classified under one tariff item cannot be diverted to a residuary exemption merely because it may be described in ordinary speech as food.

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