Classification of compounded asafoetida as spice, not packed masala, determines the applicable tax rate and defeats penalty.

Asafoetida (hing) mixed with gum arabic and wheat flour was treated as retaining its original identity and not becoming a new commercial commodity or packed masala. Entry No. 82 applied to kirana items and spices sold singly, while Entry No. 184 applied only to packed masala made from two or more spices sold in packed condition. The non-spice additives used for marketability did not alter the essential nature of the product in common and commercial parlance. The lower tax rate was therefore upheld, and the related penalty could not survive once the higher rate was found inapplicable.

---

---

Issues: Whether asafoetida (hing) mixed with gum arabic and wheat flour was classifiable as packed masala taxable at 16% or as a kirana item/spice taxable at 4%, and whether penalty could be sustained on the higher classification.

Analysis: Entry No.82 covered kirana items and spices sold singly, while Entry No.184 applied to packed masala, understood as a masala made from two or more spices sold in packed condition. The additives used in compounded asafoetida were not spices and did not alter its essential nature. On common and commercial parlance, asafoetida remained asafoetida and did not become a new commercial commodity or packed masala. The earlier decision between the same parties on the same commodity and the Supreme Court's view that the product retained its essential character supported the assessee's classification. Once the higher rate of tax was not leviable, the penalty could not stand.

Conclusion: The classification at 16% was rejected, the assessee's treatment at 4% was upheld, and the penalty was unsustainable.

Final Conclusion: The revision petitions failed because the product did not fall within packed masala and the tax board's view restoring the lower rate was correct.

Ratio Decidendi: A product retains its original taxable identity where non-spice additives are used only to make it marketable and the mixture does not result in a new commodity understood in common parlance as packed masala.

---