Manufacture of a commercially distinct coffee-chicory blend triggers excise duty; beverage exemption does not apply.

A coffee-chicory blend was treated as manufactured excisable goods because roasting chicory, powdering it, and mixing it with coffee produced a commercially distinct article with a separate name, character, and use. The court applied the settled test that manufacture requires emergence of a new marketable commodity, so the blend fell within Item 68 of the First Schedule to the Central Excises and Salt Act, 1944. The blend also did not qualify for exemption under Notification No. 55/75, because coffee and similar blends were regarded in common parlance as beverages, not food products or food preparations.

---

---

Issues: (i) Whether the coffee-chicory blend was manufactured in a factory so as to fall under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944; (ii) Whether the blend was exempt from duty under Notification No. 55/75 dated 1-3-1975 exempting all kinds of food products and food preparations.

Issue (i): Whether the coffee-chicory blend was manufactured in a factory so as to fall under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944.

Analysis: The inclusive definition of manufacture in Section 2(f) of the Act was read in the light of the settled principle that manufacture requires the emergence of a new and distinct article known to the market. Roasting chicory roots, powdering them, and mixing the powder with coffee produced a commercially different article popularly known as French Coffee, with a distinct name, character, and use. The process was not a mere change in form or acceptable presentation of the same article, but a transformation into a new marketable commodity.

Conclusion: The coffee-chicory blend was manufactured in a factory and was correctly brought to duty under Item 68.

Issue (ii): Whether the blend was exempt from duty under Notification No. 55/75 dated 1-3-1975 exempting all kinds of food products and food preparations.

Analysis: The notification was construed in the setting of the tariff schedule, which itself distinguished between food and beverages. Coffee and coffee-chicory blend were held, in common parlance and commercial usage, to be beverages rather than food. The wider meanings given to food in other statutes, including food adulteration law, were not imported into the excise notification. The exemption was also limited to food products and food preparations, and the blend did not answer that description.

Conclusion: The blend was not exempt under the notification.

Final Conclusion: The writ petition failed because the coffee-chicory blend was held to be excisable as a manufactured factory product and was found outside the scope of the exemption notification.

Ratio Decidendi: A process that brings into existence a commercially distinct article with a separate name, character, and use constitutes manufacture, and an exemption for food products will not extend to a beverage merely because it may contain ingredients associated with food.

---