Manufacture and tariff classification of guar gum powder: processing changed the commodity, but Chapter 11 classification secured nil duty.

Processing guar dal powder with additives and blending it into a graded industrial product was treated as manufacture because the operation changed the commodity's commercial identity and marketability, so the resultant product ceased to remain guar dal. However, for tariff purposes, guar gum powder was held to fall under Chapter 11 as a product of the milling industry rather than Chapter 13 as a gum, with the Tribunal distinguishing the chapter scheme and declining to treat contrary views as controlling. On that classification, the goods attracted nil duty, and the demand, confiscation and penalty were set aside in favour of the assessee, notwithstanding the adverse finding on manufacture.

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Issues: (i) Whether the process of pulverising guar dal powder with additives and blending it into graded product amounted to manufacture. (ii) Whether guar gum powder was classifiable under Chapter 11 as a product of the milling industry or under Chapter 13 as gum.

Issue (i): Whether the process of pulverising guar dal powder with additives and blending it into graded product amounted to manufacture.

Analysis: The process was not a mere reduction of grain into powder. Guar dal was blended with additives, processed for specific industrial uses, and made marketable as a different commercial product. The effect of the operation on the commodity was determinative, and the resultant product ceased to remain guar dal and became guar gum.

Conclusion: The process amounted to manufacture, against the assessee.

Issue (ii): Whether guar gum powder was classifiable under Chapter 11 as a product of the milling industry or under Chapter 13 as gum.

Analysis: Chapter 13 was read as covering gums in the context of lac, resins and other vegetable saps and extracts, while Chapter 11 covered products of the milling industry. The Tribunal declined to treat the earlier contrary view as binding, noted the distinction drawn for tamarind kernel powder, and held that guar gum powder was a product of milling and not a gum falling under Chapter 13.

Conclusion: Guar gum powder was classifiable under Chapter 11 and attracted nil duty, in favour of the assessee.

Final Conclusion: The demand, confiscation and penalty were set aside because the goods were held classifiable under Chapter 11, though the manufacturing issue was decided against the assessee.

Ratio Decidendi: The effect of the processing on the commodity determines manufacture, and guar gum powder produced by milling and blending is classifiable as a product of the milling industry when the tariff scheme does not justify placing all gums under Chapter 13.

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