TaxTMI 
TaxTMI 
2000 (2) TMI 472
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....t under heading 3003.10. However, while the excisability of the product was upheld, the Order-in-Appeal changed the classification from Chapter 30 to 21. It also reduced the penalty from Rs. 5000/- to Rs. 2000/-, but held the product to be dutiable. 2. Heard Sri N. Venkatraman, learned advocate for the appellants, who submits as follows:- (a) The appellants received vacuum dried spirulina powder for conversion into saleable retail packs of the powder as well as into converting the same as tablets. As far as the packing of the item received in the same form as powder is concerned, the department has not raised any dispute or demand. Therefore, the dispute is limited to the question whether the conversion of....
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.... manufacture. He further submits that as far as the use of solvents is concerned, it has been held in CCE v. Berger Paints as reported in 1998 (104) E.L.T. 642 (T) that mere addition of solvents does not amount to manufacture, there being no change in the character of the product. Thirdly, the learned advocate submits that addition of preservatives also does not amount to manufacture as is held in the decision of the Tribunal in the case of Jayu Products (supra), wherein acid dyes were added to preserve parity and shade of ultra marine blue. As far as the addition of binders is concerned, the learned advocate submits that in a recent decision the Tribunal has considered this very issue with respect to the similar spirulina powder in the ....
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....pirulina. Therefore, the process of tableting does not result in the emergence of a different commercial commodity and the original identity of the spirulina does not cease to exist, as the tablet is purchased only by those, who desire to consume spirulina. (ii) The second test prescribed is whether the commodity which was already in existence will serve no purpose or will be of no commercial use but for the said process? The learned advocate submits that since the spirulina is also sold and consumed in powder form therefore, it cannot be said that but for converting the same into tablet, it cannot be consumed by human beings. Tableting merely allows more convenience in form of sale and consumption by the buyer....
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....nts etc. which are added do not react at all with spirulina, therefore, the spirulina still remains pure spirulina. (f) In this connection, the learned advocate finally takes us to the Notes under Chapter 21 of the HSN, wherein he submits that though the Order-in-Appeal has not classified the product at the four or six digit level, however, the most appropriate classification which could have been proposed by the Revenue, though not admitted by him, would be under sub-heading 21.06 as food preparations not elsewhere specified or included, as the department may treat this as food supplement. He submits that Note 16 to Heading 21.06 of the HSN on page 172 of the Second edition 1996 mentions that such preparati....
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....arefully considered the rival submissions and records of the case. We find that the only issue for determination before us is whether conversion of spirulina powder into tablet form, albeit, with the addition of the required binding agents, diluents, lubricants, preservatives and solvents would constitute an act of manufacture and if so, where would the end product be classified in the Tariff? On a careful consideration, we are of the view that this conversion does not amount to manufacture at all for the following reasons:- (i) The principle active ingredient, and for which alone it is purchased by a buyer in the market, remains the same, namely spirulina. This is the known source of food which provides hig....
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....arketing and consumption of the product. (iv) Above all, our decision is also taking into consideration the ratio of the Tribunal's decision in the case of Sanat Products Ltd. (supra), wherein the Tribunal had held that when the binder is added to dried and powdered spirulina to facilitate easy filling into capsules, the spirulina still remains natural product covered under Chapter 12 of HSN and therefore, is not excisable. In the present case, apart from adding the binders certain other chemicals are added to dilute and lubricate etc. which are technically necessary for making it into tablets. For the reasons already discussed above, the ratio of this decision would also apply to the facts of this case. (v) &nb....