TaxTMI 
TaxTMI 
2015 (4) TMI 356
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....show cause notice the Additional Commissioner had proposed to classify the product of the appellant/assessee under Heading 2108 of the Central Excise Tariff Act, 1985, as Miscellaneous Edible preparation not elsewhere specified or included. It may be stated that assessee is engaged in the packing combination of mixture of raw rice, dehydrated vegetables and spices in the name of 'Rice and Spice'. The exact process which is taken note of by the Tribunal as explained by Cl. R.L. Mehta, Deputy General Manager of the assessee is as follows: "This product i.e. Rice Spice is a combination of Raw Rice, Dehydrated vegetables and certain spices and condiments mixed in a pre-determined proportion and that blended together in a mixer for uniformity and the blended mixer is heated, if required, to sterlize the product. The mixed product is the packed in pouches with Nitrogen flushing for a longer shelf life". The defence putforth by the assessee to the show cause notice issued by the Additional Commissioner was that the aforesaid process does not amount to `manufacture' within the meaning of Section 2(f) of the Central Excise Act, 1944. It was also argued that, in any case....
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....reof was pressed into service. Therefore it would be apposite to take note of this clause as well which we reproduce below: "When by application of sub-rule (b) of rule 2 or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under ....
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....tially, the assessee cleared the goods under Chapter Sub-heading 2107 of the Central Excise Tariff and was paying duty accordingly. However, the assessee filed a revised classification declaration under Rule 173B of the Central Excise Rules, 1944, with effect from 17th July, 1997, claiming classification of its product under Chapter Subheading 0801.00 of the Central Excise Tariff. It was contended by the assessee that the crushing of betel nuts into smaller pieces with the help of machines and passing them through different sizes of sieves to obtain goods of different sizes/grades and sweetening the cut pieces did not amount to manufacture in view of the fact that mere crushing of betel nuts into smaller pieces did not bring into existence a different commodity which had a distinct character of its own. Though the authorities below had decided against the assessee, this Court reversed the said view holding that the said process would not amount to `manufacture' as the process involving manufacture does not always result in the creation of a new product. In the instant case notwithstanding the manufacturing process, it could not be said that a transformation had taken place r....
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....ch the appeal was preferred by the Department. The order of the CEGAT is reported in Laljee Godhoo & Co. vs. Commissioner of Central Excise, Mumbai (2001 (132) ELT 287 (S.C.). The process noted in the judgment of the CEGAT runs thus: "The gum Arabic and wheat flour are blended in the sigma mixers. Filtered water mixed asafoetida is then poured slowly into the mixer over the gum and wheat flour. This gets the product ready. Further the resultant product is given a heat treatment by suction in pipes through which a heater is attached and the moisture is sucked out. The powder is then passed through a hammer mill where it is crushed thoroughly. This powder is then passed through a sieve, which contains magnet balls absorbing any fine iron particles. The compounded asafoetida in powder form is then packed in different grammage bottles. In case of lump form, the gum and wheat flour along with filtered water mixed with asafoetida is poured into the sigma mixer. This process takes about 40 minutes. After this the mixture, which has by now made into lumps is extracted and put into the aluminium trays and dried for a day before it is packed in cartons." We would like to reproduce para....
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....; unless it seized to be the original commodity and a new and distinct article was produced therefrom. This is explained in detail in paras 4 and 5 of the said judgment and therefore we would like to reproduce the same as under: 4. Section 5-A(1)(a) of the Kerala General Sales Tax Act envisages the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be the manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is onl....
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....ve made value addition to the product but the essential character of the product did not undergo any change, which is the determinative factor, inasmuch as pineapple remained the pineapple; albeit in slice form and continued to be known as pineapple in the market. For this proposition the Court decided to rely upon a foreign judgment where the U.S. Supreme Court had held that dressed and frozen chicken was not a commercially distinct article from the original chicken. Detailed discussion of the said judgment appears in para 7 which reads as follows: 7. While on the point, we may refer to East Taxes Motor Freight Lines vs. Frosen Food Express, where the U.S. Supreme Court held that dressed and frozen chicken was not a commercially distinct article from the original chicken. It was pointed out: "killing, dressed and freezing a chicken is certainly a change in the commodity. But it is no more drastic a change than the change which takes place in milk from pasteurising, homogenizing, adding vitamin concentrates, standardizing and bottling". It was also observed: "........................there is hardly less difference between cotton in the field and cotton at the gin or in ....
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....onsumed otherwise. There is a fallacy in the submission. The clause, truly read, speaks of goods consumed in the manufacture of other goods for sale or goods consumed in the manufacture of other goods for purposes other than sale." It follows from the above that mere addition in the value, after the original product has undergone certain process, would not bring it within the definition of 'manufacture' unless its original identity also under goes transformation and it becomes a distinctive and new product. When we apply the aforesaid principle to the facts of this case, it is clear that mere addition of dehydrated vegetables and certain spices to the raw rice, would not make it a different product. Its primary and essential character still remains the same as it is continued to be known in the market as rice and is sold as rice only. Further, this rice, again, remains in raw form and in order to make it edible, it has to be cooked like any other cereal. The process of cooking is even mentioned on the pouch which contains cooking instructions. Reading thereof amply demonstrates that it is to be cooked in the same form as any other rice is to be cooked. Therefore, we d....