AI Drafter 
TaxTMI 
TaxTMI 
2015 (10) TMI 1725
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....ative on behalf of the Revenue raised a preliminary issue insofar as the Hon'ble Supreme Court directed the Larger Bench to decide the conflict of opinion between two Division Benches of the Tribunal in the case of M/s Hindustan Gum & Chemicals Ltd Vs CCE, Ahmedabad-II [2004 (163) ELT 196 (Tri-Del)] in favour of the Assessee and M/s Dilip Gum Industries Vs CCE Rajkot [2004 (174) ELT 371 (Tri-Mum)] in favour of the Revenue. The learned Authorised Representative submits that in the case of M/s Hindustan Gums & Chemicals Ltd (supra), the Revenue filed appeal before Hon'ble Supreme Court, and the matter was remanded to the Tribunal by the Hon'ble Supreme Court, to decide afresh as reported in 2011 (272) ELT 326 (SC) (CCE Ahmedabad Vs M/s Hindustan Gum & Chemicals Ltd). It is submitted that the Tribunal already passed the order in de-novo proceedings as reported in [2012 (279) ELT 535 (Tri-Del)] (M/s Hindustan Gum & Chemicals Ltd Vs CCE Ahmedabad), (hereinafter referred to as Hindustan Gums & Chemicals Ltd 2012), in favour of the Revenue. Thus, there is no difference of opinion of co-ordinate Benches of the Tribunal and therefore, the matter may be transferred to the Division Bench to p....
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....o the Tribunal observing that some of the aspects have not been properly dealt with by the Tribunal. The said judgment remanding the case back to the Tribunal is reported as Commissioner of Central Excise, Ahmedabad Vs Hindustan Gum & Chemicals Ltd 2011 (272) ELT 326 (SC). We, thus, set aside the impugned order and remit the case back to the Tribunal. We also direct that the matter shall be hard by a Larger Bench. We may record that in the impugned order, the Tribunal has held that the aforesaid process constitutes manufacture. Since in the case of Hindustan Gum & Chemicals Ltd, this issue was left open to be decided by the Tribunal, the Larger Bench of the Tribunal can take a fresh look into this issue in the instant case as well. Having regard to the fact that the matter is quite old, we direct the Larger Bench of the Tribunal to decide the matter within six months from today." 5. A common issue is involved in these appeals and therefore, all are taken up for hearing together for disposal. The relevant facts in the case of M/s Kraps Chem P. Ltd (in short M/s Kraps), in brief, are that they purchased the Guar Dal Flour/Powder and Tamrind Kernal Powder (TKP) fr....
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....ide. Revenue filed appeals before the Honble Supreme Court. By Order dt.01.05.2015, the Honble Supreme Court set aside the order of the Tribunal and remanded the matter to the Tribunal to decide by a Larger Bench. 6. The facts of the case in the appeal of M/s Ravi Gum Industries (in short M/s Ravi Gums), and its partner & employees (Appellant Nos.3 to 6), in brief, are that M/s Ravi Gums was engaged in the manufacture of Guar Gum on job work basis, which was being used by textile processors. On 01.09.1999, the Central Excise Officers of Division-II, Rajkot visited the factory premises of M/s Ravi Gum and found that they were manufacturing the excisable goods Guar Gum without following the Central Excise Procedure. The statements of Shri Babulal Kanjibhai Sakaria, Manager, Shri Jibrajbhai Bhavanjibhai Patel, Partner, and Shri Ramnikbhai Narsinghbhai Patel, Accountant of M/s Ravi Gum were recorded. 6.1 A show cause notice dt.05.01.2002 was issued by the Deputy Commissioner of Central Excise, Division-II, Rajkot, proposing demand of duty of Rs. 4,56,208.00 alongwith interest and to impose penalties on all the Appellant Nos.3 to 6, for the period 1997-98 to 1999-2000. 6.2 Th....
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.... goods, which is supported by the decision of the Tribunal and therefore, the demand of duty for the extended period of limitation and imposition of penalty cannot be sustained. The learned Advocate submitted written submissions alongwith case laws, during the course of hearing. 8. Ms.Dimple Gohil, learned Advocate appearing on behalf of M/s Ravi Gums and its Partner and employees, adopted the arguments of the learned Advocate Shri Gajendra Jain. She submits that the entire demand of duty is beyond the normal period of limitation. It is submitted that M/s Ravi Gums is a job worker and demand of duty alongwith interest and penalty on the job worker and its employees cannot be sustained. It is submitted that the Appellant is small job worker and acted on a bonafide belief as in the entire trade, the job work process was treated as non-excisable. She further submits that it is a case of dispute of manufacture and classification of goods and the extended period of limitation and penalty cannot be sustained. 9. The learned Authorised Representative on behalf of the Revenue submits that it is not a case of mere mixing of Gaul Dal Flour and TKP and the Appellant also added Glycol an....
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....l received from the Blenders, as it was agro product and quality of the raw material depends on many factors as field crop. Their main customers were Paper Industries, Agarbatti Industries and Explosive Industries. The viscometer was used in lab for measuring viscosity of Guar Dal Flour, which ranges from 0 to 5000 CPH, Stirrer was used for stirring of the samples while measuring viscosity, Electronic weighing machine for weighing sample and PH meter for measuring pH, which may be acidity, basic and neutral. The viscosity of the product subject to explosive industries ranges from 1500 to 2000 CPH, and of product supplied to Mosquito Coil Industries ranges from 1200 to 1400 CPH. It is stated that the difference in the viscosity of their product supplied to different industries and the viscosity depends upon the percentage of inputs used in the process of the product. It is further stated that when TKP used more, the viscosity of the product was less and when the TKP percentage less, the viscosity of the product was high. It contains binding property as per its natural inherent properties. But, its viscosity and solubility differs on the basis of other inputs used in the blender. In ....
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.... and the viscosity of the final product ranges from 0 to 5000 CPH as per requirement of end use of the product. The chemical reaction in the Blender is expressing the magnitude of internal friction in a fluid and there is a change of properties as per end use of the goods. Thus, there is a change of character of the impugned product. The Appellants received Guar Dal Powder and after due process, it was sold as Guar Dal Powder/Guar Gum. There is no dispute that the said product was known in trade as Guar Gum. So, there is a change of character, identity and use of the goods. Hon'ble Supreme Court in the case of Union of India Vs Delhi Cloth & General Mills Co. Ltd 1977 (1) ELT (J199) (SC), held that the manufacture implies a change, but every change is not manufacture and yet every change of an article is to the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. The Hon'ble Supreme Court, while dealing with the identical issue in the case of Hindustan Gums & Chemicals Ltd 2011 (272) ELT 336 (SC), directed the Tribunal to consider the proce....
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....the issue when the taxation system itself changes. In the facts of the case and the law applicable we are of the view that the processes amount to manufacture." 14. The learned Advocate on behalf of the Appellant placed several decisions of the Honble Supreme Court and the Tribunal as under:- (a) Satnam Overseas Ltd Vs CCE 2015 (318) ELT 538 (SC) The issue involved in this case is whether addition of dehydrated vegetables and spices to raw rice in the name of Rice & Spice would amount to manufacture. The product i.e. Rice & Spice is combination of raw rice, dehydrated vegetables and certain spices and condiments mixed in pre-determined proportion and that blended together in a mixer for uniformity and the blended mixer is heated, if required, to sterilize the product. The mixed product is packed in pouches with Nitrogen flushing for a longer shelf life. It has been held that the rice remaining in raw form and to make it edible, it has to be cooked according to the instructions mentioned on the pouch. It did not amount to manufacture as there was no transformation into new commercially distinct commodity. (b) Servo-Med Industries Pvt.Ltd Vs CCE....
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.... (4) 1301.90 Other Nil 16. The learned Advocate submits that the term gum as mentioned in the Heading No.13.01 would cover plant exudates/extracts. It is submitted that botanical gums are divided into two parts, seed gum and plant exudates/extracts. The seed gums are divided into Guar Gum and locust bean gum. The plant exudates/extracts cover gum Arabic, gum ghatti, gum karaya, gum tragacanth and pectin. The Technical book Enclycopedia of Chemical Technology in which under the heading seed gums at Page 854, guar gum has been explained as under:- "Guar Gum (9000-30-0) is derived from the seed of the guar plant, Cyamopsis tetragenolobus, a pod-bearing nitrogen-fixing legume grown extensively in Pakistan, India, and on a commercial scale since 1946, in the south western United States. During processing, the seed coat is removed by heating and milling. The endosperm, comprising approximately 40% of the seed, is then separated from the germ by various milling processes. The final milled endosperm, which is commercial guar gum, has a typical analysis of crude fiber, 2.5%, moisture, 10-15%; protein, 5-6%; an ash 0.5-0.8%." 17. It is submitted that on read....
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....lgenous properties (viscosity, solubility, etc.)" 19. Chapter 13 of HSN included the goods, modified by chemical treatment in order to improve their properties (viscosity, solubility etc). A chemical treatment is a process in which substances interact causing chemical or physical changes and such processed material would cover under Chapter 13 of HSN. It is already stated above that in present case, the Guar Dal Flour/Powder was modified by chemical reaction in order to improve their properties as per end use of the product in various industries. So, it is rightly covered under Chapter 13 of the CETA. The Learned Advocate strongly relied upon CBEC Circular F. No. 10/18/86-CX, -I dated 14.08.1986, where it has been clarified that Tamarind Seed Powder or TKP would be correctly classifiable under Sub Heading No. 1101.90 of CETA. It is seen that the said circular was issued in the context of Tamarind Seed Powder, which is different for processed TKP and the said circular would not apply in this case. The Tribunal in the case of Hindustan Gum & Chemicals Ltd 2012 (supra) held as under:- "19. Between the two Headings 13.01 is more suitable than 11.01 for the reason that a pro....
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....oducts and vegetable products most of which cannot be considered to be manufactured items and the government did not want to levy excise duty on most such items. So the elaborate entries in HSN were compressed into fewer entries in Central Excise Tariff. In this scheme there is no evidence demonstrating that the products covered in one chapter of HSN were taken to any other chapter in Central Excise Tariff. Against this background there is no merit in the argument of the Appellants. 22. Further there is an inconsistency in the argument of the appellants when they argue that the Central Excise Tariff Headings at the relevant time were not aligned to HSN Headings but still relies on HSN notes for understanding the scope of Heading 13.01. The proper way to understand the entries is that Heading 13.01 of the Central Excise Tariff compressed both Headings 13.01 and 13.02 of HSN. Going by this approach the Revenue's argument that the product was covered under Heading 13.01 of the Excise Tariff has more merit." 20. We find force in the submissions of the learned Advocate that the extended period of limitation cannot be invoked. It is seen from the records that the Appellant fi....