TaxTMI 
TaxTMI 
2019 (3) TMI 782
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....iff rate under Sl.No.2 of Notification No.3/2006 dt.01.03.2006). Assessee preferred appeal with the Commissioner (Appeals) who vide impugned order No.51/2012 dt. 17.02.2012 upheld the order of the original authority. Hence assessee has filed Appeal E/243/2012. 4. During the said impugned period, the betel nut powder known as 'supari' was manufactured by cracking of dried betel nuts into small pieces and gently heating pulverised betel nut with vanaspati and then coating the same with sweetening and flavouring agents and the resultant product is then packed in small pouches and marketed as 'Nizam Pakku'. Department took the view that the scented betel nut, after introduction of 8 digit classification code w.e.f. 28.02.2005 was rightly classifiable under CETH 21069030. Hence following Show Cause Notice /Statements of Demand were issued to the assessee as under : (i) SCN No.3/2014 dt. 04.02.2014 Period 07.07.2009 to 30.06.2013 Duty demand proposed - Rs.2,46,89,308 (ii) SOD No.33/2014 dt. 31.07.2014 Period July 2013 to Jan'2014 Duty demand proposed - Rs.85,83,607/- (iii) SOD No.16/2015 dt.03.02.2015 Period Feb' 2014 to Dec'2014 Duty demand proposed - Rs.53,64,966/- T....
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....n as supari" and both these phrases have been defined in same manner, which indicates that there is no difference between these phrases. The said definition is reproduced below. In this chapter "betel nut product known as supari" means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely, lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol. (vi) Even after the changes w.e.f. 7/7/2009, what is specifically excluded from Chapter 8 is "betel nut product known as supari" which is also defined as above. Even without this note, a product which satisfies the definition of "betel nut product known as supari" cannot be classified under Chapter 8 but under the Chapter 21 only, which has a specific heading for this. This note has been added to bring more clarity. Though some changes were brought forth w.e.f. 07.07.2009, it may be noted that Note 3 (b) of Chapter 8 is retained according to which so long as the essential character of the betel nut is maintained, the same shall remain classified under Chapter 8 even if some minor processes like moderate heat treatment ....
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....nuts of this chapter may be partially dehydrated or treated for the following purposes : (a) ........ (b) to improve or maintain their appearance (for example by the addition of vegetable or small quantity of glucose syrup), provided that they retain the character of dried fruit dried nuts‛ (ii) From the above, it may well be observed that the processes given under Note 3(b) of Chapter 8 to the First Schedule to the Central Excise Tariff Act, 1985, (CETA for short) are very much restrictive, limited and specific for definite purposes or processes carried on the betel nut, areca nut in different forms but certainly not on other processed products of betel nuts. (iii) Whereas in the instant case, the betel nuts are subjected to various processes, including sweetening and flavouring for rendering the products marketable. Hence, the impugned goods do not fall under the scope of the processes covered under Note 3(b) of the Chapter 8 of the CETA and thereby it does not fall under Chapter 8 of the CETA. (iv) The process of adding or mixing sweetening agents to betel nut in any form, shall amount to "manufacture" as per Note 6 to Chapter Heading 21 of CETA as amended w.e.f.07.07....
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.... made to Chapter 21 to exclude Betel Nut product known as 'Supari' from Tariff Item 2106 90 30 from Chapter 8 and Note 6 to Chapter 21 to declare certain processes as amounting to manufacture would become redundant, which was not the intention of the legislature as is evident from the clarification of the Board in the Circular D.O.F.No.334/13/2009-TRU dated 06.07.2009. (ix) Impugned order dt. 17.02.2012 in respect of Appeal E/243/2012 filed by assessee upholding the view that scented beetle nut is rightly classifiable under CETH 21069030 does not call for any interference. 6.3 In respect of Department Appeal E/40791/2016, (i) Ld. AR reiterates the grounds of appeal and submits that for the very same grounds and arguments put forth in regard to Appeal E/243/2012, the dropping of consequential demands of Central Excise duty for various periods by the Commissioner is not legal, correct or proper. (ii) Once it is held that the impugned product namely scented betel nut will only fall under Chapter Heading 21069030, the grounds and reasons given by the Commissioner cannot sustain and will require to be set aside, hence for these reasons, it is prayed that department appeal may be al....
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.... - Chestnuts - Pistachios - Macadamia nuts 0802 90 - Other --- Betelnuts 0802 9011 ---- Whole 0802 9012 ----Split 0802 9013 ----Ground 0802 9019 ----Other CHAPTER 21 MISCELLANEOUS EDIBLE PREPARATIONS Supplementary notes : 2. In this chapter "betel nut product known as supari" means any preparation containing betel nuts, but not containing any one or more of the following ingredients, namely, lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol. Tariff item Description of goods Unit Rate of duty 2106 Food preparations not elsewhere specified or included 2106 9030 --- Betelnut product known as "supari" KG 16 % 8.5 With effect from 07.07.2009, certain amendments were made in the tariff entries and relevant entries stood as under : CHAPTER 8 EDIBLE FRUIT AND NUTS; PEEL OF CITRUS FRUIT OR MELONS Notes : 1. This Chapter does not cover : .. (b) betel nut product known as "Supari" of tariff item....
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....lime, katha (catechu) or tobacco to betel nut, in any form, shall amount to manufacture". 8.7 On the other hand, Ld. Advocate has been at pains to point out that a careful reading of the relevant tariff heading would reveal that as per note 3 (b) of Chapter 8 dried nuts, of that chapter may be partially rehydrated, or treated for the purposes inter alia : (b) to improve or maintain their appearance (for example by the addition of vegetable oil or small quantities of glucose syrup), provided that they retain the character of dried fruit or dried nuts. Thus, they will continue to be classified in Chapter 8 provided they retain the character of betel nut. Ld. Advocate has pointed out that this chapter note is present both prior to and post-07.07.2009. Hence as per this note, even if moderate heat treatment, addition of vegetable oils, addition of glucose syrup are undertaken, the product will remain classified under Chapter 8, if the essential character of betel nut is retained. It is argued that the product in question, which is nothing but betel nut, is recognised as such in the market and retain its essential character or being betel nut, that various process undertaken, as narr....
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....ct known as suprai. In consequence the product satisfying the requirements of Chapter Note 3 (b) of Chapter 8 will therefore necessarily fall under 08029019 as claimed by the assessee. In arriving at this conclusion, we also follow the ratio laid down by the Hon'ble Apex Court in Crane Betel Nut Powder Works Vs CC & CE Tirupathi - 2007 (120) ELT 171 (SC). The relevant portions of the said judgment are reproduced for ready reference : "21. Appearing for the Revenue, Mr. B. Datta, learned Addl. Solicitor General, reiterated the stand taken by the Department before the Tribunal as also the High Court. He reiterated that the very process of crushing the betel nuts into different gradable sizes and adding certain ingredients to the same resulted in the manufacture of a new product which attracted Chapter Sub-heading 2107.00 of the Tariff instead of Sub-heading No. 0801.00 of the Schedule to the Central Excise Tariff Act, 1985. 22.Dr. R.G. Padia, learned senior advocate, who also appeared for the respondents in the other appeal (Civil Appeal No. 6659/2005) submitted that neither the Tribunal nor the High Court had committed any error in holding that a new product emerged after the manu....
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....on activities that do not result in any new commodity. In other words, if a process is declared to be "manufacture" in the Section or Chapter Notes, it would come within the definition of "manufacture" under Section 2(f) and such process would become liable to excise duty. 25.Dr. Padia then referred to the decision of this Court in Kores India Ltd., Chennai v. Commissioner of Central Excise, Chennai, reported in (2005) 1 SCC 385, which involved the cutting of duty-paid typewriter/telex ribbons in jumbo rolls into standard predetermined lengths. It was held that such cutting brought into existence a commercial product having distinct name, character and use and that both the Commissioner of Central Excise and the Tribunal had rightly held that the same amounted to "manufacture" and attracted the liability to duty. 26.The next decision referred to by Dr. Padia was that this Court in Brakes India Ltd. v. Superintendent of Central Excise and Ors., reported in (1997) 10 SCC 717 where the process of drilling, trimming and chamfering was said to amount to "manufacture" within the meaning of Section 2(f) of the 1944 Act. While deciding the matter, this Court quoted the observations of th....
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....etening agent etc. did not result in a new and distinct product having a different character and use." 8.10 We further find that the Tribunal relying upon the aforesaid Supreme Court judgment in Crane Betel Nut Powder Works (supra) for the period after introduction of 8 digit classification, dismissed the appeal of Revenue against the order of Commissioner (Appeals) holding that the product betel nut pieces is rightly classified under CETH 08029012. In appeal, the Hon'ble Apex Court affirmed the decision of the Tribunal reported in 2010 (256) A17 (SC). 8.11 In respect of the very same product 'Nizak Pakku' manufactured by the very same appellant in their earlier name (A.R.S Company Ltd.), proceedings were initiated against them by the department, where the Commissioner (Appeals) had allowed the classification in favour of the assessee. In appeal, the Tribunal vide order dt. 30.06.2006 [2006 (206) ELT 1027 (Tri.-Chennai)] had held that the goods are classifiable as supari under CETH 21069030 and not under 08029019 and allowed the Revenue appeal. However, on appeal, the Hon'ble Apex Court set aside the Tribunal order relying upon earlier judgement of Supreme Court in Crane Betel Nu....