TaxTMI 
TaxTMI 
2024 (11) TMI 664
X X X X Extracts X X X X
X X X X Extracts X X X X
....ufacturing of said goods, the Appellant was also doing trading of dry dates/ chhuhara. The Appellant used to buy dry dates/ chhuhara from open market and sold them after undertaking the following processes on such goods:- i. Washing----- Washing from water for dust removal, ii. Pressing -------- For breaking dry dates for removal of seeds, iii. Deseeding------- Remove seeds from dry dates, iv. Cutting----------- Cut dry dates in to small pieces, v. Dehydration------ Cut dry dates are subjected to oven drying for removal of moisture, vi. Sieving---------- To get only requisite size of cut dates for final sale, vii. Packing & Despatch -------- Packing in 25 Kg and 50 Kg bags. 2.1 There was no change in the properties of the end-product different from dry dates. Only physical appearance was changed. The end products were sold as "dry dates cut" or "dry dates chura" to manufacturers of mouth fresheners. As dry dates remained the same after above processes, having same characteristics, qualities and name, the sale of the said goods was treated as trading of dry dates and no excise duty was paid thereon. 2.2 For determination of aggregate value for availing exemption from....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as below:- i. Dry dates were not traded as such but after undertaking above processes, ii. End product was classifiable under SH 20089999 of the Central Excise Tariff, iii. Processes undertaken by the Appellant on dry dates would amount to manufacture, and iv. As per chapter Note-7 0f chapter 20, labeling or relabeling, repacking from bulk to retail packing or adoption of any other treatment to render the product marketable to the consumer would amount to manufacture even if processes undertaken did not amount to manufacture. 2.6 Both the show cause notices were adjudicated by the Joint Commissioner Central Excise Noida-I by a common order, OIO No.53-54/JC/NOIDA-I/2016-17 dated 31.03.2017 whereby the whole demand of excise duty was confirmed with equal penalty and interest. The Appellant filed appeal with the Commissioner (Appeals), CGST, Noida who upheld the OIO and dismissed the appeal of the Appellant vide OIA No.NOI-EXCUS-001-APPL-1951- 17-18 dated 27.03.2018. 2.7 Hence, the present appeal before the Tribunal. 3. Shri A. P. Singh, Learned Counsel, appearing on behalf the Appellant submits that classification of dry dates cut/ dry dates chura emerging at the end of p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n one name, the classification is to be done with reference to the most appropriate name and for this purpose, the basic functional/character/use would become more relevant. It is submitted that cut dry dates provides the essential character to the dry dates as the same provides the nutrition, aroma, consistency, mouth feel and appearance of dry dates. It is further submitted that cut dry dates/ chura dry dates are marketed and consumed in the open market as dry dates. Thus, cut dry dates form the essential character of dry dates, the same are classifiable as dry dates under Chapter heading 08041090. He places reliance on the following decisions:- i. Collector of Central Excise vs. Fusebase Eltoto Ltd. [1993 (67) E.L.T. 30 (SC)]; ii. Indian Cable Co. Ltd. Vs. Collector of Central Excise, Calcutta [1994 (74) E.L.T. 22 (SC)]; iii. Metagraphs Pvt. Ltd. Vs. Collector of Central Excise, Bombay [1996 (88) E.L.T. 630 (SC)]; iv. United Copiex (India) Pvt. Ltd. vs. Commissioner of Sales Tax [1997 (94) E.L.T. 28 (SC)]; v. Plasmac Machine MFG. Co. Pvt. Ltd. Vs. Collector of Central Excise [1991 (51) E.L.T. 161 (SC)]; vi. Union of India Vs. Sahney Steel and Press Works Ltd. [1992 (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hapter 20, there is no applicability of Chapter Note-7 of Chapter 20 which specifies as:- "7. In relation to products of this Chapter, labelling or re- labelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to "manufacture"." He urged that the above provisions were not applicable when end products were not of Chapter 20. 3.4 The Learned Counsel stated that in the SCN, it was alleged that processes undertaken by the Appellant enhanced the value of goods many times, hence, such "processes" amounted to manufacture. In this context he contended that value addition was no principle to consider processes as manufacture. There was statutory definition of term "manufacture" under Section 2(f) of the Central Excise Act, 1944. He submitted that only those processes which are within ambit of Section 2(f) would be treated as amount to manufacture. He also refers to the following decisions:- i. Swastic Rayon Process [2007 (209) E.L.T. 163 (SC)] ii. S. R. Tissues Pvt. Ltd. [2005 (186) E.L.T. 385 (SC)]. 3.5 Regarding denial of SSI exemption, the Learned Counsel submitted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issue as under:- "Cut dry dates so manufactured are hardly recognizable as raw dates or dates unless being specifically pointed out as these have lost original physical appearance. ......" The above findings for classification of end product under chapter heading 2008 in place of 0804 are only based on imaginary narrative without support of any legal provisions. Physical appearance of a commodity does not decide its classification. The classification of an item in the Central Excise Tariff is regulated in accordance with the principles enunciated in General Rules for Interpretation (GIR). Rule 1 of GIR provides that classification shall be determined according to the terms of the headings and any relative Sections or Chapter Notes. If the goods to be classified are covered by the words in a heading and the Section and Chapter Notes do not exclude classification in that heading, the heading applies. A heading that is worded in such a way as to include the product in question will be the correct classification. Section and Chapter notes are to be examined to find out if the product is mentioned specifically as being included or excluded. As per GIR if goods are ambiguous and two o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s given above, end product namely dry date cut or dry date chura remains dry date as its essential character is not lost. In Chapter note, it is clearly mentioned that even moderate heat treatment would not change the classification of the product namely dry date. In the sequence of processes undertaken by the Appellant, deseeded dates are subjected to moderate heating just to remove moisture. In view of the said note, classification cannot be altered on such heat treatment. It is also found that deseeded dates merit classification under Chapter heading 0804 as may be verified from import data available at zauba.com. It shows that up to the stage of de-seeding, dates are classifiable under chapter heading 0804 and thereafter only process of cutting, moderate heating and sieving are done which obviously do not change its essential character. 5.1 The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. These terms have to be understood in a commonly accepted sense. The Hon'ble Supreme Court in the ease of Alladi Venkateswarlu vs. Government of Andhra Pradesh 1978 AIR 945 held that, "the commonly accepted sense of a term sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roducts kg. 6% 2008 19 90 --- Other kg. 6% 2008 20 00 --- Pineapples kg. 6% 2008 30 --- Citrus fruit: 2008 30 10 --- Orange kg. 6% 2008 30 90 --- Other kg. 6% 2008 40 00 --- Pears kg. 6% 2008 50 00 --- Apricots kg. 6% 2008 60 00 --- Cherries kg. 6% 2008 70 00 --- Peaches, including nectarines kg. 6% 2008 80 00 --- Strawberrieskg. 6% -Other, including mixtures other than those of sub-heading 2008 19 : 2008 91 00 -- Palm heartskg. 6% 2008 93 00 --- Cranberries (Vaccinium macrocarpon, kg. 6% Vaccinium Oxycoccos Vaccinium vitis-idaea) 2008 97 00 --- Mixtures kg. 6% 2008 99 --- Other: --- Squash : 2008 99 11 --- Mangokg. 6% 2008 99 12 ---- Lemon kg. 6% 2008 99 13 ---- Orange kg. 6% 2008 99 14 ---- Pineapple kg. 6% 2008 99 19 ---- Other kg. 6% --- Other : 2008 99 91 ---- Fruit cocktail kg. 6% 2008 99 92 ---- Grapes kg. 6% 2008 99 93 ---- Apples kg. 6% 2008 99 94 ---- Guava kg. 6% 2008 99 99 ---- Other kg. 6% It is seen from the above Chapter that the said Chapter does not cover (a) vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11. It shows that drying process in oven which is specifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eled or shelled. 5.3 The processes mentioned in Chapter 8 include chilling, steaming, boiling, drying and provisionally preserving. It shows that even after drying the product of Chapter 8, the classification would not be changed. It may further be seen that General Note of HSN Chapter Note 20 specifies as:- "Heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter." 5.4 Specifying what is included in this heading, the explanatory note states that almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat- roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. Dry-roasting, oil-roasting & fat-roasting, as a process, are very much a part of chapter heading 2008 by virtue of HSN Explanatory Notes. Roasting and drying are two different processes. In dry roasting, characteristics of the product does not change whereas in roasting the product is chemically changed. In Chapter-20, roasted fruits....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure. The statutory definition would indicate that "manufacture" under Central Excise has to be construed in two ways: (A) "general concept" of manufacture: (B) "deemed concept" of manufacture. General concept- It has been held by the Hon"ble Supreme Court in the case of UOI vs. Delhi Cloth and General Mills Co. Ltd. [1977 (1) E.L.T. J 199 (SC)] that an activity or process, in order to amount to manufacture must lead to emergence of a new commercial product, different from the one with which the process was started. In other words, it should be article with different name, character and use.' 'Manufacture' implies a change but every change in raw material is not manufacture. Something more is necessary. There must be such transformation of raw material into a new and different article emerges having a distinct name character and use. In the case of State of Maharashtra Vs. Mahalaxmi Stores [2003 (152) E.L.T. 30 (S.C)], the Hon. Supreme Court observed that "Every type of variation of goods or finishing of goods would not amount to manufacture unless it results in emergence of new commercial commodity". 7. Processes as enumerated above undertaken on dry dates do not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specified as amounting to manufacture by way of a Chapter note. The Commissioner (Appeals) has observed that dry dates are subjected to the process of cutting dry dates after washing & drying are classifiable to SH20089999 of the Central Excise Tariff. He further observed that the process of cutting dry dates after washing and drying changed them in to a product that was ready for consumption and certainly marketable to industrial consumer or individual consumer. Therefore, according to Chapter Note 7 of Chapter 20, the processes undertaken by the Appellant amounts to manufacture under deemed concept even if the said processes do not amount to manufacture under general concept. This view is incorrect inasmuch as that after subjecting the above processes, the end product remains the same in regard to characteristics, name and quality. Sub heading 2008 of the Central Excise Tariff covers only those fruits which are not classifiable elsewhere. As dry dates in all forms find entry in Chapter 8 of the Central Excise Tariff, it would not be classifiable under SH 2008. When the item does not fall under Chapter 20, there is no applicability of Chapter Note-7 of Chapter 20. We therefore, fi....