TMI Blog1980 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... t Act, 1944. Indisputable this whole milk powder is ordinarily intended for sale. Therefore, the terms of Tariff Item 1B are fully satisfied. 2. Sabar Dairy is not able to sell the entire quantity of whole milk powder which it produces. After the expiry of six months, it cannot be sold in that form in the market. It becomes time-expired. Therefore, such whole milk powder is regenerated into fluid milk by applying a mechanical process to it and skimmed milk powder and butter are produced out of it. It is not in dispute that Sabar Dairy has been paying central excise duty on the skimmed milk powder and butter under Tariff Item 1B or 1C, as the case may be. 3. Mr. Nanavati has contended before us that Sabar Dairy is not liable to pay centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process by which fluid milk is regenerated and it is out of fluid milk that the skimmed milk powder and butter are produced. By a mechanical process, the regenerated fluid milk is separated into watery milk and fat. Watery milk is used for producing skimmed milk powder and fat is used for producing butter. Now, is it not the case of the department that the fluid milk which is regenerated out of the whole milk powder is also taxable. Otherwise also, this position appears to be correct. If the generation of fluid milk is an intermediate stage for the production of skimmed milk powder and butter out of the whole milk powder, it is not taxable because it is an intermediate product and not a final product. Secondly, if the regenerated fluid mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fat. 6. Therefore, whole milk powder means natural milk application of one mechanical process while skimmed milk powder and butter mean natural milk application of four mechanical processes. They are distinct commercial commodities known in the market. 7. Our attention has been invited by Mr. Nanavati to the decision of the Andhra Pradesh High Court in The Andhra Pradesh Dairy Development Corporation Pvt. Ltd. v. Union of India and Another, 1976 Taxation Law Reports 1976. The question which the learned single Judge of that High Court was required to answer was different. In that case, the whole milk powder was manufactured out of natural milk and, therefore, it was regenerated into fluid. The question which arose was whether the regene ..... X X X X Extracts X X X X X X X X Extracts X X X X
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