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2005 (9) TMI 641 - HC - Central ExciseClassification of goods - Payment of duty - credit on inputs - produces betel nut powder known as "supari" - classifying the product of the Appellant under Chapter subheading No. 2107.00 instead of sub-heading No.0801.00 of the schedule to the Central Excise Tariff Act, 1985, (Tariff Act) - Process of manufacture involved or not - HELD THAT:- The classification, in the present case, is required to be determined having regard to the Chapter Notes. The product of the appellant falls, within the expression "Betel nut powder known as supari", as defined in Note-4 of Chapter-21, since it is not in dispute that the product is a preparation containing Betel nut. Under note 7 of Chapter-21 adoption of any other treatment to render the product marketable to the consumer is held as amounting to manufacture. In the case on hand, since Note 4 of Chapter 21 specifically states that the process indicated amounts to manufacture, the deeming provision in Section 2(f)(ii) of the Central Excise Act would apply. The products of the appellant would consequently be deemed to have undergone a process of manufacture and would be eligible to duty under sub-heading 2107-00 of Chapter 21 of the First Schedule to the Central Excise Tariff Act. The classification, of the produce in question, as provided in Rule 1 of the Rules of Interpretation of the Central Excise tariff, is determined in terms of the Chapter Notes, and thus the other Rules of Interpretation will not come Into play. Since betel nuts are not merely cut into pieces, but undergo an elaborate process wherein several additives are mixed thereto, it is clear that the explanatory notes to HSN have no application to the case on hand. As rightly held by the CESTAT, the end product of the process is different from the original material and a new and distinct product known as "supari powder" has emerged. We agree with the Tribunal, that on subjecting the raw material to a process of manufacture it is not necessary that there should be a transmutation since supari powder would have the character of betel nut and it cannot be said that there is no manufacture for the reason that betel nuts remain as such. The CESTAT rightly held that, while it may remain so, when other ingredients are added to it, it cannot be said that this process did not bring into existence a new and distinct commodity, that if one asked for betel nut the shop keeper would not give supari and that, in other words, betel nut was different from supari powder. The CESTAT, while holding that note 4 in Chapter 21 could not be disregarded, relied on several judgments including those of the Madhya Pradesh High Court in S.N. Sunderson (Minerals) Ltd. v. Supted. (Preventive), C.Ex.1994 (3) TMI 111 - HIGH COURT OF MADHYA PRADESH], the Allahabad High Court in Kothari Chemicals v. Union of India [1995 (9) TMI 72 - HIGH COURT OF JUDICATURE AT ALLAHABAD], and the Karnataka High Court in Sree Ramakrishna Soapnut Works [2001 (7) TMI 153 - HIGH COURT OF KARNATAKA AT BANGALORE]. In a catena of judgments of the Supreme Court, referred to above it has been held that, goods to attract excise duty, must satisfy the test of marketability. For articles to be goods, these must be known in the market as such. As rightly held by the CESTAT, if a person asks for betel nut, the shopkeepr would not give him "supari powder". Marketability is essentially a question of fact (Hindustan Zinc Ltd. v. Commissioner of Central Excise,[2005 (2) TMI 118 - SC ORDER]. The CESTAT, as the final fact finding Tribunal, has held that betel nut known as "supari" is a marketable commodity distinct from betel nuts. We also find considerable force in the submission of the learned Asst. Solicitor General that the Appellants, themselves, had paid duty prior to 1997, treating the products manufactured by it as involving a process of manufacture, under Ch. Sub-heading No. 2107 of Chapter 21. The order of the CESTAT does not call for any interference, by this Court, even on merits. The appeal fails and is accordingly dismissed.
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