TMI Blog2014 (4) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... change or transform dry fruits into something else - The Court relied upon Dunlop India Ltd. & Madras Rubber Factory Ltd. vs Union of India & Ors [1975 (10) TMI 94 - SUPREME COURT OF INDIA] Similarly, dry fruits – unprocessed salted or roasted- have equal claim to be classified as kirana items under Entry 81 of Schedule III to the Act - Roasting or salting does not result in the creation of a new article, or a significantly altered one as to amount to “manufacture” - Consequently it would be inappropriate to relegate them to the orphanage of the residuary item - The goods are, therefore, held to be classifiable under Entry 81 of the third schedule to the DVAT Act - The appeal is consequently allowed - Decided in favour of the assessee. - ST. APPL. 5/2014 - - - Dated:- 28-3-2014 - S. Ravindra Bhat And R. V. Easwar,JJ. For the Appellant : Sh. Rajesh Jain with Sh. P. C. Aggarwal and Sh. Virag Tiwari, Advocates. For the Respondent : Sh. Raj. K. Batra, Advocate. ORDER Mr. Justice S. Ravindra Bhat 1. This is an appeal against the order of the learned Member of the Appellate Tribunal, VAT Delhi dated 27.1.2014. The question of law for determination is whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans that they had no intent to do so. Therefore Fried and Roasted Dry Fruits , a distinguishable article from the item Dry Fruits will be taken as an unspecified item. I am therefore of the considered view that the Roasted Dry Fruits are not covered by entry No.81 of Schedule III of Delhi Value Added Tax Act, 2004 or any other entry of any other schedule appended to the said Act and hence is an unspecified item taxable at the rate of 12.50%. 4. The dealer/appellant felt aggrieved by the Commissioner s determination and approached the VAT Tribunal, which, through its impugned order, held that there was no infirmity with the Commissioner s determination and that the goods were classifiable in the residuary entry, not as kirana . 5. Entry no.81 of the IIIrd Schedule to the DVAT Act reads as follows: Kirana items namely ararote, singhara, kuttu their atta, Kala namak, sendha namak, heeng, aam papar, mushrum khumba and guchchi goley ka burada, til, rai, postdana, mungfali dana, sabudana, roli, mehendi patti, pisi mehendi, dry fruits. Appellant s contentions 6. It is argued on behalf of the appellant that the tax authorities and the Tribunal committed a funda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Batra, counsel for the revenue, argues that the approach and order of the Tribunal does not call for interference. Stressing upon the definition of the expression manufacture under Section 2 (ra) of the Delhi VAT Act, it was argued that all manner of processing falls within that expression. It was argued, therefore, that roasting or salting of dry fruits results in a change of the article as well as its use. It was argued that whether a process amounts to manufacture or not depends upon the meaning and intent of the statute in question, rather than the common parlance or common understanding of the term. Learned counsel relied on the decisions reported as Commissioner of Customs Central Excise, Goa v Phil Corporation Ltd., 2008 (223) ELT 9 (SC) which was followed in SKB Dryfruits Marketing Co. Pvt. Ltd. v Commissioner of Central Excise, New Delhi 2008 (224) ELT 339 (SC). 10. The Tribunal rejected the appellant/dealers contentions, inter alia, holding that: 11. The logic assigned by the Ld. Commissioner while passing the determination order which is assailed on the basis of commercial purpose of the goods with a further contention of taking into, consideration the common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination order only. 11. The revenue s argument that roasted and salted dry fruits are not covered in the entry kirana is premised on its submission that they undergo some process, which has been deemed to be manufacture, under Section 2 (ra). On this aspect, this Court notices the following observations of the Supreme Court in Union of India (UOI) Ors v Delhi Cloth General Mills reported as 1977(1) ELT 199 (SC): 14. the word manufacture .is generally understood to mean as bringing into existence a new substance and does not mean merely to produce some change in a substance. Manufacture implies a change, but every change is not manufacture and yet every change of an article is 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. 12. The Constitution Bench, in Tungabhadra (supra) dealt with facts where the assessee purchased groundnuts from which it manufactured groundnut oil; it also refined the oil and hydrogenated it converting it into Vanaspati and sold the oil in three states. Under the Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of matter and inter-molecular changes which deteriorate the quality or utility of the oil and it might be interesting to see if such additions and alterations could be taken to render it any the less oil . Groundnut oil when it issues out of the expeller normally contains a large proportion of unsaturated fatty acids-oleic and linoleic-which with other fatty acids which are saturated are in combination with glycerine to form the glyceride which is oil. The unsaturated fatty acids are unstable, i. e., they are subject to oxidative changes. When raw oil is exposed to air particularly if humid and warm, i.e., in a climate such as obtains in Madras, oxygen from the atmosphere is gradually absorbed by the unsaturated acid to form an unstable peroxide (in other words the change involves the addition of two atoms of oxygen) which in its turn decomposes breaking up into aldehydes. It is this oxidative change and particularly the conversion into aldehydes that is believed to be responsible for the sharp unpleasant odour, and the characteristic taste of rancid oil. If nothing were done to retard the process the rancidity may increase to such extent as to render it unfit for human cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conversion to some particular stages There is nothing in the natural meanings of the word 'process' to exclude its application to handling. There may be a process which consists only in handling and there may be a process which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture. 14. Pertinently, in a later decision, Collector, Central Excise, Bombay v S.D. Fine Chemicals Pvt. Ltd. 1995 Supp (2) SCC 336, the Court held that: 13, As has been repeatedly observed by the Court, though the principles enunciated are clear, it is their application that presents difficulties and it does not help to draw any sharp or intrinsic distinction between 'processing' and manufacture', which would only result in an oversimplification of both and tends to blur their interdependence in cases such as the present one, (Ujagar Points). It would also be not right, as pointed out in Ujagar Prints to try to restrict the sweep of the definition with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as aware about the process of roasting and could have provided for it. However, that aspect by itself cannot be conclusive; what is important in the given circumstances is whether the process of salting or roasting changed or transformed dry fruits into something else. In this context, the Court recollects the dicta of the Supreme Court in Dunlop India Ltd. Madras Rubber Factory Ltd. vs Union of India Ors AIR 1977 SC 597 that: 37. When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause 17. Here, dry fruits unprocessed salted or roasted- have equal claim to be classified as kirana items under Entry 81 of Schedule III to the Act. Roasting or salting does not result in the creation of a new article, or a significantly altered one as to amount to manufacture . Consequently it would be inappropriate to relegate them to the orphanage of the residuary item. The goods are, therefore, held to be classifiable under Entry 81 of the third schedule to the DVAT Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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