TMI Blog2008 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared these goods without payment of excise duty. 3. After due investigation, a show cause notice was issued by the Commissioner of Customs and Central Excise, Goa on 6.8.1999 to the respondent assessee demanding duty under Chapter 20(2001.10) on the goods cleared without payment of central excise duty and proposed penalty action. The respondent assessee in its reply dated 4.10.1999 denied the allegations incorporated in the show cause notice and submitted that its products were correctly classifiable under Chapter Heading 0801.00 of the Central Excise Tariff Act, 1985 and chargeable to Nil rate of duty and hence there was no requirement to register with the Central Excise Authorities. 4. After hearing the respondent assessee, the Commissioner of Customs Central Excise vide his Order-in-Original dated 31.10.2000 held that the goods are to be classified under Chapter 2001.10 and chargeable to duty and confirmed the demand and imposed penalty and redemption fine in lieu of confiscation of the seized goods and machinery. 5. Against the said order of the Commissioner of Customs Central Excise, Goa, the respondent assessee filed an appeal before the Customs, Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reparations of vegetables, fruit, nuts or other parts of plants including jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes, fruit juices and vegetable juices, whether or not containing added sugar or other sweetening matter 16% 2001.90 Put up in unit containers and bearing a brand name. Other Nil Now, we would like to setout extracts of Chapters 8 and 20 of the Harmonized System of Nomenclature (HSN) as under: "CHAPTER 8 EDIBLE FRUIT AND NUTS; PEEL OF CITRUS FRUIT OR MELONS Chapter Notes: 1. This Chapter does not cover inedible nuts or fruits. 2. Chilled fruits and nuts are to be classified in the same headings as the corresponding fresh fruits and nuts. 3. Dried fruit or dried nuts of this Chapter may be partially rehydrated, or treated for the following purposes: (a) For additional preservation or stabilization (e.g. by moderate heat treatment, sulphuring, the addition of sorbic acid or potassium sorbate), (b) To improve or maintain their appearance (e.g. by the addition of vegetable oil or small quantities of glucose syrup),provided that they retain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to fruit jellies, fruit pastes, sugar-coated almonds or the like in the form of sugar confectionary (heading 17.04) or chocolate confectionery (heading 18.06). 3. Headings 20.01, 20.04 and 20.05 cover, as the case may be, only those products of Chapter 7 or of heading 11.05 or 11.06 (other than flour, meal and powder of the products of Chapter 8) which have been prepared or preserved by processes other than those referred to in Note 1 (a). 4. Tomato juice the dry weight content of which is 7% or more is to be classified in heading 20.02. 5. For the purpose of heading 20.07, the expression "obtained by cooking" means obtained by heat treatment at atmospheric pressure or under reduced pressure to increase the viscosity of a product through reduction of water content or other means. 6. For the purpose of heading 20.09, the expression "juices, unfermented and not containing added spirit" means juices of an alcoholic strength by volume (see Note 2 to Chapter 22) not exceeding 0.5% vol. 20.08 FRUIT, NUTS AND OTHER EDIBLE PARTS OF PLANTS, OTHERWISE PREPARED OR PRESERVED WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER OR SPIRIT, NOT ELSEWHERE SPECIFIED OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter 20 of the Central Excise Tariff Act, all products where preservative solution is applied or dried, dehydrated or evaporated, have been included. Note 1 of Chapter 20 states as under:- "This chapter covers only products which are prepared or preserved by processes other than merely chilled or frozen, or put in provisional preservative solution or dried dehydrated or evaporated." 10. The learned Additional Solicitor General further submitted that the controversy involved in this case is no longer res integra. He placed reliance on the recent judgment of this court in Amrit Agro Industries Ltd. Anr. v. Commissioner of Central Excise, Ghaziabad (2007) 201 ELT 183 (SC), according to which roasted peanuts would fall under Chapter 20. Para 6 of the judgment reads as under:- "Having gone through the records and having examined the process undertaken by the assessee, we are in agreement with the view expressed by the Tribunal ("CEGAT") regarding classification of roasted peanuts under Heading 20.01. The Tribunal had adopted a correct test when it says that the essential structure of the peanut is not changed by the process of roasting. The assessee merely app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guide for ascertaining the true meaning of any expression used in the Act." 14. The learned Additional Solicitor General referred to section 2(f)(ii) of the Central Excise Act which categorically states that any process which is specified in the Chapter Notes as amounting to manufacture would be deemed to be manufacture. Section 2(f)(ii) reads as under:- "2(f) "manufacture" includes any process - (i)…… (ii) which is specified in relation to any goods in the section or chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture." 15. The learned Additional Solicitor General submitted that the respondent apart from processing of products by oil roasting etc. is involved in packing the products in retail containers of smaller packets of 50 gms./20 gms. which bear the brand name of the respondent-assessee. According to the appellant, this process by itself would amount to "manufacture" under Chapter Note 3 of Chapter 20. The process of the assessee making the products marketable by putting the products into small unit containers and branding the said goods squarely falls under Chapter Note 3 of Chapter 20. He s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to "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. The effect of this definition is that excise duty can be levied on activities which do not result in the production of a new commodity or where the raw material does not undergo such a transformation as to lose its original identity." 18. The court in the said judgment in paragraph 13 observed that the activities which otherwise do not amount to manufacture can now be treated as manufacture and made liable to duty. 19. In reply to the submissions of the learned Additional Solicitor General, Mr. Joseph Vellapally, the learned senior advocate appearing for the respondent assessee submitted that the entire case of the appellant (Commissioner of Customs Central Excise, Goa) in a show cause notice and before the tribunal was that the process of roasting, salting etc. amounts to manufacture because a new commodity emerges, i.e., the manufactured commodity goes from Chapter 8 and falls under Chapter 20. According to him, though there was specific reference to section 2(f)(ii) in the show cause notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid judgment reads as under:- "We are unable to agree with the learned counsel that by inserting this definition of the word "manufacture" in Section 2(f) the legislature intended to equate "processing" to "manufacture" and intended to make mere "processing" as distinct from "manufacture" in the same sense of bringing into existence of a new substance known to the market, liable to duty. The sole purpose of inserting this definition is to make it clear that at certain places in the Act the word 'manufacture' has been used to mean a process incidental to the manufacture of the article. Thus in the very item under which the excise duty is claimed in these cases, we find the words : "in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power". The definition of 'manufacture' as in Section 2(f) puts it beyond any possibility of controversy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(f)(ii) of Chapter Note 3 of Chapter 20. He also contended that the Sales Tax judgments relied upon by the tribunal in the impugned judgment are not at all relevant in deciding the issues in the present case. According to him, the tribunal has not considered the issue of classification. According to his submission, in view of the HSN notes and the judgment of this court in Amrit Agro Industries (supra), the classification of the products in question ought to be made only under Chapter 20. 28. We have heard the learned counsel for the parties at length and carefully analysed the judgments cited at the Bar. The Central Excise Tariff Act is broadly based on the system of classification from the International Convention called the Brussels' Convention on the Harmonised Commodity Description and Coding System (Harmonised System of Nomenclature) with necessary modifications. HSN contains a list of all the possible goods that are traded (including animals, human hair etc.) and as such the mention of an item has got nothing to do whether it is manufactured and taxable or not. 29. In a number of cases, this court has clearly enunciated that the HSN is a safe guide for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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