TMI Blog1988 (3) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... And Salt Act, 1944 (hereinafter referred to as the said Act) had undergone an amendment in or about March 1986 which and thereby packaging has been included within the excisibility of goods including tea which is involved in these proceedings. It is also an admitted fact that prior to such incorporation by way of amendment excise duty was leviable under package tea and there was no separate duties leviable for manufactured tea and package tea. Section 3 of the said Act was and still is the charging section and deals with duties specified in the First Schedule which is to be levied and under Sub-section (1) thereunder. The said section postulates that there shall be levied and collected in such manner as may be prescribed duties of excise excisable on all goods other than salt which are produced or manufactured in India, and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985 provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured,-- (i) in a free trade zone and brought to any other place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strued accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account and after the amendment as substituted with effect from 28th February, 1986 the same includes any process incidental or ancillary to the completion of a manufactured product; and (i) in relation to tobacco, includes the preparation of cigarette, cigars, cheroots, biris, cigarette or pipe or hookah tobacco, chewing tobacco or snuff; and (ii) in relation to salt, includes collection, removal, preparation, steeping, evaporation, boiling or any one or more of these processes, the separation or purification of salt obtained in the manufacture of saltpetre, the separation of salt from earth or other substance so as to produce elementary salt, and the excavation or removal of natural saline deposits of efflorescence; (iia) in relation to goods comprised in item No. 3A of the First Schedule, includes the labelling or relabelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1982 and on such application a rule was issued with a further direction that the parties concerned would be entitled to impose levy but upon furnishing bond by the said firm for ₹ 25,000 initially to the satisfaction of the Superintendent, Central Excise, Siliguri, Range-III, they would be entitled to release of all the goods. It was further directed that if the security amount was not considered to be adequate by the Collector of Central Excise Customs or the Superintendent of the said department, who were given liberty to ask the said firm to furnish another security bond not exceeding ₹ 25,000 subject to further orders of this Court. The said petitioner has stated that interim order as mentioned above, was directed to continue initially for a period of two weeks after the X-Mas vacation of that year with liberty to ask for extension of the same with notice to the respondents. 5. From the statements as made, it would appear that the matter as mentioned above, came up for hearing on 24th February, 1983, when the learned Judge dealing with the same was pleased to direct that the interim order already granted will continue till the disposal of the rule and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th May, 1984, the Assistant Collector, Central Excise, Jalpaiguri Division, informed them that the factory falls under Jalpaiguri II Range under the jurisdiction of Central Excise Division and it was further contended in that letter that the factory of the said firm at Jalpaiguri would not come under the interim order as made by this Court and the said interim order was not applicable to the case. The said firm was further directed to pay central excise duty on loose tea and package tea according to Central Excise Rules, 1944 (hereinafter referred to as the said Rules) and thereafter by another letter of 31st May, 1984, addressed to the Deputy Collector of Central Excise, North Bengal, the said firm intimated that they had simply shifted their factory and requested, to allow clearance of goods from the premises without payment of duty, but on execution of B16 bond in pursuance of the order as passed by this Court. It has been alleged that the said firm have not received any reply to that letter. It was their further case that they received duty-paid tea from their customers and packed the said duty-paid tea in 25 grams to 1 kg. packages and it was specifically stated that their bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues involved and consequently the order dated 13th July, 1984, which was said to be a purported one, should be deemed to be wrongful and illegal, the more so when, the said order dated 13th July, 1984, was passed by the Assistant Collector concerned pursuant to the directions given by the Court. 8. The affidavit-in-opposition in this case was filed by Rajendra Kumar Talajia and the same was dated 9th September, 1985. That affidavit was filed on behalf of the respondents and the same claimed that the excise duty on loose tea was levied for the first time on and from 1st March, 1944, manufactured at the garden under tariff item No. 3 of the concerned Schedule of the said Act and sometime in 1953, Parliament amended the Schedule to the said Act by including sub-item (2) of tariff item No. 3 and under the said sub-item, package tea was one of the items, on which excise duty became payable. It has also been stated that on account of the amendment as mentioned above, the said firm became liable to pay excise mentioned above, the said firm became liable to pay excise duty on package tea. It was also stated that the said firm, since 1953, were submitting returns to the respondents-autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that Brooke Bond's case. The respondent-authorities contended that in view of Section 3 of the said Act read with item 3(2) of the First Schedule, the goods should be deemed to be manufactured goods and it was also contended that once a goods manufactured in the First Schedule to the said Act, further enquiry whether the goods are manufactured or not or how they are known in the trade parlance would not be relevant and material. It is an admitted fact that by his judgment and order dated 13th July, 1983, D.K. Sen, J., in the Brooke Bond's case has held and observed that the package tea as involved in that case, would be liable to excise duty and was pleased to dismiss the application of M/s. Brook Bond India Ltd. holding inter alia amongst others, that goods were manufactured and/or deemed to have been manufactured in the facts of that case and particularly, when such goods are specifically mentioned in tariff item No. 3(2) of the First. 10. The deponent has also denied categorically the allegations of the said firm that they had to make the necessary application for licence under compulsion or duress and has stated that such application was filed by the said firm on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records certain alleged facts which were not correct. That application was further claimed to be an attempt to divert the Court from the main writ petition and the same was claimed to be misconceived as no amendment was necessary in the facts and circumstances of the case. It was also contended that amendment of a petition or plaint must relate back to the presentation of the plaint or petition before the Court and therefore, the writ petition should not be allowed to contain the fact posterior to the date of presentation of the same. On such facts amongst others, it was claimed that the amendment application should to be dismissed. In their reply, the said firm, apart from repeating and reiterating their statements as made in the writ petition, stated that the points as sought to be raised in the affidavit-in-opposition had no basis and in any event, the determinations as made in Brooke Bond's case, cannot be allowed to be agitated at this stage, since an appeal taken therefrom, is still pending and as a result whereof, the determinations as made by D.K. Sen, J., cannot be held and considered to be a final determination. It was also stated by the answering respondents that Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the commercial or trade parlance as distinct and different from loose tea with different prices or marketability. It has further been stated that since May, 1984, the said firm only packed duty-paid tea in 25 gms. to 1 kg. packages and their only business is to receive duty-paid tea and to pack them into packages and to deliver the same to their customers. The payment of excise duty on such package tea or the taking of central excise licence for such package, was stated to be under compulsion and not a voluntary action of the said firm. The said firm has also stated that they have no factory for packaging duty paid tea. 13. The said firm has stated that the levy of duty on package tea can be subject to challenge in view of the intricate questions and points of law as raised in the petition and so long the appeal in Brooke Bond's case is not finally disposed of. It has also been reiterated that package tea is not distinctly different from tea or that such package tea has distinct name or character or use and is marketed as such alleged. 14. The amendment application, the particulars whereof, have been indicated hereinbefore, has also been claimed by the appearing res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture will not normally include packaging all manufactured goods, there are some sub-sections of Section 2(f) of the said Act, wherein packaging has been specifically mentioned so as to bring the same within the definition of manufacture . 16. The learned Trial Judge has pointed out that the controversy which was raised before him was also in issue in the case of Brooke Bond India Limited v. Union of India 1984 Tax LR 2593 wherein D.K. Sen, J., repelled those arguments on the ground that the process by which tea is packed after manufacture and comes into the category of package tea will be deemed to have been considered by the Legislature to amount to, by itself, a production or manufacture, which brought the article within the ambit of the said Act. Before the learned Trial Judge on a reference to the determinations in the case of Union of India v. Godfrey Philips India Limited and Ors . 1985(22)ELT302(SC) , the determinations as made in Brooke Bond's case (supra) was not in fact upheld. The learned Trial Judge has pointed out that the Supreme Court in the case as mentioned above, has not in clear terms overruled the judgment in Brooke Bond's case (supra) and as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of the contentions as above, was that of Mc.Nicol and Anr. v. Pinch, (1906) 2 KB 352, where excise duty was levied on the concerned goods for manufacture of saccharin under the English Finance Act of 1901 and on challenges thrown to such levy it was held by the majority judgment of the Court of Appeal, that the duty in question, could not be levied unless there is a transformation of a new produce and such view, as it appears from the case of Union of India v. Delhi Cloth General Mills Co. Ltd. 1973ECR56(SC) , had been supported from the determination of the Supreme Court where it has been indicated that mere change by subjecting an article to a process would not result in manufacture. The above view also gets support from the case of South Bihar Sugar Mills Ltd. v. Union of India 1973ECR9(SC) , where the Supreme Court has observed that the gas as generated was not carbon dioxide as known to the trade and such would not fall within the mischief of the item of tariff. Similar view has also been expressed or gets support from the determination in the case of J.K. Steel Ltd. v. Union of India 1978 (2) ELT 355 (SC), as cited, and where the Supreme Court quoted with ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st. Barfi Devi 1979(4)ELT593(SC) , where the Supreme Court has held that the lease of a premises for carrying on business of retreading of tyres was not a lease for manufacturing purposes within the meaning of Section 106 of the Transfer of Property Act and has also observed to the effect that the retreading of old tyres does not bring into being commercially distinct or different entity. The old tyre retains its original character, or identity as a tyre. Retreading does not completely transform it into another commercial article, although it proves its performance and serviceability as a tyre. Retreading of old tyres is just like resoling old shoes. Just as resoling of old shoes does not produce a commercially different entity having a different identity so from retreading no new or distinct article emerges. The old tyre retain its basic structure and identity. We may sound a note of caution that the definitions of manufacture given in other enactments such as, in the Factories Act or Excise Act should not be blindly applied while interpreting the expression manufacturing purposes in Section 106 of the Transfer of Property Act. In some enactments for instance in the Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the company could be said to be manufacturing or processing so that other goods purchased by the company to be used in the said operations would attract a lower rate of tax under the Central Sales Tax Act, 1956. The Supreme Court held that operation of blending amounted to processing the meaning of the said Act but blending of different qualities of ores was not manufacture. The Supreme Court observed as follows: -- the blending of different qualities of ore possessing differing chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specifications, blended together. In the case of Commissioner of Sales Tax v. Musarafalli Kutubuddin [1975] 35 STC 503, where the sale of old and second-hand furniture after polishing and colouring was involved, it has been held not to be a manufacture under Section 2(17) of the Bombay Sales Tax Act which indicated that manufacture with all its grammatical variations and cognate expressions means producing, making, extracting, alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (supra) has further observed that the excise duty levied under the goods manufactured or produced by the petitioner, viz., package tea is valid and lawful and according to him package tea is a separate specific excisable items and as such, the authorities were entitled to treat the same as such. 21. Mr. Gupta submitted that observations as made by the learned Judge in the Brooke Bond's case (supra) on leviability of package tea on the basis of his determination on the effect of the section of the said Act and the Schedule, were improper and according to him if there was or has been any inconsistency between the Schedule and the section, which according to him was the case in this proceeding, the section should have precedents over the Schedule and in not holding so, the learned Judge in the Brooke Bond's case (supra) had acted irregularly. 22. We have referred to and indicated hereinbefore the definition of manufacture as in the said Act and for the purpose of having an idea as to what manufacture is or what should be the meaning of the said term, Mr. Gupta referred to the case of Union of India and Anr. v. Delhi Cloth and General Mills Co. Ltd. 1973ECR56(SC) , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of manufacture in Section 2(1) does not equate manufacturing processing to manufacture . The processed raw oil is not, therefore, covered by the expression vegetable non-essential oil or by all sorts as no new substance known to the market has been brought into existence at that stage. There is therefore no legal basis for the demand of excise duty thereon under item 12 (old item 23) of Schedule I. Mr. Gupta then referred to the case of South Bihar Sugar Mills Ltd. and Anr. V. Union of India and Anr. 1973ECR9(SC) , where while dealing with Schedule I and item 14H under the said Act in the case of the appellants who produced gas by lime kilns and used in manufacturing sugar and soda ash on the tests for excisability it has been observed that though in the process of manufacture of sugar by carbonisation process and of soda ash by solvay ammonia soda process, the manufacturer does not require carbon dioxide for the purpose of producing the two articles and sets up lime kiln for that purpose, the gas generated by the kilns is kiln gas and not carbon dioxide as known to the trade, i.e., to those who deal in it or who use it. The kiln gas in question therefore is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the job work of processing done by them and it was their case that apart from the excise duty the cotton fabrics and man-made fabrics were also subjected to the additional duties of excise as a result of the amendments of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. By Section 4 of the Amending Act, items 19-I and 22(2) of the First Schedule to the Excise Act were also similarly amended by making an identical substitution of items 19-I and 22(1) in the First Schedule to the Additional Duties Act. The effect of various amendments inserted in the Excise Act by the Amendment Act was to include the processes of bleaching, dyeing and printing, insofar as the present petitions are concerned within the definition of the word manufacture . The petitioners challenged the validity of the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980. The question for determination were: (1) Whether processes conducted and carried on by the petitioner in respect of cotton fabrics and woollen fabrics/man-made fabrics as mentioned under item 19 or 22 of the Schedule to the Central Excises and Salt Act amount to manufacture as the Act stood prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransformed into something altogether different. It would still require that these should be produced in the sense that some human activity and energy should be spent on them and these should be subjected to some processes in order that these might be brought to the state in which they might become fit for consumption. So further transformation of the transformed material by the human labour and skill making it fit for human consumption so as to attract the duty is covered by the entry, apart from holding that in any event the impugned Act would be covered by entry 97 of List 1 of the Seventh Schedule if it is not covered by Entry 84. It is difficult to appreciate the argument that the levy would fail as there will be no appropriate charging section or machinery for effectuating the levy on the activity like the method of processing even if such an activity can be justified under Entry 97 of List 1 of Seventh Schedule. The charging section is Section 3 of the Central Excises and Salt Act, which stipulates the levy and charge of duty of excise on all excisable goods produced or manufactured. Manufactured under the Act after the amendment would be the manufacture as amended in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new commodity, reference was made by Mr. Gupta to the case of M/s. Sterling Foods, a Partnership Firm represented by its Partner Shri Ramesh Dalpatram v. State of Karnataka and Anr . 1986(26)ELT3(SC) which is also reported in 1986(26)ELT3(SC) , 1986(26)ELT3(SC) , where it has been observed by the Supreme Court that in order to attract Sub-section (3) of Section 5 of the Central Sales Tax Act it is necessary that the goods which are purchased by an assessee for the purpose of complying with the agreement or order for or in relation to export, must be the same goods which are exported out of the territory of India. The words those goods in this sub-section are clearly referable to any goods mentioned in the preceding part of the sub-section and the test which has to be applied for the purpose of determining whether a commodity subjected to processing retains its original character and identity is as to whether the processed commodity is regarded in the trade by those who deal in it as distinct in identity from the original commodity or it is regarded, commercially and in the trade, the same as the original commodity. It is only when the change or a series of changes take the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture within the meaning of that term in Section 2(17) of the Act and that the cashew-nuts were not sold in sealed containers. It would appear that on a reference it was held (i) that the question to be considered was whether the fried and salted cashew-nuts prepared by the assessees could be said- to be a different commercial commodity from plain cashew-nuts and this was primarily a question of fact to be determined on the evidence before the sales tax authorities. As the Tribunal had found that even after the plain cashew-nuts were fried and salted by the assessees they still continued to be the same commercial commodity, viz., cashew-nuts, the process or activity applied on the cashew-nuts could not be said to be manufacture within the meaning of the term in Section 2(17) of the Act; (ii) that there was also ample material before the Tribunal on which it could come to the conclusion that the fried and salted cashew-nuts sold by the assessees could not said to be a new or different commercial commodity from the plain cashew-nuts which had been purchased by the assessees; (iii) that the cashew-nuts were not sold by the assessee in sealed container and the Tribunal was jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be regarded as a commercially new and distinct commodity from the ore of different specifications blended together, the operation of blending would amount to processing of ore within the meaning of Section 8(3)(b) and Rule 13. Consequently, where the blending was done through the Mechanical Ore Handling Plant, the plant fell within the description of machinery, plant, equipment used in the processing of ore for sale and it follows as a necessary corollary that if any items of goods were purchased by the assessee as being intended for use as machinery, plant, equipment, tools, spare parts, stores, fuel or lubricants for the mechanical ore handling plant, they would be eligible for inclusion in the certificate of registration of the assessee. On the basis of the said determinations and on consideration of the definition of manufacture under Section 2(f) of the said Act, it was Mr. Gupta's firm contention that unless because of the process involved, there has been a change of the product, there could not be any case of manufacture and such being the position, since tea packed in packages from out of the bulk tea purchased by the appellants remain tea and do not have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lict between the Civil Procedure Code and its Schedule, the Code must prevail. In the case of Muneshwara Nand v. State AIR1961All24 , to which reference was also made by Mr. Gupta, it has been indicated that Schedules form a part of the statute and must be read together with it for all purposes of construction. But expression in the Schedule cannot control, or prevail against the express enactment. If there is any appearance of inconsistency between the Schedule and the enactment the enactment shall prevail, and if the enacting part and the Schedule cannot be made to correspond, the latter must yield to the former and on that basis Mr. Gupta wanted to supplement his arguments that section in the instant case should prevail over the Schedule. Similar view as above, has also been indicated in the case of Commissioner of Income Tax, Madras v. Ajax Products Limited [1965]55ITR741(SC) where it has also been specifically indicated that if the words of a statute are precise and unambiguous it must be accepted as declaring the express intention of the Legislature and a proviso must be considered harmoniously with the main enactment, apart from holding that fictions should not be stretc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en processes as machining and polishing result in a distinctly different commodity. This determination, on appeal, has been upheld in the case Collector of Central Excise v. Fine Marble etc . (1986) 9 ECR 504. 30. Mr. Bhattacharjee appearing for the authorities concerned and opposing the appeals claimed and contended that package tea is itself a concept and the same forms a different class from tea as purchased in bulk by the appellants and have a distinct character, use and recognition to the consumers and it was specifically claimed by him that such concept, viz., package tea is a different class by itself was evidenced since after the last Second World War and as the authorities concerned felt and realised that package tea grew or was growing as a different concept by itself, so in 1953, the Legislature wanted to have such tea levied to tax. In fact, he wanted to establish such intention, on a reference to the provisions of Central Excise and Salt (Amendment) Act, 1953, according to which tea includes all varieties of the product known commercially as tea, and also includes green tea. 1) package tea, that is to say, tea packed in any kind of container containing not mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which tea includes all varieties of the products known commercially as tea, and also includes green tea, (1) (2) package tea, that is to say, tea packed in any kind of container containing not more than 27 kilograms net of tea, Mr. Bhattacharjee contended that such inclusive definition would also justify the imposition or levy of tax on package tea as made in the instant case. For the purpose of establishing what is meant by the word includes within the meaning of tea as in item 3 of the First Schedule, Mr. Bhattacharjee referred firstly, to the case of Khan Bahadur C.K. Mammad Koyi v. Assistant Collector, Estate Duty-cum-Income-tax Circle, Coimbatore [1961]43ITR1(SC) (Estate Duty Cases). In that case, the words including in particular or the meaning thereof, in Moplah Marumakkattayam Act, 1939 were considered and the Division Bench of the Madras High Court has observed that where the expression used in a section is merely including it does not have a restrictive operation and confine the scope of the section only to those things specified in the words following. Specially in a taxation measure, which is intended to be quite general in its operation, it enlarges the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the case of The Commissioner of Income Tax, Andhra Pradesh v. Raj Mahal Hotel, Secunderabad AIR 1972 SC 162, where the expression plant as in Section 10(2) (vi-b) and (5) of the Income Tax Act, 1922 and the meaning thereof, was considered and while considering the effect and meaning of the word includes it has been observed by the Supreme Court that the very fact that even books have been included in the definition of the word plant in Section 10(5) shows that the meaning intended to be given to plant is wide. The word includes is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statutes. When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import but also those things which the interpretation clause declares that they shall include, apart from observing that to have sanitary fittings, etc., in a bath room is one of the essential amenities or conveniences which are normally provided in any good hotel, in the present times. It is therefore incomprehensible how sanitary fittings can be said to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 7AA of the Rajasthan Sales Tax Act and interest under Section 11B of the Act for the delay in depositing the freight charges. Similarly in the assessment orders passed under the Central Act penalty under Section 7AA and interest under Section 11B of the State Act read with Section 9(2) of the Central Act were levied. The assessee obtained special leave of the Supreme Court under Article 136 of the Constitution of India to appeal against these orders and on such facts it has been observed by the majority that the explanation of the assessee for not including the freight charges in the taxable turnover that there was a doubt about its liability to pay sales tax thereon as the very same question was pending adjudication before the Supreme Court and that within two months after the judgment of the Supreme Court in Hindustan Sugar Mill's case [1979]1SCR276 , the assessee had filed the revised returns including the freight charges in the taxable turnover and paid the sales tax payable in respect of them even before the assessing authority had passed the orders of assessment had to be accepted. Therefore, the levy of penalties (under the State as well as the Central Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The Courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated. It is the duty of the Court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it. Wherever the intention to impose liability is clear the courts ought to have no hesitation in giving a common sense interpretation to the machinery sections so that the charge does not fail and a fair reading of Section 11B of the Act suggests that the Act expects that all assessees who are liable to pay sales tax should file a true return within the period prescribed under Section 7(1) and should produce a treasury receipt or a receipt of any bank authorised to receive money on behalf of the State Government showing that the full amount of the tax du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charjee, the Division Bench of the Rajasthan High Court has also observed, while dealing with a case of vegetable product and if packing of the same is a process of manufacture that since under tariff item 13 of the central excise tariff, the vegetable product which is made subject to duty of excise should be fit for human consumption, therefore, canning of such a vegetable product in containers of metal or polythene is a process incidental and ancillary to the completion of manufacture of the vegetable products, apart from holding that the very fact that the petitioners are marketing their products under their own brand name lends added assurance to the conclusion that the process of canning of vanaspati in metal or polythene containers inscribed with brand name of the petitioner, is incidental or ancillary to the completion of the manufacture of vegetable product to make it fit for human consumption and since canning of vegetable products in metal or polythene containers is a process incidental and ancillary to the completion of vegetable product, therefore, the cost of such canning is includible in the value of vegetable products for assessing the duty of excise. It makes no dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is meant, then the process is not a simple one but a process incidental or ancillary to the completion of a manufactured product. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may very from one product to another and there could be several stages of processing and different kinds of processing depending upon the utility for which the end product is meant. Any process if it is incidental and ancillary to the completion of manufactured product, it will certainly amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, apart from indicating that the question as to when the manufacture of an excisable goods can be stated to be complete is certainly a mixed question of law and fact. In order to dispel any ambiguity which may arise as to the precise stage when the manufacture of an excisable goods could be stated to have been completed the definition clause in Section 2(f) stands enacted, first generally setting out that it will include any process incidental or ancillary to the completion of a manufactured product, further expatiating the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use declares that they shall include. He also contended that the present definition of manufacture is all inclusive and has been brought into the statute by way of ex abundanti cautela. In support of such submissions, he referred to the observations in Craies on Statute Law (Seventh Edition) and more particularly to the observations that sometimes a term is defined in an interpretation clause merely ex abundanti cautela--that is to say, to present the possibility of some common law incident relating to that term escaping notice. While on the question and submissions of double taxation, reference was made by him to Maxwell on The Interpretation of Statutes (Twelfth Edition) and more particularly to the chapter [which] deals on the question of construction most agreeable to justice and reason and pointed out that in determining either the general object of the Legislature, or the meaning of its language in any particular passage, it is obvious that the intention which appears to be most in accord with convenience, reason, justice and legal principles should, in all cases of doubtful significance, be presumed to be the true one. It was pointed out in terms of the determinations in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The process involved in the case after the intermediate stage formed an integral part of the manufacture of the product in question and the classification of the manufactured product for purposes of excise duty would depend upon its nature and character at its final stage of production unless a contrary intention appears from the statute. It is seen from Clause (vii) of Section 2(f) of the Act which is no doubt introduced subsequently that bleaching, heat setting, etc., are incidental and ancillary processes necessary for the completion of the manufactured product falling under item No. 22. This amendment has only attempted to explain the obvious and to put the question beyond dispute. Therefore even though the product in question might have fallen under item No. 19 in the First Schedule to the Act at the intermediate stage of production, at the final stage, when the duty became exigible, it became taxable under item No. 22 only. In fact, Mr. Bhattacharjee, on the basis of the incorporation of the product package tea since 1953 by the Amendment Act as mentioned hereinbefore, claimed that since package tea has been included in the Schedule/Tariff, the imposition or levy as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and limitation for enforcement. The will of the legislature is the supreme law and it must always prevail. It is to be given effect to without scanning its wisdom or policy and without adding, omitting or implying anything inconsistent with the statute. If the statute intends to embody a particular branch of law, it is to be given effect to without whittling down its efficacy lest it will be frustrated. While on the point, a further reference was made by Mr. Bhattacharjee to the case of Annapurna Carbon Industries Co. v. State of Andhra Pradesh : [1976]3SCR561 , where the question for determination in the appeals by special leave, was whether sales of arc carbons, known as cinema arc carbons , manufactured by the appellant-company, were rightly subjected to sale-tax for two assessment years 1965-66 and 1966-67, on the ground that they fall under entry No. 4 of the First Schedule of the Andhra Pradesh Sales Tax Act, 1957, which indicated that cinematographic equipment, including cameras, projectors, and sound recording and re-producing equipment, lenses, films and parts and accessories required for use therewith. While deliberating on the issue, the Supreme Court has observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s much part of the Act as any provisions thereof. If an enactment in a schedule, other than one merely of form, contradicts an earlier clause, it is the schedule that would prevail. Here in this case, Mr. Bhattacharjee's specific contention was that since there has been conflict between the schedule and the provisions of the said Act, so the schedule of the same cannot be disregarded and should be taken into consideration while making the determination. The above submission of Mr. Bhattacharjee and more particularly as to what should be the effect, if there is any conflict between the provisions of the Act and the schedule, reference was also made by him to the case of State of Kerala v. M. K. Mrishnea Nair and Ors . [1978] 2 SCR 864, which has indicated that where two constructions are possible, that one which leads to unconstitutionality must be avoided and the other, which tends to make provisions constitutional should be adopted, even if straining of language is necessary. Such determination was made in a case where the constitutionality of bifurcation of State Judicial Service into two wings, that is civil and criminal, on the basis of separate rules governing recruitment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that before excise duty can be levied, the goods brought into existence must be the goods which can be bought and sold in the market. In other words, by the process of treatment, labour, and manipulation, the raw material must be converted into a different article having a distinctive name, character or use on which duty is leviable, apart from observing that the term manufacture or produce are synonymous and that manufacture means creation or production of a product from raw material or by combining two or more products to form a different one. It has also been held interchangeable or synonymous with fabricate , make and process and it is not open to doubt that asbestos fibre is a marketable commodity and is known to the market and is saleable as such, while asbestos rock is not saleable, but great and intensive process is required before the asbestos rock can be converted, transformed and put into market as asbestos fibre. Therefore, it cannot be said that the detailed process of converting the asbestos rock to asbestos fibre, i.e., breaking boulders into smaller pieces and further putting them into crushers, air cleaner, hurricane mills, separating fibres from the rock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was classifiable as rubber raw under item 39 of the Tariff Act. The Central Government revised the findings of the appellate authorities and held that the said V.P. latex was an aqueous dispersion of synthetic resin up to 1st March, 1970 and thereafter under new item 82 of the Tariff Act. It has further held that the said goods were liable to countervailing duty under Central Excises and Salt Act. The reason for such a finding as appeared from the order, was that, the authority was principally influenced to come to its decision on a sole basis of the ultimate use of the imported article in the trade and in the concerned appeal, it has been held that in the state of evidence before the revisional authority, no reasonable person could come to the conclusion that V.P. latex would not come under rubber raw. The basis of the reason with regard to the end use of the article was absolutely irrelevant in the context of the entry, where there was no reference to the use or adaptation of the article. On the basis of above determinations, it was also a specific submission of Mr. Bhattacharjee that the basis of classification, which has been made in the instant case of tea and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, tea. In the case under consideration it has been indicated that in the context of the provision of the Act, all varieties in item 3 of the First Schedule would mean all such different types of tea which are commercially known to be of different types. Such difference in types of variety would be reflected in the different preferences of the buyers or in different types of buyers for the excisable item and the same would sometime be also reflected in the prices which the teas of the different varieties would fetch at the market reflecting varying demands for the different varieties. The moment there are demands for different types or varieties of tea reflecting in the different demands for the different varieties there would be demand of tea commercially known as such. It cannot, therefore, be said that there would not be sub-classification of the varieties under item 3. The categories of varieties, commercially known as different varieties are not closed. It is indisputable that Black Tea, Green Tea and Brick Tea are different varieties or categories of tea known for their differences but commercially there may be other qualitative differences in the teas produced by the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parliament. In that case it has been indicated that the manner of levy and collection must be by rules prescribed and such rule is Rule 96F, which has authorized the Central Government for the purpose. Therefore, both the authority to frame rules as well as to make groups of different varieties and to fix different rates have been given to the Central Government. Secondly, in the scheme of the Act and in the legislative history there is no abandonment of essential legislative function by the legislature. Thirdly, the maximum rate has been indicated. In view of this, the power to classify different varieties for the purpose of levy of differential duty cannot be said to be bad on account of excessive delegation of legislative function. The said judgment, in short, has held that the zonal classification as made for the purpose of levy of duty on tea, was not improper and the authorities concerned had power to levy differential rates of duty for different varieties and different rates of duty as charged for different zones, was not violative of the concept of equality and such power of imposing differential rates of duty for different varieties of tea do not suffer from excessive del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natory and invalid. The articles to be taxed were not the same and the legislature could provide differently about their taxation. 41. Mr. Bhattacharjee contended that harshness on the incidence of taxation, if there be any, cannot be sustained in this case and in support of such submissions, he referred to the case of Jagannath and Ors. v. Union of India 1978(2)ELT304(SC) , where the tariff entry in dispute under the taxing statute was entry 4 in the First Schedule, which deals with tobacco. Under that entry tobacco means any form of tobacco, whether cured or uncured and whether manufactured or not and includes the leaf, stalks and stems of the tobacco plant but does not include any part of a tobacco plant while still attached to the earth. Clause 1 in entry 4 deals with unmanufactured tobacco and prescribed tariff per kilogram in respect of the several items specified therein. Item (1) under the said clause deals with five categories. Item (2) deals with tobacco which is flue cured and used for the manufacture of smoking mixtures for pipes and cigarettes. Item (3) provides for flue cured tobacco which is not otherwise specified and item (4) is concerned with tobacco other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the imposition of tariff is clearly reasonable and the attack against the validity of Clause (6) on the ground of unconstitutional discrimination cannot be upheld; this is so even assuming that if discrimination in respect of commodities taxed is proved it ultimately amounts to a discrimination against the persons taxed and therefore Article 14 can be invoked in such a case. 43. Another case on the levy of duty on tobacco, which was referred to and relied on by Mr. Bhattacharjee was that of East India Tobacco Co., etc. v. State of Andhra Pradesh and Anr . AIR 1962 SC 733. In that case, the validity of Andhra Act 14 of 1955, which amended Section 5 of Madras General Sales Tax Act was under consideration. In appeals which were taken against the judgment of the High Court of Andhra Pradesh, as made in proceedings under Article 226 of the Constitution of India questioning the validity of the Andhra Act concerned insofar as the same imposed a tax on the sale of Virginia tobacco, was considered. The appellants in that case were firms doing business in the export of tobacco. The usual course of that business was stated to be that, they first enter into contracts with their custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Andhra Pradesh challenging the constitutionality of the Amendment Act on the ground inter alia that in taxing of Virginia tobacco and exempting from tax sales of other tobacco, the Act was discriminatory, and that in consequence, it was obnoxious to Article 14 of the Constitution and that further, it was in contravention of Article 286(1)(b), as it was really tax on sales in the course of export of tobacco and accordingly prayed that a mandamus might be issued directing the respondents to forbear from making any assessment on the sale of tobacco. The proceeding was dismissed holding that the impugned Act did not infringe any constitutional provisions, but granted certificate under Article 133 of the Constitution and the Supreme Court has observed, that taxation law must also pass the test of Article 14. But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of the selection, the law operates unequally, and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85(20)ELT222(SC) . There the Supreme Court has considered the scope of Section 3(1) of the Customs Tariff Act, 1975 and whether the terms additional duty as mentioned in the said section was in the nature of countervailing duty. It has been observed by the Supreme Court that it cannot be said that Section 3(1) of the Tariff Act is an independent, charging section or that the additional duty which it speaks of is not a duty of customs but is a countervailing duty and the scheme embodied in Section 12 of Customs Act, 1962 is amplified by what is provided in Section 3(1) of Customs Tariff Act. The customs duty charged under Section 12 of Customs Act, 1962 is extended by an additional duty confined to imported articles in the measure set forth in Section 3(1). Thus, the additional duty which is mentioned in Section 3(1) of the Tariff Act is not in the nature of countervailing duty. Section 3(1) cannot be treated as a charging section merely because the Statement of Objects and Reasons of Section 3 says that Section 3 provides for the levy . The Statement of Objects and Reasons errs in being common to Sub-sections (1) and (3) of Section 3. It is more apposite to Sub-section (3) tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h occurs in Section 3(1) of the Tariff Act, 1975 means excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, apart from holding that the brass scrap cannot possibly be a master alloy , it is not, in the wildest imagination, an alloy of mixture of elements used for introducing desired elements into molten metals in the foundry. A master alloy is generally called a foundry alloy for the simple reason that it is an alloy used for adding elements in the foundry. Brass scrap does not square with that description and use. Brass is an alloy of copper and zinc and is a complete and finished product by itself. Brass or brass scrap is not used as a raw material in the manufacture of other alloys. Therefore, it is not a master alloy. Accordingly, the importers of the brass scrap cannot claim the benefit of notification No. 97 dated June 25, 1977 on the basis that brass scrap is a master alloy and also indicated that insofar as the terms of Heading No. 74.01/02 in Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry 84, List 1 of the Seventh Schedule to the Constitution. Even otherwise, Parliament would have the legislative competence to pass the law because of the combined operation of Article 248 and entry 97, List 1, of the Seventh Schedule. After the above citations, Mr. Bhattacharjee referred to the case of Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Anr . 1978(2)ELT389(SC) . In that case, the rolling of billets of copper alloys in circles were involved and the point arose as to whether excise duty under item 25A(2) was leviable, though circles are uncut and not trimmed. The Supreme Court in that case has observed that when billets of copper alloys, namely, mansi and brass are rolled into circles in some form or the other and in different sizes, the process of manufacture of circles is complete even if the circles are uncut. Consequently, the rolled circles are liable to excise duty under item 26-A(2). It cannot be said that only trimmed circles can be treated as circles and as finished product. Even, uncut circles are circles as envisaged by the item. The rolling of a billet into a circle is a process in the course of completion of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicated hereinbefore, would be separately assessable to levy of tax, as the same has been incorporated in the Schedule/tariff. To further establish and augment his submissions on manufacture, Mr. Bhattacharjee referred to the case of Metro Readywear Co. v. Collector of Customs 1978 ELT 620, where it has been observed by the Kerala High Court, while considering whether ironing of stitched brassiers is incidental or ancillary to their manufacture since the said process was intended to give a finishing touch in order to render them marketable that brassiers are undoubtedly under-garment falling within articles of ready to wear apparel (known commercially as readymade garments ) and as such classifiable under item 22D of the central excise tariff and ironing with electric iron amounts to a process of manufacture with the aid of power. 47. As mentioned earlier, it was Mr. Bhattacharjee's contentions that double taxation, if the same has occurred in the case of tea and package tea, the same was possible and permissible and in support of that submission, he referred to the case of Avinder Singh, etc. v. State of Punjab and Anr . (supra) where it has been observed that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of complying with the agreement or order for or in relation to export, must be the same goods which are exported out of the territory of India. The words those goods in this sub-section [are clearly referable to any goods mentioned in the preceding part of the sub-section] and it is, therefore, obvious that the goods purchased by the assessee and the goods exported by him must be the same. If by reason of any processing to which the goods may be subjected after purchase, they change their identity so that commercially they can no longer be regarded as the original goods but instead become a new and different kind of goods and then they are exported, the purchases of original goods made by the assessee cannot be said to be purchases in the course of export, and the test which has to be applied for the purpose of determining whether a commodity subjected to processing retains its original character and identity is as to whether the processed commodity is regarded in the trade by those who deal in it as distinct in identity from the original commodity or it is regarded commercially and in the trade, the same as the original commodity, apart from holding that processed or frozen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. Same submissions were made by Mr. Bhattacharjee while with the case of South Bihar Sugar Mills Ltd. and Anr. v. Union of India and Anr. (supra) and he reiterated that while dealing on the question the Court should see what is produced and how the subject matter of such production is known to the commercial world and the general public. The case of Commissioner of Sales Tax, etc. v. Paper Process, etc. and Ors. (supra) and the determinations as made therein, according to Mr. Bhattacharjee would have no application in this case, as the said determination was on a reference where the specific question was required to be answered. The submissions as above, were also made by Mr. Bhattacharjee while distinguishing the case of Commissioner of Sales Tax v. Bombay Traders (supra), where two questions, viz., (1) whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the activity of frying and spicing of the cashew nuts did not amount to manufacture within the meaning of Section 2(17) of the Bombay Sales Tax Act, 1959? and (2) whether, on the facts and in the circumstances of the case the Tribunal was right in holding that the fried and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words in relation to would mean and extend to the commodities as indicated and furthermore change of container, as in this case, will not bring about separate goods liable for levy. After placing the definition of manufacture or what the same means Mr. Bajoria further contended that the package tea as in this case, would not be subject to the excise duty or levy as made, as here only change is in respect of the container/package. It was his submission that the determination in Empire Industries case (supra), would really help the appellants and not the Revenue in view of the observations in paragraph 20 of the determinations. It was further submitted by him that on application of the tests of manufacture as laid down in that case, the goods in this case package tea would not be liable to any levy of duty as tea as contained therein, remains the same since such packages are made out of bulk tea as purchased by the appellants. Even if the Schedule in the instant case as referred to in Section 3 of the said Act, the levy as made in respect of package tea was not permissible or possible as tea has not been classified like tobacco and other merchandise and more particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of sales tax, the charging event in that case was thus sale and that case merely interpreted the two items of the Schedule and will not be a decision for holding or arriving at the conclusion that once an item has put in the Schedule, the power of the Court would be taken away. Similarly, Mr. Bajoria contended that the case of A. Hajee Abdul Shukoon Co. v. The State of Madras AIR 1964 SC 1729, which deals with hides and skins would not also apply with such efficacy as has been sought to be argued by Mr. Bhattacharjee, since these products were and are subject to some process, which would not be the factor in the present case of tea or package tea and more particularly when, no change or alternation in the product, except the packaging of the same, takes place in case of package tea . Mr. Bajoria also contended that in view of the challenge as involved in the case of Jagannath and Ors. v. Union of India , (supra), the determinations as made therein, would not apply in our case and in this case, no tax should be levied or imposed as the charging section has been appropriately amended. It was also contended by him that the determinations as made in the case under reply or Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em and the authorities were entitled to treat it as such. 55. Apart from the said company, the said proceeding in CO. 15368(W) of 1982, was moved by one of their shareholders and it was their case that the said company carries on business in tea, purchased in India. The said tea has been said to be sold in India, apart from exporting abroad. According to them such production involves (a) the plucking of tea leaves from plants in the tea gardens and are subjected to successive processes known as withering, rolling, fermenting, firing and sorting of the factories or processing centres (b) then the manufactured tea is packed in chests in bulk by the manufacturers and are cleared upon payment of central excise duty for being sold in different auction centres and (c) the manufacture of tea is completed in the factory and processing centres is as aforesaid whereby a manufactured product known as tea, fit for human consumption, is brought into existence. 56. It has also been stated that the said company is not the owner of any tea garden and they purchase tea of diverse varieties from the auction centres all over India on payment of relevant central excise duty as levied or leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s essentially a duty on manufacture or production of excisable goods and there is no doubt or dispute that it is only those processes which bring into existence a new article having a distinct name, character and use which would amount to manufacture. It was also contended that the authorities concerned, in the instant case, had no power, jurisdiction and competence to levy or collect excise duty on any article under the said Act unless the same is manufacture of a new article though involving a process, resulting in the emergence of a new article having the character as mentioned hereinbefore or unless the use of the process bring out or produces an article, the use whereof is different from the original product, tea in this case. It was the further and definite case of the said company that package tea which has been sought to be subjected to duty now under Clause (2) of item 3 of the tariff, has no other distinctive features from that of the manufactured tea as subjected to duty under Clause (1) of the said tariff item 3, except that the same is packed in smaller package and duty has already been levied on the same. 59. The said company has further contended that such process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has no power or authority to make any law to amend the Schedule to the said Act and thus to incorporate as excisable article, a new manufacture and on which excise duty has already been levied and such levy would give rise to double taxation. 60. Thus, according to the said company, the duty levied and collected under item 3(2) would be bad in law and a nullity. The said Clause (2) of the concerned item was also claimed to be violative of Article 14 of the Constitution of India, as the mere weight of tea, put in a container of a packet without taking into account or consideration the quality or value of the same or other guiding and relevant factors, cannot be a reasonable classification for the purpose of levy of duty. It has also been stated that the said Company has been paying excise duty under item 3(2) of the tariff as demanded by the authorities concerned on the mistaken belief that such duty was lawfully payable and they have come to know and realise their mistake very recently, when Liptons India Ltd., which also carries on business similar to them, challenged such levy in a proceeding under Article 226 of the Constitution of India. According to the said company, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company fully knowing the said facts had been voluntarily paying excise duty on such package tea. The present application is wholly misconceived, mala fide and speculative and (f) the said company are guilty of gross delay and laches and no proper or any explanation has been given for the same and the application should be dismissed on that ground alone. 62. The deponent has more or less agreed that the said company has been, for a long time manufacturing or producing package tea in their various factories in India and has stated that such production is carried on by machineries, which are operated automatically and he has also stated that the entire process of blending, packing and labelling are also carried on by mechanical means. It has also been stated by the said deponent that the factories of the said company in different parts of India, the manufacture as involved in this case is carried on by sophisticated and fully equipped machines, from duty paid loose tea, purchased from auctions. His further case is that tea produced/manufactured in the gardens are liable to excise duty as loose tea. It has been alleged that purposefully the said company has suppressed the said fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nown in the market and in the trade parlance as separate and distinct from the loose tea and (d) the grounds made out in the present case do not disclose any cause of action and they are misconceived and are not tenable in facts or in law. 65. The reply to the above affidavit-in-opposition was dated 18th August, 1982 and the same was filed through Satya Paul Saigal, petitioner No. 2, who is the Director. Finance of the said Company. He has alleged that the process of blending carried out by the said company, on which the answering respondents to the rule have mainly put forward their defence, was wholly misconceived as blending has no relevance to the dispute involving package tea. According to the said company those answering respondents were and are not entitled to introduce the case of blending or the concerned item as he claimed that packaging by itself would not amount to any case of manufacture and by such blending not only there has been no amount of manufacture but there is no new material which is brought into existence. It was also the case of the said company that both before and after blending and packing as made by the said Company, the material, viz., manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packaging the quality, character and use of the same is not changed and package tea is also known, not only in the ordinary parlance, but in the commercial world as tea, and the same is used as such. He, of course, in his usual fairness stated that if by such packaging as involved in this case, there was formation of the product to anything else which was not tea, then the answering respondents in the rule could have claimed such transformation to be a case of manufacture under Section 2(f) of the said Act. In any event, he submitted that since packing in small cartons of tea would not bring into existence any separate material or identity, having a separate or distinctive character and use and as such, so there would not be any case of manufacture through such packing process and prior to the incorporation of the amendment through Section 2(f) of the said Act, such packeting of tea or blending of the same would not be a case of manufacture. Mr. Ghosh referred to the case of Union of India and Ors. v. Godfrey Philips India Ltd. and Ors . (supra), where the Supreme Court has observed while dealing with how valuation is to be made, that cost of secondary packing done for protection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the cost of corrugated fibre board containers cannot be included in the value for the purpose of assessment of excise duty. Further, the position expressed by the Central Board of Excise and Customs in its letter dated 24-5-1976, that the cost of corrugated fibre board containers in question does not form part of the value of cigarettes for the purpose of excise duty is perfectly right, apart from holding that cigarettes are packed initially in paper/and board packing of 10 and 20 and these packets are then packed together in paper/board cartons/ outers. These cartons/outers are then placed in corrugated fibre board containers and it is these corrugated fibre board containers filled with cartons/outers containing packets of cigarettes of 10 and 20 which are delivered by the respondent to the wholesale dealers at the factory gate. In view of the enlarged definition of the term value as given in Section 4(4)(d)(i) read with explanation, the cost of packing of all the three stages, i. e., initial packing, secondary packing and final packing is includible in the assessable value of the cigarettes. The manufacturer's contention that the packing which was necessitated in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is satisfied, the value of goods would include the cost of such packing. The explanation to Section 4(4)(d)(i) provides an exclusive definition of the term packing and it includes not only the outer packing but also what may be called the inner packing. Ordinarily, bobbin, pirl, spool, reel and wrap beam on which yarn is wound would not be regarded as packing of such yarn, but they are brought within the definition of packing by the explanation. The explanation thus extends the meaning of the word packing to cover items which would not ordinarily be regarded as forming part of packing. Therefore, there can be no doubt that corrugated fibre board containers in which cigarettes are contained fall within the definition of packing , and their cost is liable to be included in value of the cigarettes and the question of cost of packing was broadly dealt with in the judgment delivered by the Supreme Court in the Bombay Tyres International's case 1983 ELT 1896. The general proposition laid down in the said case was that the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of manufacture would imply a change, but every process is not manufacture. He reiterated that by such manufacture as involved in this case, there would be a new article, having the distinct name, use and character should be presumed. 71. Mr. Ghosh claimed and submitted that there could not be any levy on package tea and by such packaging, there is no transformation or creation of a new product and to establish such submission or the other particulars of his submissions on the points as indicated hereinbefore, he first referred to the case of Union of India and Anr. v. Delhi Cloth and General Mills Co. Ltd, (supra), where it has been observed that the produce of vanaspati cannot be held to manufacture some kind of non-essential vegetable oil within the meaning of item 12 of Schedule I under the said Act, by applying to the new material purchased by them, the processes of neutralisation by alkali and blending by activated earth and or carbon. It has been observed in that case by the Supreme Court that manufacture will be complete as soon as by the application of one or more processes, the raw material undergoes some change is to a equate processing to manufacture and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence was made by Mr. Ghosh to the case of P.C. Cherivan v. Mst. Barfi Devi (supra), where the Supreme Court has observed that manufacturing process will not include business of retreading of tyres and the broad test for determining whether the process is a manufacturing process, whether it brings out a complete transformation for the old components so as to produce a commercially different articles or commodity. It has also been observed in that case that the retreading of old tyres would not bring into being commercially distinct or different entity. The old tyre retains its original character or identity as a tyre and retreading does not completely transform it into another commercial article, although it proves its performance and serviceability as a tyre. While on the point a further reference was made by Mr. Ghosh to the case of Sterling Foods v. State of Karnataka and Anr . (supra) where practically the same view as to the emergence of a new commodity in the use of manufacturing process to constitute manufacture has also been indicated. We have not indicated the specific findings on the abovementioned cases now as we have indicated them in our judgment earlier. 72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia and more particularly to paragraphs 22-23 where the contentions for the Revenue have been recorded. In that case, a point arose as to whether wires manufactured out of steel rods imported by the assessee prior to 24th April, 1962, can be levied under the said Act. We have already indicated that in the said determinations, the Supreme Court has quoted with approval, the observations of Lord Cairns in Partington v. Attorney General (supra) and it has been indicated that the Crown, seeking to recover the tax cannot bring the subject within the letter of the law, the case might otherwise' appear to be. On such observations, it was Mr. Ghosh's specific submission that since the case of manufacture as in this proceeding, cannot be brought within the purview of the said Act or the Rules and Tariffs thereunder, the Revenue would not be entitled to ask for the levy as made or make any levy at all. 74. On the basis of the observations in the case of Union of India v. Godfrey Philips India Ltd and Ors . (supra), Mr. Ghosh pointed out that manufacture must and should mean manufacture of a new product, which is not the case here and such packaging as involved, is not also th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or unit of a machine. In such a case, the activity of fitting together of manufactured parts must be regarded as manufacture and the end product must be regarded as goods produced or manufactured by this process. But, the converse process by which a manufactured commodity is broken up or taken apart cannot be regarded as manufacture or production of the components. To take the simple illustration of a car which is produced by assembling various parts in the assembly line. The activity of fitting together various components to make a complete car must be regarded as manufacture of car. The end product of the product is the car. But, when that car is broken up and things like carburetor, battery or other fittings are taken apart can it be said that these things have been manufactured by the process of taking apart the car. Neither in common parlance nor by the definition of manufacture given in the Act, can it be said that these components which were taken apart in the process of breaking up the car were manufactured or produced by the activity of breaking up of the car. On the same analogy the nails or tacks or rivets used in construction of a ship do not cease to be the same n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assification and liability, was not in dispute in that case and submissions as made hereinbefore, Mr. Ghosh pointed out would apparently be satisfied from paragraph 38 of the reports. The determinations in U nion of India v. Godfrey Philips India Ltd. and Ors . (supra) will not help as in this case, the packaging of package tea by the said company or anybody concerned is made or the same is necessary for the sale of the excisable goods tea in the wholesale market. At a late stage of his submissions, Mr. Bhattacharjee made a further reference to the case of Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Anr . (supra), the relevant findings whereof have been quoted hereinbefore. Mr. Ghosh also claimed that the said determination has also no application in the facts of this case. The rolled circles in that case have been found to be liable to excise duty under item 26A(2) with the further observations, that only trimmed circles cannot be treated as circles and as finished product and even uncut circles, as envisaged by the concerned item, apart from holding that the rolling [of] a billet into a circle is a process in the course of complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nless some process is done in the matter of packing or until the packaging is complete. According to him, thus manufacture is the touchstone in the case of package tea and that should also be the due construction of Section 2(f) of the said Act and the words any process would not only mean process incidental or ancillary, but that would also mean and include, manufacturing of tea including packaging of tea or package tea. The above submissions that package tea is a different variety or class were also sought to be supported and supplemented on a reference to item 3 of the tariff. 77. Excepting the cases which we have already indicated to be distinguishable in the facts of this case, the other cases as cited by Mr. Ghosh in this appeal and by Mr. Gupta in the other appeal, do support the contentions as indicated hereinbefore and more particularly, the submissions that there would not be a case of levy on any product, if even after manufacture or any manufacturing process, the character, use and quality of the original item is not changed. As indicated earlier, it was submitted by Mr. Ghosh that since after packaging, tea remains tea and the quality, character and use of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the help of labour, capital, power and other machineries is required and as such also, the levy as made cannot be said to be without justification. We also find that package tea as mentioned in Schedule 3(2) is an inclusive one and as such also, the imposition or levy of tax as made, was with jurisdiction. The cases as cited by Mr. Bhattacharjee on the question and meaning of the word include , in our view do also support the views which we have expressed. 80. We further feel and find and that too on the principles as indicated by the cases as cited at the Bar, that every endeavour should be made to preserve the intention of the legislature as indicated in the Schedule/Tariff and every endeavour should further be made to avoid any repugnancy. The definition of the word manufacture in Section 2(f) of the said Act is no doubt inclusive and any clause appended thereto, should be deemed to be merely illustrative and not exhaustive. The amendment as incorporated to the definition of manufacture is only clarificatory also and it is needless to point out that the word include is often used in interpretation clause for enlarging the meaning and scope of the words and phrases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial world. 81. No doubt the Legislature in this case has elected to levy and impose duty on tea and package tea. Even if we agree with the submissions of the appellants, that by manufacturing package tea through the process as indicated hereinbefore, the species tea remains tea and does not change its quality, character and use by such packaging there will be no difficulty in holding in favour of such imposition of levy of duty in respect of package tea, as there is nothing in Article 265 of the Constitution of India, holding such taxation to be void and unconstitutional and there would be no inherent illegality or irregularity, and such imposition would be valid, unless there are specific prohibitions, which are really absent in this case. 82. In view of the findings as above, we uphold the findings of the learned Trial Judge in Brooke Bond's case, that the First Schedule and the items thereunder are part of the said Act and have statutory force. The Legislature having specifically indicated package tea as a different item must be considered to have taken into consideration the fact that package tea is produced out of tea already produced and is levied to tax and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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