TMI Blog1995 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as framed and filed are not maintainable as they suffer from the doctrine of EXHAUSTION inasmuch as petitioners have not availed of alternative remedy envisaged under Section 35 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), consequently all the writ petitions be dismissed on this ground alone. 3.Mr. K. Parasaran, learned Senior Advocate to Supreme Court, Ex-Attorney General of India, appearing for petitioners, submitted that since these are the of inherent want of jurisdiction in the central authorities for the reason that `pan masala' and other products of like nature are not excisable goods, hence preliminary objection as to alternative remedy is not admissible. 4.Without entering into merits of the arguments on the question of alternative remedy, we are of the opinion that since the petitions have been admitted for hearing the parties and are pending for the last about 15 years, hence the ratio laid down by the apex Court in L. Hriday Narain v. Income Tax Officer (A.I.R. 1971 SC 33) is fully applicable, therefore, petitions are liable to be heard and decided on merits. The preliminary objection is disposed of accordingly. 5.The brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and bad in law as those were not excisable and no necessity for taking Central Excise Licence was there. 10.Learned counsel further contended that before 1985, preparation of `Pan Masala' from the stage of supari will not amount to `manufacture' within the meaning of Section 2(f) of the Act and even if it is held that `Pan Masala' was a manufactured product, it was classifiable under Tariff Item 1B of the Central Excise Tariff as it stood then and was wholly exempt from payment of duty in terms of Notification No. 55/75-CE dated 1-3-1975. 11.Learned counsel also contended that `Pan Masala' is a `food product' therefore, eligible for exemption under the Notification dated 1-3-1970 and if not then it can be classified under Tariff Item 68 and thus it is eligible for exemption under Notification dated 1-3-1975. 12.Mr. U.N. Sharma, learned counsel appearing for Union of India contended that `Pan Masala' is not covered under the term `food product' and `food preparation' therefore, the exemption granted by aforesaid two notifications is not applicable to `Pan Masala' and other products of like nature. 13.Learned counsel further contended that the petitioners were using thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess incidental or ancillary to the completion of a manufactured product; and ....." 18.It is not disputed that from 1986 onwards, the process of converting supari etc. into `Pan Masala' is defined to be a process of manufacture within the meaning of Section 2(f) of the Act, therefore, since March 1986 admittedly `Pan Masala' and other products of like nature are excisable under the Act. The lis pertains to the period prior to March 1985. Therefore, we are proceeding to examine the term `manufacture' as it was before 1985. 19.The definition of term `manufacture' given in Section 2(f) of the Act is couched in inclusive texture and takes in its fold the incidental or ancillary processes in the nature of finishing towards to the manufactured product. The word `manufacture' implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The term `manufacture' means the making by labour or machine of an object or various objects into another object of a different character. The essence of manufacture is the transformation of the parts of basic compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proportion and they are powdered, then the original property of the particular ingredient is lost and is mixed with the properties of the other ingredients with the result that a new and a different article having a disticnt name, character or use emerges. Such masalas would be covered by Tariff Item 68. Thus, the ratio laid down in this case fully applies to the facts of instant petitions, as the ratio was laid down on the facts that different spices were mixed in certain proportion and they were powdered and as a result of the same different commodities came into existence known as Garam Masala, Dal Masala, Chana Masala etc. 22.Learned senior counsel for petitioners, giving references of various decisions of apex court particularly in the case of Union of India v. Delhi Cloth General Mills Co. Ltd. [1977 (1) E.L.T. (J 199) (SC) = A.I.R. 1963 SC 791] and Dy. Commissioner Sales Tax (Law) v. Pio Food Packers [1980 (6) E.L.T. 343] contended that the word `manufacture' used as a verb is generally understood to mean as `bringing into existence a new substance' and does not mean merely `to produce some change in a substance' however minor its consequential change may be. It is sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct as `tooth powder'. Therefore, it is too late in the day to doubt that ash-vibhuti and tooth powder are two different and distinct commercial commodities. If, after transformation, vibhuthi is turned into tooth-powder and is sold as such, it is no more open to the petitioner to contend that there is no change either in the use of ash-vibhuthi or in the transformed product `tooth-powder'. Further in para 13 of the judgment it has been pointed out that it might be that if the tooth-powder is put into the water, the ash can be obtained. But this is wholly irrelevant in the teeth of the definition of `manufacture' occurring in Section 2(f) of the Act and thus `tooth powder' has been held subject to excise duty. 26.In the instant case also `Pan Masala' and other products of like nature are manufactured from betel nuts and other components but as a result of the process betel nuts and other components are transformed into `Pan Masala' and other products of like nature and the components lose not only its identity but also its commercial name, character and use, therefore, the ratio laid down in aforesaid case is fully applicable to the instant case. 27.Thus, in view of the discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... food or drink by a man or by men and other animals whether simply mixed or compound,. It is further stated therein that under some statutes, even the articles used for medicines are also included within the meaning of the word `food'. The passage from Corpus Juris Secundum itself shows that the word `food' has no definition of universe application and that it varies from statute to statute. 32.Under similar circumstances in Brooke Bond India Ltd. v. Union of India and Others [1980 (6) E.L.T. 65 (A.P.)] it has been held that `French Coffee' has a distinctive name, character and use different from chicory roots. The process of roasting, powdering and its mixing with coffee powder is a `manufacturing process'. There is no conceivable similarity between the use of the original roots and the ultimate use to which the coffee chicory is put. 33.Further in the aforesaid case His Lordship Hon'ble Mr. Justice Jeevan Reddy of Andhra Pradesh High Court as he then was (now Hon'ble Judge of apex Court), with reference to the aforesaid Notification dated 1-3-1975, held that what is exempt under Notification No. 55/75 is not `food' as such but `food products' and `food preparations' and Coffee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Doypack Systems Pvt. Ltd. v. Union of India - 1988 (36) E.L.T. 201 (SC) = A.I.R. 1988 SC 782). 38.In M/s. Doypack Systems Pvt. Ltd. (supra) their Lordships of Supreme Court observed as follows: "Contemporanea expositio is a well settled principle or doctrine which applies only to the construction of ambiguous language in old statutes. Reliance may be placed in this connection on Maxwell 13th Ed. P.269. It is not applicable to modern statutes. Reference may be made to G.P. Singh, Principles of Statutory Interpretation, 3rd Edn. Pages 238 and 239. As noted in Maxwell on the Interpretation of Statutes, 12th Edition at page 269 that the leading modern case on contemporanea expositio is the case of Campbell College, Belfast v. Commissioner of Valuation for Northern Ireland (1964) I WLR 912 in which House of Lords has made it clear that the doctrine is to be applied only to the construction of ambiguous language in the very old statutes. It is, therefore, well to remember what Lord Wetson said in Clyde Navigation Trustees v. Laird (1883) 8 A.C 658 that contemporanea expositio could have no application to a Modern Act". 39.Thus, for the reasons given above the doctrine contempor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69-C.E., dated 1-3-1969, the Central Government hereby exempts prepared or preserved foods falling under Item No.1B of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) other than those specified in the Schedule hereto annexed from the whole of the duty of excise leviable thereon." 45.Thus, from above, it is clear that by this Notification Central Government exempted only prepared or preserved foods falling under item No.1B of the First Schedule to the Act, other than those specified in the Schedule to the Act, other than those specified in the Schedule to the Notification. 46.In this regard it may be made clear that in the instant petitions we are concerned with `Pan Masala' and other products of like nature and these products are not covered under Item No.1B of the First Schedule to the Act rather are classifiable under Item 68 of the First Schedule to the Act and the Notification No. 55/75 is in respect of prepared or preserved foods falling under Item No.1B of the First Schedule to the Act, therefore, the exemption granted by this Notification is not applicable to `Pan Masala' and other products of like nature. Indeed, Tariff Item 68 does not contain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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