M/S. Crane Betel Nut Powder Works vs Commissioner Of Customs & Central ...

The appellant-company is engaged in the business of marketing betel nuts in different sizes after processing them by adding essential/non-essential oils, menthol, sweetening agent etc. Initially, the appellant cleared the goods under Chapter Sub-heading 2107 of the Central Excise Tariff and was paying duty accordingly. However, the appellant filed a revised classification declaration under Rule 173B of the Central Excise Rules, 1944, with effect from 17th July, 1997, claiming classification of its product under Chapter Sub- heading 0801.00 of the Central Excise Tariff. It was contended that the crushing of betel nuts into smaller pieces with the help of machines and passing them through different sizes of sieves to obtain goods of different sizes/grades and sweetening the cut pieces did not amount to manufacture in view of the fact that mere crushing of betel nuts into smaller pieces did not bring into existence a different commodity which had a distinct character of its own.

The appellant-company went up in appeal against the said order of the Adjudicating Authority to the Commissioner of Customs and Central Excise, (Appeals) and the same was decided in favour of the appellant-company. After considering the submissions made on behalf of the respective parties, the Commissioner came to the conclusion that the process of cutting betel nuts into small pieces and the addition of essential/non-essential oils, menthol, sweetening agent etc. does not result in a new and distinct product having a different character being formed. Accordingly, there was no "manufacture" involved therein and even according to Note 7 of Chapter 21 of the Tariff, there was no "manufacture" involved in the production of the impugned goods. The Commissioner further held that the item "betel nut powder/supari" finding a place/mentioned in the tariff is of no consequence unless the product was the result of manufacture or production, which is not so in the instant case.

The Tribunal took a different view and reversed the order of the Commissioner upon holding that the end product of the process involved in the preparation of the appellant's product was different from the original material. According to the Tribunal, a new and distinct product known as "supari powder" had emerged. The Tribunal went on to observe as follows :-

And the word "manufacture" shall be construed 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;"

In our view, the Commissioner of Customs and Central Excise (Appeals) has correctly analysed the factual as well as the legal situation in arriving at the conclusion that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent etc. did not result in a new and distinct product having a different character and use.

The decision in this appeal will govern Civil Appeal No.6659/2005 as the facts of which are similar to those of the present appeal.

There will be no order as to costs.