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Supreme Court held that process did not change nature of end product
Supreme Court held that process did not change nature of end product
Crane Betel Nut Powder Works marketed betel nuts after processing them by adding essential oils etc, and initially cleared goods under Chapter Sub-heading 2107. It applied for reclassification, claiming its process did not amount to manufacturing. ACCE rejected claim. CCCE(A) allowed assessee’s appeal. CESTAT & High Court reversed the findings. Supreme Court held that process did not change thenature of end product and allowed assessee’s appeal.-900187
1. M/s Crane Betel Nut Powder Works was into marketing betel nuts in different sizes after processing them by adding essential/non-essential oils etc.
2. Initially, the appellant cleared the goods under Chapter Sub-heading 2107 of the Central Excise Tariff and was paying duty accordingly.
3. It filed a revised classification declaration under Rule 173B claiming classification of its product under Chapter Sub-heading 0801.00 of the Central Excise Tariff, claiming that its process did not amount to manufacturing.
4. ACCE rejected the claim of the appellant and held that appellant's product had been rightly classified under Chapter Heading 2107.00 and the appellant was liable to pay duty at the appropriate rate.
5. CCCE(A) allowed assessee’s appeal, and held that the process of cutting betel nuts into small pieces and the addition of essential/non-essential oils did not result in a new and distinct product.
6. CESTAT reversed the Commissioner’s order holding that the end product of the process involved in the preparation of the appellant's product was different from the original material.
7. The High Court dismissed the appellant’s appeal.
On appeal, the Supreme Court held as under:
8. In our view, the process of manufacture employed by the appellant-company did not change the nature of the end product, which in the words of the Tribunal, was that in the end product the 'betel nut remains a betel nut'.
9. 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.
10. In the circumstances, we allow the appeal and set aside the orders passed by the High Court.
Case Reference - M/S. Crane Betel Nut Powder Works vs Commissioner Of Customs & Central Excise.
Supreme Court of India
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