KESARWANI ZARDA BHANDAR versus STATE OF U.P. AND OTHERS

Citation: [2008] 8 S.C.R. 801 · Decided: 14-05-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2008] 8 S.C.R. 801 
KESARWANI ZARDA BHANDAR 
A 
V. 
STATE OF U.P. AND OTHERS 
(Civil Appeal Nos. 5760 & 5761 of 20"05) 
May 14,2008 
B 
[S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.] 
• 
~ 
Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 
- s.2(a) and (d) -
Market fee -
Levibility of- On Zafrani 
Zarda -
Held: Zafrani Zarda being a manufactured tobacco c 
and not processed tobacco, market fee is not /eviable on it. 
The question for consideration is whether Zafrani 
Zarda is subject to market fee under Uttar Pradesh Krishi 
Utpadan Mandi Adhiniyam, 1964. 
Allowing the appeals, the Court 
D 
HELD: 1. Market fee is leviable on specified agricul-
tural produce, not on agricultural produce simplicitor. 
Zarda is not a specified agricultural produce. It can be 
subjected to payment of market fee provided it is held to E 
be 'tobacco'. Zafrani Zarda, as an agricultural produce 
for the purpose of market fee must answer the descrip-
tion of 'specified agricultural produce' as defined in Sec-
tion 2(a) of Uttar Pradesh Krishi Utpadan Mandi 
l. 
Adhiniyam, 1964. If it is held that Zafrani Zarda is merely a F 
processed form of tobacoo, it would be subjected to levy 
of market fee, but if it is manufactured, it would not. In this 
case, Zafrani Zarda, must be held to be a manufactured 
product.[Paras 15 & 16] [811-G,H, 812-A,B] 
. 
State of Madras v: Swastik Tobacco Factory 1966 (3) ~CR IG 
): 
79; Agricultural Produce Market Committee v. Prabhat Zarda 
• 
Factory, 1994 Supp (2) SCC 514; Dharampal Satyapal 
V. 
CCE, 2005 (4) SCC 337 - relied on. 
.. . 
801 
H 
802 
SUPREME COURT REPORTS 
[2008] 8 S.C.R. 
A 
KUMS v. Ganga Dal Mills 1984 (4) SCC 616; Belsund 
'r 
B 
Sugar Co. Ltd. v. State of Bihar and Ors. 1999 (9) SCC 620; 
Krishi Utpadan Mandi Samiti and Ors. v. Pilibhi( Pantnagar 
Beej Ltd. and Anr. 2004 (1) SCC 39; Park Leather{P) ltd. v. 
State of U.P and Ors. 2001 (3) SCC 135 - referred to.: 
2. The distinction between 'manufactured' and. 'pro-
cessed' may not in all situation depend upon the nature 
of the statute involved. Jt must pass the rf.quisite test, 
namely, as to whether it is a completely new'item. Raw 
material of a manufactured product has to be distin-
C guished from the manufactured product. The distinction 
between 'processing' and 'manufacturirig' is well known. 
When a new thing comes into being, the steps which are 
taken for manufacture may be relevant but may not be 
decisive. [Para 17) [812-8,C,D] 
D 
Commissioner of Central Excise, Tamil Nadu v. 
Vinayaga Body Building Industries Ltd. :ZOOS (3) SCC 666 -
referred to. 
3. Zafrani Zarda being a 'manufactured tobacco' 
E would not answer the description of processed tobacco. 
ltis used by· a class of consumers. It is used fora specific 
purpose. Tobacco as a processed form is used for many 
purposes, by many persons and in many ways. Tobacco 
in raw form or in any other processed formJs not com-
F mercially known as Zarda. The common parlance test may 
have to be applied for the purpose of findipg out as to 
whether the product in question is manufactured goods 
or not. [Para 18) [812-E,F] 
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 5760 
G ~2005 
. 
·~ 
From the final Judgment and final Order dated 21.7.2003 
"\ 
ot' the High Court of Judicature at Allahabad in C.M.W.P. No. 
7756/1995 
H 
Rakesh DWivedi, Anoop G. Chaudhary, \U,Jay Hansaria, 
... 
KESARWANI ZARDA BHANDAR v. STATE OF 
803 
U.P. AND OTHERS [S.B. SINHA, J.] 
S.B. Sanyal, R.G. Padia, Mathai M. Paikeday, Shobha Dikshit, A 
K.K. Mohan, Amit Kr. Singh, Shantanu Krishna, Mukti 
Choudhary, Anant Prakash, Sneha Kalita, Sanjai K. Pathak, 
Vivek Narayan, Ajit Kumar Pande, Sunil Roy, Madhurima Tatia, 
Anil Katiyar, V.K. Verma, Shishir Pinaki, Amit Singh, P.I. Jose, 
Pradeep Misra, Daleep Dhayani, Gopal Singh, Anukul Raj, B 
. Manish Kr. and Chandan Kr. for the Appearing Parties. 
The Judgment of the Court was delivered by 
S.B. SINHA, J. 1. Levy of market fee on Zafrani Zarda in 
terms of the provisions of the U.P. Krishi Utpadan Mandi c 
Adhiniyam, 1964 (for short, 'the Act') is in question in these 
appeals which arise out of a common judgment and order dated 
21st July, 2003. 
2. The Act was enacted to provide for the regulation of 
sale and purchase of agricultural produce and for the establish-
D 
ment, superintendence and control of markets therefor in Uttar 
Pradesh. 
3. Before embarking on the question, we may notice some 
ofthe relevant provisions of the Act. 
Section 2(a), 2(d), 6, 8,
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