M/S CRANE BETEL NUT POWDER WORKS versus COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, TIRUPATHI AND ANR.

Citation: [2007] 4 S.C.R. 109 · Decided: 19-03-2007 · Supreme Court of India · Bench: AR. LAKSHMANAN · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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,I 
.... 
MIS CRANE BETEL NUT POWDER WORKS 
A 
v. 
COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, TIRUPATHI 
ANDANR. 
MARCH 19, 2007 
B 
[DR. AR. LAKSHMANAN AND AL TAMAS KABIR, JJ.] 
Central Excise Act, 1944-s. 2(f)-Process of cutting betel nuts into 
small pieces and adding essential/non- essential oils, menthol, sweetening c 
agent etc.-Held does not result in manufacture of a new and distinct product 
having a different character and use-End product continues to retain its 
original character though in a modified form-Central Excise Tariff Act, 
1985-Chapter 8, Sub heading 0801.00. 
Appellant-company is engaged in the business of marketing betel nuts B 
in different sizes after processing them by adding essential/non-essential oils, 
menthol and sweetening agent . 
The question which arouse for consideration in the present appeal is 
whether buy crushing betel nuts and processing them with spices and oils, a E 
new product could be said to have come into being which attracted duty 
separately under the Schedule to the Central Excise Tariff Act, 1985. 
"'t·. 
Allowing the appeal, the Court 
HELD: 1.1. The process of manufacture employed by the appellant F 
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' 
The said observation of the Tribunal depicts the status of the product prior to 
manufacture and thereafter. The observation that manufacture implies a 
change, but every change is not manufacture and yet every change of an article 
is the result of treatment, labour and manipulations opposite to the situation (j} 
at hand. The process involved in the manufacture of sweetened betel nut pieces 
does not result in the manufacture of a new product as the end product 
continues to retain its original character though in a modified form. 
(Para 31 I 
109 
H 
A 
B 
110 
SUPREME COURT REPORTS 
{2007] 4 S.C.R. 
1.2. The Commissioner of Customs-and Central Exdse (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 s~all 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. 
(Para 32) fl 18-FJ 
OK. Play (India) Ltd. v. Commissioner a/Central Excise-I/, New Delhi, 
(20051 2 sec 555, disting,.ished. 
Union of India v. Delhi Cloth & General Mills, (1963) Supp . .I SCR 586, 
C followed. 
Deputy Commissioner of Sales Tax (law), Board of Revenue (Taxes), 
Ernakulam v. Mis PIO Food Packers, (1980) Supp. SCC 174; Shyam Oil Cake 
Ltd v. Collector of Central Excise, Jaij:Jur, (2005) I SCC 264; Aman Marble 
Industries (P) Ltd v. Collector a/Central Excise, Jaipur, (200S)lSCC279; 
D Kores India Ltd Chennai v. Commissioner of Central Excise, Chennai, (2005) 
I SCC 385 and Brakes India Ltd v. Superintendent of Central Excise And 
Ors., (1997) 10 SCC 717, referred to. 
Anheuser-busch Brewing Associatio_n v. United States, 52 L.ED.336-
E 338, referred to. 
F 
G 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1453 of2007. 
From the Final Judgment and Order dated 15.09.2005 of the High Court 
of Judicature, Andhra Pradesh at Hyderabad in C.EA. No. 20 of2005. 
·WITH 
Civil Appeal No. 6659 of2005. 
Soli Sorabjee, S. Chandra Shekhar, Ardhendumauli Prasad and Madhu 
Sharan for the Appellant. 
B. Dutta, A.S.G., R.G. Padia, T.A. Khan and B. Krishna Prasad for the 
Respondents. 
The Judgment of the Court was delivered by 
H 
AL TAMAS KABIR, J. I. Leave granted. 
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CRANE BETEL NUT POWDER WORKS"· COMMNR. OF CUSTOMS & CENTRAL EXCISE. TRIPUATHI IALTAMAS KABIR. J.1111 
2. The appellant-company is engaged in the business of marketing betel A 
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 1738 of the Central Excise Rules, 1944, with effect from B 
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 s

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