M/S. SATNAM OVERSEAS LTD. versus . COMMNR. OF CENTRAL EXCISE, NEW DELHI.

Citation: [2015] 4 S.C.R. 437 · Decided: 18-03-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2015] 4 S.C.R. 437 
MIS. SATNAM OVERSEAS LTD. 
v . 
. COMMNR. OF CENTRAL EXCISE, NEW DELHI. 
(Civil Appeal No. 8958 of 2003) 
MARCH 18, 2015 
[A.K. SIKRI AND R. F. NARIMAN, JJ.] 
A 
B 
Central Excise Act, 1944 - s. 2(f) - Manufacture -
C 
Assessee engaged in packing of mixture of raw rice, 
dehydrated vegetables and spices in the name of rice and 
spice - Said mixture in pre-determined proportion is 
blended together and is heated, if required to sterilize the 0 
product and the mixed product packed in pouches with 
nitrogen flushing for a longer life - Said process, if 
amounts to 'manufacture' - Held: Mere addition in the 
value, after the original product has undergone certain 
process, would not bring it within the definition of E 
'manufacture' unless its original identity also under goes 
transformation and it becomes a distinctive and new 
product - Thus, mere addition of dehydrated vegetables 
and certain spices to the raw rice, would not make it a 
different product - Activity undertaken by assessee does F 
not amount to manufacture and rate of duty would be nil -
It continues to be a product of milling industry and 
classifiable under sub-heading 11.01 - Central Excise Tariff 
Act, 1985. 
Allowing the appeal, the Court 
HELD: 1.1 The process would be treated as 
"manufacture" only if new product known to the 
G 
437 
H 
438 
SUPREME COURT REPORTS 
[2015] 4 S.C.R. 
A market comes into existence with original product 
losing its original character. Mere addition in the value, 
after the original product has undergone certain 
process, would not bring it within the definition of 
'manufacture' unless its original identity also under 
B goes transformation and it becomes a distinctive and 
new product. Applying the said principle to the facts of 
the instant case, it is clear that mere addition of 
dehydrated vegetables and certain spices to the raw 
rice, would not make it a different product. Its primary 
C and essential character still remains the same as it is 
continued to be known in the market as rice and is 
sold as rice only. Further, this rice, again, remains in 
raw form and in order to make it edible, it has to be 
0 
cooked like any other cereal. The process of cooking 
is even mentioned on the pouch which contains 
cooking instructions. Reading thereof amply 
demonstrates that it is to be cooked in the same form 
as any other rice is to be cooked. Therefore, the order 
E passed by the CEGAT that there is a transformation 
into a new commodity, commercially known as distinct 
and separate commodity, cannot be accepted. [Paras 9, 
18, 19, 20] (444-8,C; 453-H, 454-A-D] 
F 
1.2 Since the activity undertaken by the assessee 
does not amount to manufacture, Rate of duty on this 
product, is 'nil'. Even otherwise the classification of the 
product by the Revenue under sub- heading 21.08 may 
not be correct. Since it does not amount to 
G 'manufacture' as the essential characteristics of the 
product, still remains the same, namely, rice, a natural 
corollary would be that it continues to be the product 
of the milling industry and would be classifiable under 
sub-heading 11.01. Thus, the order of the CEGAT as 
H well as demand of excise duty by the Revenue is set 
SATNAM OVERSEAS LTD. v .. COMMNR. OF CENTRAL 439 
EXCISE, N. DELHI. 
aside. [Para 21, 22] [454-E-H; 455-A-B] 
Crane Betel Nut Powder Works vs. Commissioner of 
Customs, Central Excise, Tirupathi (2007 (210) ELT, 171 
(S.C.) ; Commissioner of Centr_al Excise vs. Laljee Godhoo 
A 
& Co. (2007 (216) ELT 514 (S.C); Laljee Godhoo & Co. vs. 
B 
Commissioner of Central Excise, Mumbai (2001 (132) ELT 
287 (S.C.); Deputy Commissioner Sales Tax (Law), Board 
of Revenue (Taxes), Emakulam Vs. PIO Food Packers 
(1980 (6) ELT 343 (S.C.) - referred to. 
Case Law Reference• 
2007 (210) ELT, 171 (S.C.)· 
referred to. Para 11 
2007 (216) ELT 514 (S.C) 
referred to. Para 14 
(2001 (132) ELT 287 (S.C.) 
referred to. Para 14 
(1980 (6) ELT 343 (S.C.). 
referred to. Para 16 
c 
D 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8958 of 
2003. 
E 
From the Judgment and Order dated 10.10.2002 of the 
Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi 
in Appeal No. E/2510/01-0. 
L. Charanaya, V. Lakshmikumaran, M. P. Devanath, Vivek 
Sharma, Aditya BhatacharyaPrashanth S. Shivadass, R. 
Ramachandran, Rajesh Kumar for the Appellant. 
F 
A. K. Sanghi, Nisha Bagchi, Shweta Garg, B. Krishna Prasad G 
for the Respondent. 
The Judgment of the Court was deliver
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