ORDER
Gowri Shankar, Member(Technical)
1. We are concerned in these two appeals with whether “compounding” of asafoetida amounts to manufacture.Laljee Gadhoo and Co.(LG for short)import raw asafoetida from Afghanistan.Asafoetida is an exudate fro the ferula plant, and imported by the appellant in the form of latex.It is thereafter compounded or blended with wheat flour and gum Arabic. The process is described in the show cause notice issued to the manufacturer as follows:
“The gum arabic and whet flour are blended in the signa mixers.Filtered water mixed asafoetida is then poured slowly into the mixer over the gum and wheat flour.This gets the product ready.Further the resultant product is given a heat treatment by suction in pipes through which a heater is attached and the moisture is sucked out./The power is then passed through a hammer mill where it is crushed thoroughly.This power is then passed through a sieve, which contains magnet balls absorbing any fine iron particles.The compounded asafoetida in powder form is then packed in different grammage bottles.In case of lump form, the gum and wheat flour along with filtered water mixed with asafoetida is poured into the sigma mixer.This process takes about 40 minutes.After this the mixture, which has by now made into lumps, is extracted and put into the aluminium trays and dried for a day before it is packed in cartons.”
2. The notice issued to LG in appeal 3405 proposed to recover duty on the resultant product as being a manufactured product, classifiable under heading 1301.10 of the Tariff.This heading is for lac, gum or resin.It was the contention of the appellant that the process of blending or compounding did not amount to manufacture.The Commissioner did not accept the contention.
3. The other appeal 2891/100 is by the Commissioner against the order of the Commissioner(Appeals) holding with respect to a notice subsequent to which we are concerned in appeal 3405 that the process of compounding of asafoetida does not amount to manufacture.
4. The Commissioner in his order impugned in appeal 3405, impugned in appeal 3405 has rejected the contention of the manufacturer that there cannot be manufacture when the product at the stating point of the process and that which results fall within the same tariff heading.This refusal is not questioned before us.He has thereafter refused to accept the contention that the process involved only mixing blending and dilution and therefore did not amount to manufacture.He has relied entirely upon the judgement of the Karnataka High Court in Superintendent of Central Excise, Bangalore vs.Karnataka Soopnui Powder Manufacturers Association 1999 (111) ELT 27.
5. It is common ground that the processes to which the raw asafoetida is subjected, resulting in the lump or powder which is sold does not bring about any chemical change in the asafoetida.The process, as we have seen, is nothing more than the addition to the asafoetida of wheat flour and gum arabic.It is stated that gum Arabic is added in order that the particles of the asafoetida and wheat flour adhere to each other.neither the gum arabic nor the wheat flour reacts chemically with the asafoetida.The contention is that while the raw asafoetida itself is used in cases where its very strongly pungent flavour is required, for example, in the making go pickles and papad, it is compounded in order to render it more suitable for use in day today cooking where a lighter flavour is desired.The essential character of the product therefore does not change.It is used in both its concentrated and blended form only as an addition to food preparation, flavouring agent or for the medicinal properties that it is reputed to possess.
6. On the same facts, the Commissioner(Appeals) has come to a conclusion that the process does not amount to manufacture. He has cited from the circular no.427/60/98 CX dated 30.01.99 of the Board in which he has explained that the wheat flour and gum act as a filler and do not change the actual character of the asafoetida.He has relied upon the judgment of the Andhra pradesh High Court in Tata Exports vs. UOI 1985(22) ELT 732 and of the Madras High Court in Coromandel Prodorite Pvt.Ltd. vs. GOI 1985(20) ELT 257, to the effect that the dilution of a product by addition of a filler does not amount to manufacture where a different commodity and different characteristic does not come into existence.He has noted that the conversion of physical form, lumps into powder and crushing of ore does not by itself result in manufacture citing decisions of the Tribunal in support.He has concluded that the process does not pass the two fold test compounded by the Supreme Court in its judgment in UOI vs. JG Glass Industry Ltd. 1998(97)ELT 5 for deciding that manufacture takes place.
7. In holding in the order impugned in appeal 3405, that the process amounts to manufacture the Commissioner, as we have noted, has relied entirely upon the judgement of the Karnataka High Court. The question before the High Court was whether the process undertaken by the respondent in the writ appeal before it of obtaining shikaki powder from shikakai pods was a process of manufacture and whether the powder was a commodity separate and distinct from the pods.In that judgment, the Court has come tot he conclusion that the powder is distinct from the shikakai pods.The Court itself however emphasised whether a particular process is manufacture of not has to be decided according to the facts of each case.On the facts before us, it is not possible to agree that the process of conversion of shikakair pods into powder stands on the same footing with the process with which we are concerned.Mr. Rohan Shah cites before us the judgment of the Supreme Court in Krishna Chander Dutta (Spices) Pvt.Ltd. vs. Commercial Tax officer 1994(70) ELT 501.In coming to the conclusion that the crushing of black and white pepper does not amount to manufacture,the Court noted that whole pepper and pepper powder were considered to be the same goods in commercial parlance.It appears to us to us that the ratio of that judgment would be more appropriately applicable to the facts before us.
8. The ground in the department’s appeal against the Commissioner(Appeals)’s order is nothing more than a reference of the ground advanced by the Commissioner in his order (in appeal 3405) holding the process to be manufacture.
9. It has therefore to be concluded that the process employed by LG does not amount to manufacture.In view of this conclusion, we have not considered it necessary to examine further the question of classification of the product.
10.Appeal E/3405/00 allowed, E/2891/00 dismissed. Consequential relief according to law.