ROYAL COFFEE WORKS Vs. UNION OF INDIA

JUDGEMENT

(1.) O .P. No.723 of 1980 is a writ petition for a declaration that coffee-chicory mixture sold and ((THELAW)) 2009 KLT INFOTECH VerDIS � Page 1 of 31985 KLT 853 to be sold by the petitioner under the trade name 'French Coffee' was not liable to levy of Excise Duty under item No.68 of the I schedule to the Central Excises and Salt Act, 1944 (The Act) and for quashing Ext. P10 letter dated 12-12-1979 issued by the 2nd respondent- Assistant Collector, Central Excise, Kottayam, and Ext.P11 letter dated 27-2-1980 issued by the 3rd respondent-Superintendent, Central Excise, Kottayam II Range, Kottayam, informing the petitioner that he was liable to pay Excise Duty on the turnover of coffee-chicory blend at the rate specified in item 68 of the I Schedule to the Act. One other contention raised by the petitioner is that the said coffee is food preparation or food product exempted from Excise Duty by Notification No.55/75 dated 1-3-1975 of the Ministry of Finance under R.8 of the Central Excise Rules. O.P. No.7609 of 1983 is a writ petition under Art.226 of the Constitution read with S.35-G of the Act for directing the 1st respondent therein, the Customs Excise and Gold (Control) Appellate Tribunal, Special Branch D, New Delhi, to draw up a @page-KLT854# statement of the case and refer to this Court the question of law as to whether the petitioner was entitled to the benefit under Notification No.55/75 dated 1-3-1975 of the Finance Department, under S.35-G(l) of the Act. There are, therefore two points to be decided: (1) whether the petitioner was liable to pay Excise Duty on the turnover of coffee-chicory blend at the rate specified in item 68 of the I Schedule to the Act; and (2) whether the petitioner is entitled to the benefit under Notification No.55/75 referred to above. The second question is common in both the writ petitions.

(2.) . We would first deal with the first question referred to above, the decision on which would be sufficient to dispose of O.P. No.723 of 1980, as the common question could be dealt with in O.P. No.7609 of 1983, which is one for compelling reference. According to the petitioner, the rate for item 68 in the Schedule to the Act is not attracted to coffee-chicory blend sold or to be sold; and the rate applicable would be that for coffee in item 2 in the I Schedule to the Act. It may at once be noticed that item 2 in the Schedule consists of two parts: (1) Coffee, cured; and (2) Coffee commercially known as 'Instant Coffee'; and for these two, different rates of duty are provided. Item 68 is with respect to all other goods, not elsewhere specified, excluding those mentioned thereunder, and the tariff rate under that item is 8 percent ad valorem. Unless coffee-chicory blend popularly known as French coffee could be considered to be coffee cured or instant coffee, it would not fall within the ambit of item 2. Coffee-chicory blend undoubtedly ((THELAW)) 2009 KLT INFOTECH VerDIS � Page 2 of 31985 KLT 853 is produced by mixing coffee with chicory by a manufacturing process. French Coffee has an identity of its own. If one asks for French Coffee, the shop keeper would not give coffee cured, or instant coffee. So also if instant coffee or coffee cured is asked for, the shop keeper would not offer French Coffee. Undergoing a manufacturing process which results in the conversion of coffee into a mixture of coffee and chicory, French coffee acquires a distinct character: and, therefore it could not be equated to coffee (cured or instant) for the purpose of levy of excise duty In other words, tariff rate for item 2 in the first Schedule to the Act would not be applicable to 'French Coffee', which constitutes a separate product or preparation, for which no rate of duty has been elsewhere provided in the Act, and, as such, the rate as provided for with respect to item 68 in the Schedule would apply. We, therefore, reject the first contention raised by the petitioner in O.P. No.723 of 1980. So far as the second contention is concerned, we propose to consider it in O.P. No.7609 of 1983 which is one for compelling reference.