BROOKE BOND INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal is directed against the order of our learned brother Jeevan Reddy. J. dated 12-10-1979 passed in W.P. No. 1615/1978, dismissing the petition for the issuance of a writ of mandamus, restraining the Central Excise authorities and the Central Government from levying and collecting excise duty on "Coffee-Chicory Mixture".

(2.) The appellant herein M/s. Brooke Bond India Ltd., was the petitioner in the Writ Petition. The petitioner-company has 33 Area sales offices and seven Factories in different parts of India, including the factory at Ghatkesar, Ranga Reddy District and is represented by its Factory Manager. The petitioners carry on the business of selling among other items "Coffee-Chicory Mixture". The activities of the petitioners consist of purchasing coffee seeds, roasting and grinding them and preparing coffee powder out of those seeds by mechanical process involving consumption of power. The petitioners also purchase chicory-roots and then they are subjected to roasting and grinding by mechanical process involving consumption of power. The powders thus obtained from coffee and chicory are then blended by mechanical process involving consumption of power and the product thus obtained is bottled and marketed as "Coffee-Chicory Blend", what is known as "French Coffee" in the business market. The proportion in which the coffee and chicory powders are mixed is equal. The sample bottles in which the French Coffee is sold have been shown to us and they describe with the mixture consisting of 50% coffee and 50% chicory. The petitioners paid duty on coffee-chicory blend under Item No. 68 of the First Schedule of the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act") without any demur since 1-3-1975. But for the first time in their letter dated 10-1-1978, they raised an objection to the said levy and claimed exemption from duty under notification No. 55/75-C.E., dated 1-3-1975 issued by the Central Government claiming that the mixture of "Coffee and Chicory" is an item of food. The Department rejected the claim of the petitioners. Thereupon the petitioners challenged the levy of duty in the Writ Petition, which has been dismissed as stated above by the impugned order.

(3.) In this appeal Shri K. Srinivasa Murthy, the learned counsel for the appellant-company contended firstly that the process of mixing chicory power with coffee powder undertaken by the appellant-company in their factory at Ghatkesar, does not amount to manufacturing process as no new product emerges by this mixture and it continues to be the same and it has to be treated as coffee only within the definition of the term under Item No. 2 of the First Schedule of the Act and hence Item No. 68 of the First Schedule of the Act is not applicable to the mixture of coffee and chicory, so as to attract liability to duty under that item. Accordingly, he argued that the demand for Excise duty on the ground that the mixture of chicory and coffee powders results in a new commercial commodity treating it as an item falling under Item No. 68 of the First Schedule is illegal. Secondly he contended that even if the mixture of Coffee and Chicory is treated as a new and different commodity covered by Item No. 68 of the First Schedule of the Act, the mixture being a food is exempted from duty under Notification No. 55/75-C.E., dated 1-3-1975 issued under Item No. 68 by the Central Government. Whereas Shri Upenderlal Waghray, Additional Central Government Standing Counsel on behalf of the respondents herein contended that the process employed by the petitioners in preparing the "Coffee-Chicory Blend" with the aid of power is manufacturing process, resulting in the production of a new and different commercial commodity and that, therefore, Item No. 68 of the First Schedule is attracted. He further contended that "Coffee-Chicory Blend" is not "food products or food preparations" within the meaning of Notification No. 55/75-C.E, dated 1-3-75 and, therefore, not entitled to exemption.