Judgment

RANGANATHAN, J.:- All these appeals involve a common question as to whether the goods exported by the appellants are liable to export duty. There are 67 appeals which relate to various batches of exports made by the appellants during the period from 4-3-76 to 14-2-1982. They will be disposed of by this common order.

2. The goods exported by the appellants are blanched, roasted and salted peanuts packed in vacuum containers. The appellants purchase groundnuts without shell in raw form from various parts of Saurashtra in the State of Gujarat. Thereafter, they are sorted out into different sized - small, medium and big. The medium and small sized are separated. Dust and husk are cleaned out and other foreign material removed. The commodity then goes to a dry roaster where it is roasted at a temperature of 1500C. This results in reduction of the moisture and destruction of enzymes to a considerable extent. It is also stated that by this process any fungus or aflatoxin is removed. After dry roasting, the product is cooled down with the aid of a blower so that the skin of the groundnuts become loose and the groundnut contracts. Thereafter, it goes through automatic blanching machines. This separates the skin of the groundnut and on removal of the skin it becomes white. Thereafter, the seeds are put on running tables and picked, according to uniform sizes, with the aid of an electric eye sorter. The commodity thereafter goes to a frying section for being subjected to deep oil bath frying in an automatic fryer. They are then subjected to anti-oxident chemicals and thereafter sent through the blower for being cooled down. The extra oil is sucked out. They are then subjected to a glazing process and are given permeated chemicals and salt treatment and are packed in packets and tins.

3. The goods thus exported by the appellants are charged to duty under item 13 of the Second Schedule to the Indian Tariff Act 1934 and, later, under item 20 of the second Schedule to the Customs Tariff Act, 1975. The entry is the same under both enactments but the rate of duty is different. The entry reads :

Item No. Name of the article Groundnut:- Rate of duty

13/20 (i) Groundnut Kernel Rs. 810/1500 per tonne

(ii) Groundnut in shell Rs. 600/1125 per tonne

4. The appellant contended that the product exported by it was "processed peanuts" and that it did not fall under the tariff entries above extracted. The first line of argument of the assessee was that the item groundnut kernel refers to groundnut seeds, the basic characteristic of which is the quality of germination. It was submitted that, since the product exported by the assessee, though basically groundnuts, had been so processed and treated that it lost its quality of germination, it could no longer be described as groundnut kernel. The second line of argument put forward on behalf of the appellant was that the entry in the export tariff referred only to groundnut kernel used for oil extraction. It was pointed out that groundnut in shell as well as groundnut kernel can be said to be of two varieties -one an edible variety and the other a variety used for oil extraction purposes. While it is true that it is not a mutually exclusive classification in that perhaps all groundnut is capable of being eaten or of being processed to yield oil, the submission was that these two varieties of groundnut kernels or grondnut in shell were two different trade commodities. They had different characteristics; they were meant for different markets; their end-use different; and their prices as well as mode of pricing were totally different. Referring to entries in this regard in the BTN (British Trade Nomenclature), the Indian Import Tariff as well as the Indian Import Export Policy, it was contended on behalf of the appellant that the entry should be confined only to groundnut kernel of the oil yielding variety and not the variety exported by the appellant, which could be more appropriately described as "processe