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High Court Of Calcutta
Dipak Kumar Sen
BROOKE BOND INDIA LTD. - Appellant
Versus
UNION OF INDIA (UOI) - Respondent
Civil Order 15368 (W) Of 1982
Decided On : 07/14/1983
EXCISE DUTY - TEA - PACKAGE TEA - MANUFACTURE - DEFINITION - CENTRAL EXCISES AND SALT ACT, 1944, S. 2(F) - CENTRAL EXCISE TARIFF, ITEM 3 - CONSTITUTION OF INDIA, ARTS. 14, 246, LIST I, ENTRY 84.
Fact of the Case:
The petitioner, a company engaged in the business of tea, challenged the levy of excise duty on tea blended and packed by it in small packets under Clause (2) of Item 3 of the Central Excise Tariff, contending that such blending and packing did not amount to manufacture of a new product and was therefore unconstitutional and violative of Articles 14, 246, and 300A of the Constitution. The Revenue contended that the Parliament was competent to levy duty on package tea as a distinct excisable item and that the petitioner was not entitled to challenge the validity of the tariff item.
Finding of the Court:
The Court held that the levy of excise duty on package tea was valid and lawful. It held that package tea was a separate and specific excisable item and that the Authorities were entitled to treat it as such. The Court further held that the petitioner was not entitled to any order in its favor and dismissed the petition.
Issues: 1. Whether the blending and packing of tea in small packets amounted to manufacture of a new product? 2. Whether the levy of excise duty on package tea was unconstitutional and violative of Articles 14, 246, and 300A of the Constitution?
Ratio Decidendi: 1. The Court held that the blending and packing of tea in small packets did not amount to manufacture of a new product. It relied on the definition of "manufacture" in Section 2(f) of the Central Excises and Salt Act, 1944, which includes any process incidental or ancillary to the completion of a manufactured product. The Court held that the blending and packing of tea was a process incidental to the completion of the manufactured product, namely, tea. 2. The Court held that the levy of excise duty on package tea was not unconstitutional and violative of Articles 14, 246, and 300A of the Constitution. It held that the Parliament was competent to levy duty on package tea as a distinct excisable item and that the petitioner was not entitled to challenge the validity of the tariff item.
Final Decision: The Court dismissed the petition.
( 1 ) BROOKE Bond India Ltd. , the petitioner No. 1, is an existing company within the meaning of the Companies Act, 1956. Satya Paul Saigal, the petitioner No. 2, is a shareholder of the petitioner No. 1. The petitioner No. 1 carries on business in tea. Purchased in India, such tea is sold by the petitioner No. 1 in India and is also exported abroad.
( 2 ) PRODUCTION of tea in India involves the following : tea leaves plucked from plants in the tea gardens are subjected to successive processes known as withering, rolling fermentation, firing and sorting at the factories or processing centres.
( 3 ) MANUFACTURED as aforesaid, tea is packed in chests in bulk by the manufacturers and are cleared upon payment of Central Excise Duty for being sold in different auction centres.
( 4 ) THE petitioner's case is that the manufacture of tea is completed in the factory and processing centres as aforesaid whereby a manufactured product known as tea, fit for human consumption, is brought into existence.
( 5 ) THE petitioner No. 1 does not own any tea garden and purchases tea of different varieties from the auction centres all over India upon payment of appropriate Central Excise Duty leviable under Tariff Item No. 3 (1) of the Central Excises and Salt Act, 1944, (hereinafter referred to as the said Act) as a manufactured product.
( 6 ) THE tea purchased as aforesaid are brought to the blending or packing centres of the petitioner No. 1 at Calcutta in West Bengal, Tundla in Uttar Pradesh, Jamnagar in Gujarat, Kannan in Maharastra, Ghaskesar in Andhra Pradesh and Coimbatore in Tamil Nadu, where they are packed in small packets after blending or mixture of different grades and are labelled with the brand names used by the petitioner No. 1.
( 7 ) ITEM 3 of the current Central Excise Tariff reads as follows :-"tea" includes all varieties of the product known commercially as tea and also includes green tea and "instant tea". (1) Tea, all varieties except package tea and "instant tea" falling within sub-items (2) and (3), respectively, of this Item. (2) Package tea, that is to say, tea packed in any kind of container containing not more than 27 kilograms net of tea but excluding "instant tea". (3) Instant Tea. Not exceeding two rupees per kilogram as the Central Government may, by notification in the Official Gazette, fix. One rupee and twentyfive paise per kilogram plus the duty for the time being leviable under sub-item (1) of this Item, if not already paid. Ten per cent ad valorem plus the duty for the time being leviable on tea falling under sub-item (1) of this Item, if not already paid and if such tea is used in the manufacture of such "instant tea".
( 8 ) AFTER levy of excise duty on manufactured tea under Clause (1) of Item 3, the petitioner No. 1 is being called upon to pay and is paying further excise duty on tea blended and packed by its small packets under Clause (2) of the said Item which was introduced in the statute in 1953.
( 9 ) THE petitioners are aggrieved by the aforesaid and seek to impugn the same in the present application. The petitioners contend, inter alia, that Clause (2) of Item 3 provides for a separate rate of duty on tea (excluding instant tea) packed in any kind of container containing not more than 27 Kg. net weight. It is contended further that the said clauses do not lay down any distinction is quality or value or any other factor which distinguishes tea packed in small packets from tea packed in bulk i. e. 27 Kg. and more. The process of blending or packing of tea carried out by the petitioner No. 1 does not bring into existence any new product having a distinctive name, character and use different from the product which is so processed. There is no transformation and the article, i. e. the manufactured product known as tea, remains the same before and after blending and continues to be known in the market and used by the consumers as tea.
( 10 ) IT is contended that the process of
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