PerGowri Shankar :

We are concerned in these two appeals with whether "compounding" of asafoetida amounts to manufacture. Laljee Godhoo and Co. (LG for short) imports raw asafoetida from Afghanistan. Asafoetida is an exudate from 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 wheat flour are blended in the sigma 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 powder is then passed through a hammer mill where it is crushed thoroughly. This powder 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 2891/00 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 starting 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 judgment of the Karnataka High Court in Superintendent of Central Excise, Bangalore Vs. Karnataka Soapnui 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 of 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 30.10.99[reported in 1998 (29) RLT M45] of the Board in which he has explained that the wh