Disposed

M/S. Anguvilas M.V. Muthiah v. the Assistant Director

Madras HC19 Apr 2021WP/26966/2008

Case brief

AI extract

What is this about?

This disposal holds that questions regarding whether repacking and mixing raw tobacco constitutes manufacturing are matters for Tribunal adjudication. The Court directed the petitioner to approach the Customs, Excise and Service Tax Appellate Tribunal for determination of manufacturing status and refund claims via proper procedures under the Central Excise Act.

What did the court decide?

Petitioner directed to file appropriate application under Section 11B of Central Excise Act, 1944; writ petitions disposed; no costs.

M/S. Anguvilas M.V. Muthiah Vs the Assistant Director — Cheque Dishonour | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 19.04.2021

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CORAM

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THE HONOURABLE MR.JUSTICE S.M. SUBRAMANIAM

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W.P.Nos.26966 to 26968 of 2008 and M.P.Nos.1 to 3 of 2008 and W.M.P.Nos.2008 of 2016 & 30728 of 2019

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M/s.Anguvilas M.V.Muthiah Pillai (Firm), Partnership Firm, Rep., by its Partner,

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Cellamuthiah,

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No.21 (Old No.69), Chinniah Puram,

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Dindigul-624 001.

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... Petitioner in all W.Ps. -vs-

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1.The Assistant Director, Directorate General of Central Excise Intelligence, Chennai Zonal Unit, C-3, 'C' Wing, II Floor,

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Rajaji Bhavan, Besant Nagar, Chennai-600 090.

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2.The Chief Commissioner of Central Excise, Central Revenue Building, 1/37, Race Course Road,

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ATD Street, Coimbatore-641 018.

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3.The Commissioner of Central Excise, Central Revenues Building, Madurai-625 002.

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4.The Assistant Commissioner of Central Excise, Dindigul I Division, 30, Mengles Road, Dindigul-624 001.

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5.The Superintendent of Central Excise, Dindigul II Range, 2/75, N.G.G.O. Colony, Dindigul-624 005.

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6.The Customs, Excise and Service Tax Appellate Tribunal, Shastri Bhavan Annexe Building, 1^st Floor, No.26, Haddows Road, Chennai-600 006. ... Respondents in all W.Ps.

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[R6 – Impleaded vide order dated 19.04.2021 in W.M.P.Nos.2007, 2009 & 2010 of 2016 in W.P.Nos.26966 to 26968 of 2008]

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https://hcservices.ecourts.gov.in/hcservices/

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W.P.No.26966 of 2008 :- Petition filed under Article 226 of the Constitution of India praying for issuance of Writ of Declaration declaring to that effect that the product “chewing tobacco” that of the petitioner does not fall within the ambit of manufacture as defined under Section 2(f) of the Central Excise Act, 1944 Section Notes, Chapter Notes and Tariff Heads and hence not an excisable product.

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W.P.No.26967 of 2008 :- Petition filed under Article 226 of the Constitution of India praying for issuance of Writ of Mandamus, directing the respondents more particularly the 2^nd , 3^rd and 4^th respondents to refund Rs.2,00,000/- which has been credited on 25.10.2008 as directed by the 1^st respondent.

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W.P.No.26968 of 2008 :- Petition filed under Article 226 of the Constitution of India praying for issuance of Writ of Mandamus directing the respondents more particularly the 2^nd , 3^rd and 4^th respondents to de-register of the Registration Certification No.AAEFA 6138 XM 001 as applied on 31.10.2008.

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The petitioner, in all these writ petitions, is M/s.Anguvilas M.V.Muthiah Pillai (Firm), a Partnership Firm, represented by its Partner, Cellamuthiah.

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2.The relief sought for in W.P.No.26966 of 2008 is to declare the product “chewing tobacco” that of the petitioner does not fall within the ambit of manufacture as defined under Section 2(f) of the Central Excise Act, 1944 Section Notes, Chapter Notes and Tariff Heads and hence not an excisable product.

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3.The learned counsel appearing on behalf of the petitionerfirm mainly contended that the petitioner-firm is a manufacturer of tobacco product and there is no conversion as such in respect of selling of tobacco, as far as the petitioner-firm is

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https://hcservices.ecourts.gov.in/hcservices/

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concerned. The petitioner-firm purchases the raw tobacco from the farmers and re-packs the same and sells it to the customers and there is no conversion of tobacco as any other product and the manufacturing process is absent. Thus, the tobacco, being sold in the market, is not excisable and therefore, the actions taken by the respondents are untenable.

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4.The learned Senior Panel Counsel appearing on behalf of the first respondent disputed the said contention by stating that Courts cannot form an opinion regarding the process of manufacturing done by the petitioner-firm and whether the tobacco product, being sold in the market by the petitionerfirm, is a manufactured product or not and the same is to be decided by an adjudication with reference to the documents, evidences and by examination. Thus, the very claim set out in the writ petition deserves no merit for adjudication. Further, the petitioner-firm has already preferred appeals before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai (Tribunal). The Tribunal by order dated 11.07.2017 closed the appeals for statistical purpose, however made it clear that the appeals along with stay order/interim orders, if any, will continue before the Tribunal. Further, the Tribunal has granted liberty to both parties to file application before it to reopen the matter as and when the cases are disposed of by this Court in case of any change of circumstance. Now, it is for the petitioner to approach the Tribunal for adjudication of these issues by filing application for reopening the matter.

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5.During the course of argument, the learned counsel for the petitioner cited a judgment of the Madurai Bench of Madras High Court in the case of Tvl.M.U.Mohamed Sultan & Co. vs. Asstt. Commr. Service Tax (F.A.C.), Pudukkottai reported in 2019 (368) E.L.T. 669 (Mad.). Paragraph 4 of the judgment would be relevant, which reads as follows:-

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“4.In the instant cases, the petitioners are in the business of purchasing mined tobacco on whole sale basis, add some scent, repack it in small packs and sell it. The respondent has taxed them, on the ground that adding scent and making in small packs involves manufacturing process and the tobacco is converted from raw tobacco to chewing tobacco, which is a different commercial product and, therefore, they are liable for paying tax.”

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6.Relying on the said judgment, the learned counsel for the petitioner reiterated that the petitioner is also repacking the tobacco products by scenting and the facts are similar and therefore, the writ petition is liable to be allowed.

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https://hcservices.ecourts.gov.in/hcservices/

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7.In the case of Crane Betel Nut Powder Works vs. Commissioner reported in 2007 (210) E.L.T. 171 (SC), the Hon'ble Supreme Court held that manufacture and crushing betel nuts into smaller pieces and sweetening the same with essential/nonessential oils, menthol, sweetening agencies etc., did not result in manufacture of a new and distinct product having a different character and use as end product continues to retain its original character though in a modified form.

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8.As far as the above judgments are concerned, this Court has to consider the nature of repacking as narrated by the writ petitioner-firm in its own affidavit in paragraph 13, which reads as hereunder:-

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“13. ....the petitioner purchases raw chewing tobacco from the farmers and from the market. The petitioner also purchases other raw materials such as Jaggery, Grocery, Musk, Xylol, Ambertee, Calcium Powder etc. The petitioner cut the raw tobacco into pieces through a cutting machine. The petitioner mixes various varieties of groceries in a fixed combination and powder them in a pulverizing machine. Similarly, Musk, Xylol, Ambertee, Calcium Powder are powdered in a pulverizing machine. The petitioner dissolves jaggery in water and heat it in oven for a fixed time and prepare the jaggery paste and pore the jaggery paste into vessels and mix with raw cut tobacco, grocery powder and the grounded musk and allow to settle for some time. The petitioner thereby completes the process and the resultant products kept in loose form are directly packed in pouches in determined quantity and sell them in the market only as “chewing tobacco””.

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9.Perusal of the above paragraph clearly provides an idea that various other ingredients are also involved in the process of making the tobacco, as far as the petitioner-firm is concerned. They admit that along with the raw materials, they add jaggery, grocery, musk, xylol, ambertee, calcium powder etc. Etc., is to be elaborated by the petitioner and such elaboration must be adjudicated in detail and depth with reference to the product, which come out for selling in the market.

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10.High Court is not an Expert Body in order to form an opinion with regard to the manufacturing of a product or otherwise. Experts in the Department must conduct an inspection and form an opinion, whether it is a manufacture of product or the raw material is just repacked and sold to the end user. The said nature of proceedings cannot be adjudicated before the High Court, as the scope of the writ proceedings are limited. The

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https://hcservices.ecourts.gov.in/hcservices/

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High Court can adjudicate the process through which the decision is taken by the competent authorities in consonance with the provisions of the statutes and rules and certainly not the decision itself. This apart, the petitioner has already approached the Tribunal for adjudication of these issues.

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11.Prima facie paragraph 13 of the affidavit reveals that some processes are involved in respect of the products sold by the writ petitioner to the end user in the society. All such details are to be adjudicated with reference to the product sold to the end user, the raw materials used and the processes undertook in this regard.

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12.This being the factum, the judgments cited by the petitioner cannot be relied upon, in view of the fact that the facts in the present writ petition are entirely different and as far as the judgment of the Hon'ble Supreme Court is concerned, the Hon'ble Supreme Court held that if the original character is not modified, then it need not be considered as a manufacturing, but in the present case such facts are to be decided only through complete adjudication by the competent authority and by the appellate authority. Thus, the petitioner is at liberty to exhaust the appellate remedy in the manner known to law.

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13.As far as W.P.No.26967 of 2008 is concerned, with reference to the relief sought for refunding of central excise duty, the petitioner is to file appropriate application under Section 11B of the Central Excise Act, 1944. Thus, the petitioner is at liberty to approach the authorities and the authorities competent shall decide the application, if any, filed by the petitioner by following the procedures on merits and in accordance with law as expeditiously as possible.

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14.As far as W.P.No.26968 of 2008 is concerned, the relief sought for in this writ petition cannot be considered by this Court, as the issues are pending before the Tribunal and such issues can be adjudicated by the petitioner in the manner known to law.

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15.With the above observations, all these writ petitions stand disposed of. No costs. Consequently, connected miscellaneous petitions are closed.

Sd/-

Deputy Registrar

//True Copy//

Sub Assistant Registrar

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https://hcservices.ecourts.gov.in/hcservices/

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abr

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1.The Assistant Director, Directorate General of Central Excise Intelligence, Chennai Zonal Unit, C-3, 'C' Wing, II Floor, Rajaji Bhavan, Besant Nagar, Chennai-600 090.

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