(1.)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.
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 :
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 "processed food" rather than as groundnut kernel.
(3.)THE appellant's contention, initially put forward before the Assistant Collector of Customs in an application for refund, was rejected by the Collector of Customs, on appeal by the Central Board of Excise and Customs and, on further revision, by the Government of India under the then existing procedure. So far as the subsequent periods of exports were concerned, the contentions of the appellant were considered and rejected by a Full Bench of the Customs, Excise and Gold Control Appellate Tribunal. THE appellant preferred a Special Leave Petition from the order of the Central Government in revision dated 14-2-1978, which was admitted and numbered as Civil Appeal No. 390 of 1979. Against the other orders of the Tribunal, the appellant has preferred appeals to this Court under Section 130-E of the Customs Act, 1962.
On behalf of the appellants, a number of circumstances have been relied upon to justify the distinction sought to be made between groundnut kernel simpliciter and blanched and roasted groundnuts exported by the assessee. It will be convenient to summarise the points made on behalf of the appellant here:
(1) In the Indian Trade Classification (I.T.C.), which has been published by the Government of India for purposes of foreign trade, there is a bifurcation in the classification between the oil seeds and roasted nuts. There are various revisions of this classification. Up to 1/04/1972, the I.T.C. classified oil seeds, oilnuts and oil kernels in Division 22. The various items occurring under this Division were as follows:
As against the above, in group No. 053, roasted nuts are specified as below:
053.9009 others (roasted nuts including groundnuts)
In a revised alphabetic index to the commodities, the relevant code numbers for various commodities pertaining to groundnuts are as follows:
In the more recent classification, heading No. 12.02 refers to groundnuts, not roasted or otherwise cooked, whether or not shelled or broken. The unit of quantity in which these goods are sold is tonne. This chapter deals with various types of oil seeds like soya beans, copra, linseed, rape or colza seeds, sunflower seeds, palm nuts and kernels and other oil seeds and oleaginous fruits. On the other hand edible nuts some under heading 20.08, which reads thus:
"Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included - Nuts, groundnuts and other seeds, whether or not mixed together:
(2) A similar clasification has also been made under the BTN. Chapter 12 deals with oil seeds and oleaginous fruit, miscellaneous grains, seeds and fruit, industrial and medical plants, staw and fodder. Note 1 under this Chapter reads thus:
1. Heading No. 12.01 is to be taken to apply, inter alia, to groundnuts, soya beans, mutard seeds, oil poppy seeds, poppy seeds and copra. It is to be taken not to apply to coconuts or other products of heading No. 08.01 or to olives (Chapter 7 or Chapter 20). Heading 12.01 reads:
"Oil seeds and oleaginous fruit, whole or broken - This heading covers seeds and fruit of a kind used for the extraction (by pressure or by solvents) of edible or industrial oils and fats, whether they are imported for that purpose, for sowing or for other purposes. It does not, however, include olives (Chapter 7), coconuts (heading 08.01) or certain seeds and fruits from which oil may be extacted but which are primarily used for other purposes, e.g., walnuts and almonds (heading 08.05), apricot, peach, and plum kernels (heading 12.08) and coca beans (heading 18.01)".
It is also stated that the heading covers, inter alia, groundnuts (except roasted groundnuts-heding 20.06). As against this heading 20.06, which deals with fruit otherwise prepared or preserved, whether or not containing added sugar or spirit, carries the following sub-heading:
(3) Almonds, groundnuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives.
(3) Even under the customs Tariff, the first Schedule, which deals with import, contains a similar classification. Chapter 12 and note 1 to the Chapter are the same as in BTN. Item 12.01 reads - oil seeds and oleaginous fruit, whole or broken- (1) not elsewhere specified (2) Copra. Chapter 20 deals with preparations of vegetables, fruit or other parts of plants. It contains a note that the Chapter covers edible plants, parts of plants and roots of plants conserved in syrup (for example, ginger) and roasted groundnuts.
(4) It is pointed out that the goods of the appellant are exported through the medium of Processed Foods Export Promotion Council, Delhi, whereas groundnuts intended for oil extraction purposes are exported through the Indian Oil and Oil Produce Exporters' Association, Bombay. This indicates that the customers for two types of goods are totally different.
(5) On 14/07/1976, the Government of India decided to ban with immediate effect export of HPS (Hand Picked Seeds) groundnuts (both in shell and kernel), which is canalised through Indian Oil and Oil Produce Exporters' Association. However, by an export trade notice dated 8-9-76, the Government of India clarified that the item "blanched and roasted groundnut kernels", does not fall within the purview of Exports Control Order, 1968 and its export is allowed without any licensing formalities.
(6) It has been pointed out that the Collector of Customs used to levy and recover an agricultural cess on the goods in question until the Government of India, by an order of 1976, held that the roasted and salted peanuts/groundnuts exported by the assessee were not liable to cess under the Agricultural Produce Cess Act, 1940.
(7) It is pointed out that the packed roasted seeds exported by the appellants are more value added than raw groundnu kernel used for other purposes. The assessee's product is packed in vacuum containers and sold in terms of kilograms, whereas other groundnuts are exported in bags or drums and sold in tonnes. It would not be correct to bring both of them under same classification for export purposes.