CIR NO.879/17/2008-CX, DT. 05/12/2008
- Document type
- Circular
- Reference no.
- O
- Dated
Classification of bura, makhana, mishri, hardas and battasas (patashas)
Classification of bura, makhana, mishri, hardas and battasas (patashas)
2. These products are made from sugar. The manufacturing process is as follows:
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a. Sugar is added to boiled water in an open pan manually to obtain sugar solution and some hydrogen sulphide is passed through the solution for bleaching.
b. Patasahas are obtained by splashing the solution on a piece of wood which converts sugar into amorphous sugar.
c. Hardas are prepared by pouring the solution into moulds which is then allowed to cool.
d. Alchidanas/ makhanas are obtained by the passing the sugar solution of appropriate consistency through sieve so as to convert into granulated lumps of sugar.
e. Misri is obtained by pouring the solution into drums where threads are already placed and the solution is allowed to dry around the threads.
f. Bura is obtained by beating the dried solution with wooden debbies manually.
3. The first issue is as to whether the processes indicated above amount to manufacture in terms of provisions of Central Excise Act, 1944 or not. The industry has relied upon the decision of the Supreme Court in case of Sakarwala Brothers [1967 STC XIX (24)] to argue that since the Supreme Court has held that the products under consideration are nothing but refined forms of sugar, no new commodity has emerged as result of processes undertaken. Hence the processes undertaken by them cannot be said to be amounting to manufacture under Section 2(f) of the Central Excise Act, 1944.
4. The matter has been examined. The above mentioned decisions of Apex Court do not decide the question whether the processes undertaken amount to manufacture or not in terms of the Section 2(f) of Central Excise Act,1944. From the reading of the decision of the Gujrat High Court and Apex Court in case of Sakarwala Brothers, it would be evident that the courts even at that time agreed to the fact that these goods namely bura, makhana, mishri & patasha are commercially known as products distinct from sugar. As per judicial pronouncements on the issue of manufacture", a process results into manufacture, if the new product is known commercially different its character and use are different from the materials from which it has been made. When a customer asks for Batasha, no shopkeeper would give him sugar or vice versa. Thus reading this judgment of Apex Court along with the series of judgement starting from DCM case makes it clear that processes undertaken will amount to manufacture.
5. The next issue is regarding correct classification of these products. Two contending classifications are under heading 1701 and 1704
6. From the explanatory notes to HSN it is quite evident that sugar in all forms, containing more than 90% of sucrose contents will be classified as sugar under heading number 1701. The sugar preparations like sweetmeats, confectionery and candies will classifiable under heading 1704.
7. The Apex Court in case of Sakarwala Brothers has held that patasha, hardas, bura sugar and alchidana are forms of sugar. The court stated that it is possible to convert these articles into sugar by dissolving them in water and by subjecting the solution to an appropriate process. Further these articles can be put to the same use to which sugar-candy can be put. It is, therefore, manifest that patasa, harda and alchidana are only different forms of refined sugar with the requisite sucrose contents.
8. The classification of these items, has been decided by the Tribunal in the following cases and it has been held that these products are classified under heading 1701.
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a. 1996 (84) E.L.T. 221 (T) D.C.M. Shriram Industries Vs C CEx, Meerut
b. 2006 (203) E.L.T. 232 (T) C C. EX Aurangabad Vs. Shrijee Heavy Projects Works Ltd
c. 2007 (210) E.L.T. 681 (T) Atul Industries Vs. C C. Ex., Pune
10. The HSN explanatory notes provide that:
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a. Refined sugar can be produced as crystalline substance in the form of small cube, loaves, slabs or sticks or regularly moulded sawn or cut pieces. [Hardas are moulded products].
b. Heading 1701 covers items like sugar candy consisting of large crystal produced by slow crystallization of concentrated solutions of sugar. [Mishri is a type of candy manufactured by this process].
12. Now, therefore, following instructions/ directions are issued:
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a. The process of making bura, makhana, mishri, hardas and battasas (patashas) from sugar shall amount to manufacture in terms of provisions of Section 2(f) of the Central Excise Act, 1944 and will be liable to pay excise duty.
b. These products shall be classified under heading no 17019100, provided that they fulfil the conditions of sub-heading note 1 and 2.
Sd/-
(Ashima B ansal
Under Secretary to the Government of India