Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, dated 5th December,2008
Order under Section 37B of Central Excise Act, 1944
Subject: Classification of bura, makhana, mishri, hardas and battasas (patashas).
1. In exercise of powers conferred under Section 37B of the Central Excise Act,1944, Central Board of Excise and Customs considers it necessary, for the purposes of uniformity with respect to levy of excise duty on items like bura, makhana, mishri, hardas and battasas (patashas), and for classification of such goods, to issue the following instructions.
2. These products are made from sugar. The manufacturing process is as follows:
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.
These products contain sucrose content of more than 90%.
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.
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
9. However, Tribunal has in case of S M Confectionery (1993 (66) ELT 469) decided that items like Chironjidana, Mishri, Rewadi, Batasha are more appropriately classifiable as sugar confectionary under tariff heading 1704.90. But the dispute before the Tribunal in this case was whether these sugar items are prasadam falling under chapter 21 or are sugar confectionary classifiable under chapter 17. Moreover since this decision failed to consider the implication of chapter notes referred above and the decision of the Apex Court in case of Sakarwala, the decision is per incuriam and cannot be taken as binding precedence.
10. The HSN explanatory notes provide that:
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].
11. In view of above discussion, it is evident that these products namely Ghadi Sakar (Mishri), Batasha (Pattasha), Illichidana (Chironjidana), Makhana etc., are a form of sugar having more than 90% sucrose and therefore correctly classified under item no 17019100 under the entry refined sugar.
12. Now, therefore, following instructions/ directions are issued:
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.
13. Based on the above clarifications pending cases may be disposed of.
14. Receipt of this order may please be acknowledged.
15. Hindi version will follow.
Under Secretary to the Government of India