Classification of bura, makhana, mishri, hardas and battasas (patashas). - Board issues Section 37B order

By Vijay Kumar

Yesterday's DDT had explained that the above mentioned items were sugar products and exempted.

First of all are they excisable?

Board explains:-

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%.

Do these processes amount to manufacture? Board observes, "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."

Having decided that the process amounts to manufacture, what is the classification? 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.

So the CBEC directs that

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.

The Notes read as,

1. For the purposes of sub-headings 1701 11 and 1701 12, "raw sugar" means sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 degree.

2. For the purposes of sub-heading 1701 11 or 1701 12 or 1701 91, "Sugar" means any form of sugar in which the sucrose content, if expressed as the percentage of the material dried to constant weight at 105^o C would be more than 90.

Board wants pending cases to be disposed of based on the above clarification.

Since the Government had anyway decided to exempt these products with effect from 5th December 2008, why couldn't they be exempted with retrospective effect? Will there be a Section 11 C Notification?

CBEC Circular No. 879/17/08- CX, Dated : December 05, 2008