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Rabindra Nath Sinha

KOLKATA, May 5

THE ruling by the Supreme Court that instant tea is indeed tea and not a different product has to be viewed against the ground realities.

As an extension of the operative part of the ruling, the Supreme Court has said that cess under the Tea Act of 1953 could, therefore, be levied on instant tea.

Currently, cess is collected at the rate of 30 paise per kg of `made tea'.

Instant tea can be manufactured from both green leaves and `made tea'. Producers find it more economical to make instant tea out of `made tea'— particularly the secondary grades — as well as tea waste, which is a by-product of the manufacturing process.

What is to be noted is that green leaves constitute the basic raw material for both secondary grades of `made tea' and tea waste.

Instant tea, which is in powder form, only involves a further stage of processing. It is also to be noted that under the existing provisions, tea waste is subject to excise duty (cess is also treated as excise duty) when it is processed further.

It will not attract excise duty if it is denatured.

Given this position, instant tea cannot be amenable to a separate definition.

With green leaves being the basic raw material, it is immaterial whether the conversion into instant tea is directly from green leaves or indirectly from secondary grades of `made tea' / tea waste.

Informed quarters see in this light the Supreme Court ruling in the case posed before it by Tata Tea, which contended that instant tea is a different product.

For the record, there are four or five domestic manufacturers of instant tea, including Tata Tea whose share in the total output of between 2.6 and 2.7 million kg is the highest.

It is not a preferred product in the domestic market and that explains why the entire output is exported.

The US is the principal market. Some quantities are also sold in the UK and West Europe.

Tata Tea makes instant tea at is facility in South India. The powder is sent to its subsidiary, Tata Inc, in Florida for reprocessing to the specifications of customers, who use the product to make ready-to-drink iced tea drinks.

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