1994 (10) TMI 132 - AT - Central Excise

Summary

Issues Involved:
1. Whether the preparations based on Ultra Marine Blue amount to "manufacture" within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944.
2. Whether the appellants were entitled to the benefit of exemption Notification No. 114/73-C.E., dated 13-4-1973 as amended.

Detailed Analysis:

1. Whether the preparations based on Ultra Marine Blue amount to "manufacture" within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944:

The appellants purchased duty-paid Ultra Marine Blue, diluted it with China Clay and Acid Dyes, and repackaged it for sale. They argued that this activity did not constitute "manufacture" as there was no change in the name, character, or use of the product. The Ultra Marine Blue retained its identity post-dilution, with China Clay acting merely as a dilutant and the Acid Dye maintaining the shade parity without chemically modifying the product.

The Assistant Collector and the Collector (Appeals) disagreed, holding that the process of dilution and repackaging created a new commercial commodity, thus constituting "manufacture." The Collector (Appeals) noted that the product would not be saleable without this process, implying a transformation into a new commodity.

However, the Tribunal referenced several precedents, including the cases of Coromandal Prodorite Pvt. Ltd. v. Govt. of India and CCE, Bangalore v. Mallaya Fine Chem (P) Ltd., which established that mere mixing or dilution does not amount to manufacture. The Tribunal concluded that the appellants' activities did not result in a new product with a different character, hence did not constitute "manufacture."

2. Whether the appellants were entitled to the benefit of exemption Notification No. 114/73-C.E., dated 13-4-1973 as amended:

Given the Tribunal's finding that the appellants' activities did not amount to manufacture, it was unnecessary to examine their eligibility for exemption under Notification No. 114/73. The Tribunal's decision rendered this issue moot.

Conclusion:

The Tribunal held that the appellants' process of diluting Ultra Marine Blue with China Clay and Acid Dyes and repackaging it did not constitute "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944. Consequently, the appeal was allowed, and the appellants were granted relief according to law.