TMI Blog2006 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... issued a Show Cause Notice alleging that they have manufactured vat paste in different colours by mixing two or more dyes (powder) to get the required shade thoroughly mixing with glycerine, dispersing agent and water etc. as per formula in Ball Mill, for a total process involving 80-90 hours, thereby converting vat dyes (powder) into liquid/paste form reducing the powder/strength/concentration of vat dyes (powder) as per required particle size of fineness for use in textile industries for printing purpose. It was alleged that the vat paste is manufactured by way of secret formula which is not divulged to any one being their trade secret and vat paste coming into existence as above is therefore formulated/ prepared/standardized and ready to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dyes into standardized dyes amounts to manufacture and duty should have been paid accordingly. Show Cause Notice also alleged that some of the standardized dyes so prepared by M/s Nirvip were sold under brand name of Indo-Chem which did not belong to the appellant and therefore, the appellants were not entitled to SSI exemption. The material was being purchased from Indo-kem and the Show Cause Notice alleges that Indo-kem have abetted the appellants in evading duty and accordingly proposed to impose penalty on Indo-kem besides Mr. Ashok Desai, Managing Director, Mr. Vipul Desai, Director of the appellants. 2. The Show Cause Notice was adjudicated by the Commissioner, who confirmed the duty amounting to Rs.1,00,83,429/- on the goods affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplated in Note 6 of Chapter 32. The Commissioner erred in misinterpretation on the content of Note 7 which lays down that it is only conversion of unformulated/unstandardised or unprepared form of dyes into formulated/standardized or prepared form of dyes used for dyeing which will amount to manufacture. Thus conversion from unstandardised/ unformulated dyes to Standardized/ formulated dyes alone will amount to manufacture. In the present case, the process of conversion of vat powder into vat paste is from standardized/formulated powder into standardized/ formulated paste and only physical form changes and therefore they are out of the coverage of earlier note 6 as well as new Note 7. The fact that vat powder purchased by the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den, the impugned order was held to be completely without any merits and was set aside. A reference was also invited to the decision of the Tribunal in the case of CCE, Mumbai II Vs. Indian Dyes Chemicals,2005 (188) ELT 529, wherein also it was held that conversion of vat powder into vat paste before being used for printing process does not amount to manufacture. Similar view has been taken in the case of CCE Vs. Empress Mills, 1999 (31) RLT 750 (CEGAT)1999 (106) ELT 375 (T). 4. As regards the Commissioner's reliance on the CEGAT's Final Order in the case of CCE, Bombay Vs. French Dyes Chemicals Pvt. Ltd. 1997(19) RLT 142 (CEGAT-SB)=1997 (90) UT 411 (T) it was submitted that the Tribunal proceeded on the premise that the vat paste was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arification given by the Board and held by various forams like High Court and Tribunal etc. 5. Shri K.V. Sahasrabudhe, the Ld. Consultant, representing Indo-kem reiterated the submissions made by Shri Prakash Shah, to hold that the process undertaken by the appellants Nirvip does not amount to manufacture and therefore the question of their abetting them to evade duty etc. does not arise. 6.The Ld. DR however submitted that whether a dye (powder) can be considered as a standardized/formulated or prepared depends upon the fact whether it is ready for use or not. Since in the present case, two dyes of different colour are being mixed to get a particular shade, they have to be considered as not being ready for use and therefore are unprepa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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