TMI Blog1985 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... resin content and actually a demand dated 24-11-1974 was issued to the appellants for payment of Rs. 50,039.82 being the differential duty which was short levied for the period from 1-4-1971 to 13-5-1972. The appellants questioned the validity of the said demand by filing an appeal before the Appellate Collector of Central Excise on 31st May, 1973 who, by his order dated 21-3-1974, held that the earlier assessments on the basis of the actual resin content in the syrup produced by the appellants and not on the entire quantity of syrup was due to a mistake or inadvertence on the part of the excise authorities and that mistake was realised only subsequently and it is thereafter a show cause notice has been issued for recovery of the short levy and by an exercise of power under rule 10 the demand has been made for the amount of duty short levied which was not collected by mistake and in that view he dismissed the appeal. Later the appellants filed a revision before the third respondent but without success. Thereafter the appellants moved this court by way of the above, writ petition seeking to quash the said demand mainly on four grounds namely, (1) that the process by which the resin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asic question as to whether the resin solution produced by the appellants by mixing the synthetic resin imported by them with alcohol amounts to a manufacture and whether the end product is excisable. Before us the learned counsel for the appellants contends that though this point was urged before the learned Judge he has not expressed any opinion on that question and therefore this court has not only to deal with the correctness or otherwise of application of rule 10 to the facts of this case but also consider the nature of the process adopted by the appellants for bringing into existence of the resin solution and whether such process can be taken to be a manufacture process so as to attract the levy of duty under the Central Excises and Salt Act, 1944. 3. The learned counsel for the respondents does not dispute the fact that the question as to whether the end product is excisable at all was in fact canvassed before the learned single Judge. Even otherwise that being a question of law directly arising on the facts put forward in this case, we are of the view that the question as to the applicability of rule 10 will arise only if the article produced by the appellants is excisabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is brought into existence by mixing the synthetic resin imported by the appellants with alcohol is a product different in character, nature and use so as to say that the end product is excisable under the provisions of the Act. 6. According to the learned counsel for the appellants what is done is a mere dilution of the synthetic resin which is ia a solid from the alcohol to bring into existence a solution which the appellants call by name 'Furacin Syrup' and that this process does not amount to in any sense, a manufacturing process. It is also the appellant's case that the end product which is the resin solution is not different from the original synthetic resin and it continues to have the same properties as the synthetic resin which has been used for producing the resin solution. In support of his submission that mere dilution of synthetic resin or the mere mixing of water or alcohol will not amount to manufacture, the learned counsel for the appellants relies on a decision of the Bombay High Court in Sandoz India Limited v. Union of India and others (1980 E.L.T. 696). In that case the synthetic organic dyes were formulated into a liquid solution. The formulation adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d different article must emerge having a distinctive name, character or use. In Shakti Insulated Wires Pvt. Limited and another v. Union of India and Others (1982 E.L.T. 10) (Bombay), the Bombay High Court again dealt with a similar question. In that case, the copper or aluminium strips were insulated for being advantageously used as a conductor. The insulation was done either by insulating the copper or aluminium strips either by glass-fibre or by paper or cotton cover. The question arose in that case whether the mere application of such process made a different and distinct article than the original article, namely, copper strips or aluminium strips so as to amount to manufacture under section 2(f) of the Central Excise Act. The court while dealing with the question held that as processing is distinct from manufacture and merely because some process is carried on the article produced would not necessarily amount to manufacture of fresh article under section 2(f) of the Central Excise Act and that though at some point processing and manufacturing may merge, where the commodity retains a continuing substantial identity through the process even after the processing it cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Bombay High Court was not approved by the Supreme Court in PIO Food Packers Case - 1980 E.L.T. 343 = 1980 (46) S.T.C. 63 and the Supreme Court has held that the said decision does not lay down the correct law. In Commr. of Sales Tax v. Dunken Coffee Mfg. Co. (35 S.T.C. 493) the question arose as to whether mixing and blending of coffee powder with chicory powder to obtain "french coffee" amounts to manufacture within the definition of Section 2(17) of the Bombay Sales Tax Act. The Bombay High Court observed that for an activity to amount to manufacture it must result in a different commercial article or commodity. It must not be a commodity which is commercially the same as it was before the activity was applied to it, that in some cases the ingredients are totally ' transformed and, in other cases, they undergo some change, alteration or transformation and yet retain their essential character and properties and that the test in all cases is to ascertain whether the activities result in a commercially different commodity and it is irrelevant whether this result is produced by a mechanical or chemical process or otherwise. The court ultimately held that the activities of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form. The synthetic resin, because it is in a solid form, cannot be used for bonding purposes and therefore it is converted into a liquid by adding alcohol and the end product is used for bounding purposes. Therefore it cannot be said that the end product which was brought into existence by the process of dilution or adding alcohol to resin is a separate product apart from synthetic resin and it continues to have the same characteristics as resin. As a matter of fact, in this case the respondents are seeking to bring even the end product under Tariff Item 15-A which deals with resin. Therefore, the respondents themselves haw treated the end product as nothing but resin. Though by the process of mixing there is change of form, that by itself cannot be taken to be the product of a manufacturing process. It is well established that though a process brings about a change in the raw material used, every change cannot be taken to constitute a manufacture. If, as a result of the process, raw materials have been transformed into a distinct and commercially a new product, then alone the process can be taken to be a manufacture. In this case, since the end product brought about by the proces ..... 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