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TMI Blog1994 (10) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... e as not excisable. Subsequently they also claimed the benefit under exemption Notification No. 114/73 as amended. However, on scrutiny of the classification list the Department was of the opinion that the appellants were not eligible for the benefit of exemption Notification No. 114/73 or Notification No. 175/86. Accordingly, a Show Cause Notice was issued to the appellants to show cause as to why the benefit of the said exemption Notification be not denied and also for liquid blue manufactured by them be not classified under Heading 3206. In reply the appellants submitted that they are purchasing duty paid Ultra Marine Blue from the manufacturers and dilute the same by adding China Clay and Acid Dyes and thereafter pack it in smaller consumer packs and sell the same. On this premises it was their defence that this activity cannot be equated with the process of manufacture. Alternatively it was also claimed that in case it is held that the said activity amounts to manufacture then they will be eligible to exemption under Notification No. 114/73. However, the Assistant Collector negatived the said defence of the appellants and approved the said classification list classifying the U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to the diluted ultra marine blue and the conclusion that the same amounted to manufacture according to Chapter Note 6 to Chapter 32 was totally unwarranted. As regards the liquid blue he contended that acid dyestuff was diluted with water and nothing more was done. The acid dyestuffs were standardised, formulated and prepared forms. Consequently, in the case of liquid blue Chapter Note 6 to Chapter 32 is inapplicable. To buttress his submission he drew our attention to that part of the impugned order-in-appeal where the Collector (Appeals) according to him, obliquely held that Chapter Note 6 to Chapter 32 is inapplicable by observing that No doubt the lower authority has relied upon Note 6 of the Chapter Notes of Chapter 32 which apply to Tariff Item 32.04. The same analogy can be applied to the process adopted by the appellant . Challenging the observation of the Collector (Appeals) that the same analogy can be applied to the process adopted by the appellants he submitted that it is totally incorrect to apply the analogy. In support of his submission he cited the case of Jyothi Laboratories v. Collector of Central Excise, Cochin, 1994 (72) E.L.T. 669 (Tribunal) = 1994 (50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower authority has relied upon Note 6 of the Chapter Note 32 which apply to Tariff Item 32.06 adding that the same analogy can be applied to the process adopted by the appellants. So the foremost question before us is as to whether some addition of the China Clay and acid dye to dilute the ultra marine blue amounts to manufacture. The Collector (Appeals) has held so observing that unless these ingredients that is to say China Clay and acid dyes are mixed up, the commodity produced by the appellants would not become diluted and would not be saleable in the form in which it is being sold by them. In fact, it is nothing short of the process of manufacture. And, therefore according to him by adopting this process the appellants are producing a new commodity and marketing it accordingly. In the case of Coromandal Prodorite Pvt. Ltd. v. Govt. of India and Others, 1985 (20) E.L.T. 257, it was held by the Division Bench of the Madras High Court that mere mixing or dilution of substance will not amount to manufacture. Following this decision this Tribunal in the case of CCE, Bangalore v. Mallaya Fine Chem (P) Ltd., Bangalore, Final Order No. 1245/90-C, while deciding the question as to whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the ratio of the said decision this Tribunal reiterated the same view in M/s. Bush Boake Allen (India) Ltd. v. CCE, Madras - Final Order No. 1246/90-C. In the instant case what the appellants are doing is that they are purchasing the ultra marine blue falling under Tariff Item 3206.90 which had already suffered the excise duty and after so purchasing the ultra marine blue they add China Clay and acid dyes and thereafter pack it in smaller consumer pack and sell the same under different brand names. This process in our considered opinion does not bring any change in the name, character or use of the product. The ultra marine blue has the same identity after dilution. As regards the liquid blue it is the case of the appellants that they purchase acid dyes on payment of duty and merely add water to that for the purpose of dilution. And, therefore, this activity of adding water to the acid dye does not amount to manufacture. Against this it was the contention of the Ld. JDR Shri Arora that as per paragraph 150 of the judgment delivered in the case of Jyothi Laboratories v. CCE, Cochin, supra, it will fall under Heading 3204.29 as it is the preparation based on synthetic organic dy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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