9911796707
TMI Blog1997 (1) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... of processing carried out on market purchased synthetic coal tar dyes. The Asstt. Collector issued a show cause notice on 1st February, 1988 alleging that the respondents herein were engaged in converting unformulated/unstandardised/unprepared forms of dyes into formulated/standardised/prepared forms ready for use in the process of dying. The appellants were therefore, asked to explain as to why the above process should not be treated as amounting to manufacture in terms of Note 6 of Chapter 32. 3. Another show cause notice was issued by the Supdt. of Central Excise on 5-2-1988 asking the respondent herein to explain as to why they should not be required to pay Rs. 3,11,946 as duty under Section 11A of the CESA, 1944. 4. In reply to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the Hon ble Supreme Court in the case of DCM that unless any new commodity emerges by the process carried on by a party, there is no manufacturing involved and hence no excise duty can be levied on the party; that the respondents herein only use formulated/standardised/prepared dyes, the provisions of Note 6 of Chapter 32 do not apply in their case. 5. It was also argued that for a long time, the process undertaken by them was not considered as manufacture and since the process remains the same, there was no question of considering the same as a process of manufacture. It was also argued that the said dyes are bought and sold are known as formulated/standardised/prepared dyes; that commercial parlance test is the only relevant test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the concentrated S.O. dyes, the product known as formulated S.O. dyes is manufactured which is ready for use; that the concentrated S.O. dyes purchased by the respondents do not at any stage become formulated/prepared dyes unless and until some process of mixing and diluting is carried out as explained above; that such reduction in strength brings into existence formulated/prepared/standardised dyes ready for use. The ld. SDR referred to Note 6 of Chapter 32 and submitted that since the dyes purchased by the respondents herein from the market needed dilution and mixing up, they were not formulated/prepared/standardised dyes ready for use; that these dyes became formulated/prepared/standardised dyes only after dilution and mixing up an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Heading No. 32.04, conversion of unformulated, unstandardised or unprepared forms (for example, wet cakes) of such dyes by : (a) reduction in particle size (b) addition of dispersing agents or diluents, or (c) adoption of any other treatment, into their formulated, standardised or prepared forms ready for use in the process of dyeing shall amount to `manufacture ." We observe that in the show cause notice the allegation was that the respondents purchased unformulated/unstandardised/unprepared dyes from the market. The respondents herein in their explanation before the issue of show cause notice while replying to the queries in their letter dated 22nd July, 1987 had intimated that they purchased synthetic coal tar dyes from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dye does not affect the classification of colouring matter. Colouring matter of these descriptions is usually in the form of powder, crystals, pastes, etc. A reading of this Note shows that diluents are added to standardise so also mixing of two dyes to get a particular shade is done only to make it ready for use. Now reading the requirement of Note 6 of Chapter 32 again, we find that it must be a conversion, it must be of unformulated, unstandardised, unprepared of such dyes (a) reduction in particle size (b) addition of dispersing agents or diluents, or (c) adoption of any other treatment, into their formulated, standardised or prepared forms ready for use in the process of dyeing shall amount to manufacture. Thus all the ingredien ..... X X X X Extracts X X X X X X X X Extracts X X X X
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