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TMI Blog2003 (10) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... lour world" manufactured by Asian Paints India Limited with a view to provide various shades of colour as per the choice of the customers. The applicant submitted, that it purchased white paint within the State of U.P. on payment of tax and on the desire of the customers mixed stainers purchased within the State of U.P. According to the applicant, by the process of staining, colour was given to the white paint and therefore, the material which was purchased within the State of U.P. was white paint and after staining or tinting by stainers it remained paint and no independent distinct commercial commodity came into existence. He submitted that the process of tinting/staining is not the manufacturing process as defined under section 2(e-1) of the U.P. Sales Tax Act and since the white paint was U.P. purchased (tax paid), hence, coloured paint is not liable to tax. The applicant claimed exemption on the turnover of coloured paint before the assessing authority. 4.. The assessing authority rejected the claim of the applicant on the ground that the material used was not the white paint but was the base material for paint out of which, the paint was made by mixing the colour and by u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the colour world computerised machine manufactured the desired paint and it is established that the base material could not be used as such because it is clearly mentioned in the packing material that it could be sold only after tinting and the final product is obtained only after the mixing of colourant. Deputy Commissioner accordingly treated the process of mixing/staining/tinting as manufacturing. However, Deputy Commissioner (Appeals) remanded back the case to find out that how much material was sold as such in the same form and how much material was used in the manufacturing of coloured paint and accordingly fixed the turnover. Applicant filed second appeal before the Tribunal, which was rejected: Tribunal has observed as follows: "The first is whether the process of tinting amounts to manufacture or not and whether the base material without process is a paint or not. In this connection the learned counsel for the appellant has vehemently argued by several case laws that manufacture should be established. In this connection the masterpiece judgment before us is Ashirwad Ispat Udyog v. State Level Committee as reported in [1999] 112 STC 207 (SC); STI 1998 (SC) 129; AIR 1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "That the assessing authority when surveyed the business premises of the appellant on August 14, 2001 noted the following three sentences on the packing of the white paint meant for tinting- 1. Not to be sold without tinting. 2. Base material for paints. 3. Final product after addition of colourant. The appellant has submitted and explained that the 3 above sentences noticed on packing of the plain paint are the instructions to the traders, not to make sale of the plain paint without tinting. The idea behind the language used on the packing is to avoid adulteration in the open market which is clear from the fact that in case the plain paint is as such sold, the colours which may be mixed with the plain paint in the open market, the quality of coloured paint may be different and the result will not be according to the standard maintained by the appellant-company. The shades of colour may also not to be the satisfaction of the customer. If these fact should have been considered by the assessing authority in true and correct sense of the language used, there was nothing to work out three stages of the paint actually sold by the trader, i.e., base paint + colours = final pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oured paint may be different and the result will not be according to the standard maintained by the appellant-company. Further it was submitted that tinting system was well-known in international commercial practice where retail paint and hardware dealer insert measured quantity of universal stainers to obtain a wide range of shade of the same paint. 10.. Explanation given in the written submission why on the packing of base material the words "not to be sold without tinting" and "base material for paints", "final product after addition of colourant" may not have been referred and considered as stated in the written submission but the fact that the instructions mentioned on the packing of the base material, which is not disputed, have been considered and on this basis it was held that the base material was the semi-manufactured product and was not in the form of paint. Though Tribunal has referred as admission of the learned counsel that it is base material and something is to be added to make it to be paint with the help of the machine by some specific process may be disputed but the fact which has also not been disputed, that in the base material something was added in the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel for the applicant that base material was paint and by tinting only the paint of different shades, as desired was manufactured. 11.. In my view, the findings of Tribunal and the authorities below in this respect are finding of fact and in my opinion, it cannot be said to be erroneous. Once the argument of learned counsel for the applicant is not accepted, namely, that base material was paint, the other submission of learned counsel for the applicant automatically stand forceless. Once it is found that base material was not paint, it did not have a characteristic of paint and was a base material for paint not to be sold as such without tinting, the final product obtained after adding colourant by the process of tinting/ mixing and staining in a colour world automatic computerised machine is different commercial commodity known in a market world as a coloured paint. Therefore, the process for producing the coloured paint amounts to manufacture as defined under section 2(e-1) of the Act. 12.. It may also be useful to refer a few decision of the apex Court on the point. 13.. In the case of B.P. Oil Mills Ltd. v. Sales Tax Tribunal reported in [1998] 111 STC 188 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bherhaghat Mineral Industries reported in [2000] 120 STC 205 (SC), crushing dolomite lumps into chips and powder has been held by the honourable Supreme Court as not a process of manufacture because it does not bring about a new commercial commodity. 2.. In the case of Commissioner of Sales Tax, U.P. v. Lal Kunwa Stone Crusher (P.) Ltd. reported in [2000] 118 STC 287 (SC) dealer was engaged in purchasing stone boulders and crushing them into stone chips, gitti and dust for the purpose of further sale, claimed that at the time of purchase of boulders, sales tax has been paid and hence the sales of small stones, dust, etc., were not liable to tax again. The Tribunal and the High Court held that the goods continued to be stone and they were not commercially different goods to be identified differently for the purpose of sales tax. Honourable Supreme Court affirmed the decision of the High Court that the stone as such and gitti and articles of stone are all of similar nature though by size they may be different. Apex Court further held that even if gitti, kankar, stone-ballast, etc., may all be looked upon as separate in commercial character from stone boulders offered for sale in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and freezing, they do not cease to be shrimps, prawns and lobsters and become another distinct commodity. They are in common parlance known as shrimps, prawns and lobsters. 16.. Sum and substance of all the cases cited by the learned counsel for the applicant is that if the process do not bring a different commodity into existence and the commodity remains the same then such process do not amount to manufacture. In the present case, all the three authorities found that base material which was used for staining/mixing/tinting was not the finished product in the form of paint and by the process of tinting after mixing colour in a colour world computerised automatic machine a new commercial commodity is manufactured in the form of coloured paint having all the characteristic of paint which was not in existence in the base material. These findings are finding of fact based on material and I do not find any reason to differ and same is accordingly upheld. Learned counsel for the applicant has not placed any scientific analytical report or any other evidence to prove that the base material had all the characteristic of paint. The explanation given in the written submission explaini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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