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TMI Blog2014 (12) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... cotex TSN 100 describes the product as 'speciality styrene butadiene latex used as admixture in cement concrete'. It is the claim of the appellant that for manufacturing the product Sika Latex and Sika Latex Power, they are only adding water to inputs namely "Styrofan D 623 AP" and "Apcotex TSN 100". The appellants' claim is that since the manufacturing process undertaken by them is only of diluting the inputs and repacking the same, their activities do not amount to manufacture and hence, no excise duty is payable on their final product namely, Sika Latex and Sika Latex Power. The Revenue, on the other hand, is claiming that the final product of the appellant is the 'water resistant bonding agent', which is used as an additive to cement mortar/concrete to improve the adhesive and water resistant property of such cement mortar/concrete, while their inputs are "Styrofan D 623 AP" and "Apcotex TSN 100", which are aqueous polymer dispersion used in the modification of hydraulic setting system. The products being sold by them have distinctive name, character and use and hence the process undertaken by them amounts to manufacture. These products are therefore excisable. Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the appellants does not amount to 'manufacture'. The learned Advocate further argued that the water percentage in the end product is miniscule to even suggest change of any kind in starting material. It was also argued that the decision of the Tribunal in the case of CCE vs. Karam Chand Appliances - 2000 (117) ELT 739 (T) is squarely applicable to the facts of the present case. The appellant also, relied upon the following case laws to support the said contention:- (a) CCE Vs. Pest Control (India) Pvt. Ltd. - 2006 (196) ELT 145 (T) (b) CCE Vs. Titanium Equipment & Anode Mfg. Co. Ltd. - 2002 (142) ELT (T) affirmed by Hon'ble Apex Court - 2003 (153) ELT A298. (c) CCE Vs. Kayes Agro Industries - 2001 (132) ELT 701 (T) affirmed by Hon'ble Apex Court - 2002 (143) ELT A264. (d) CCE Vs. Arlabs Ltd. - 2000 (122) EKT 470 (T) affirmed by Hon'ble Apex Court - 2001 (130) ELT A86. (e) Punjab Powerpacks Ltd. Vs. CCE - 1998 (104) ELT 50 (T) (f) Hyderabad Batteries Ltd. Vs. CCE - 2002 (149) ELT 128 (T) (g) Dolsun Containers Pvt. Ltd. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has acted in bona fide manner, hence penalty and interest are not chargeable on the appellants. 3. The learned Addl. Commissioner (AR) appearing for the Revenue opposes the contention of the appellant. Learned AR argued that commercially their product is known in the market as Sika Latex and Sika Latex Power. Both the products are used as water resistant bonding agent. The said products are used as additives in cement mortar/concrete. The addition of these additives improves the adhesive and water resistant quality. The learned AR further contended that the customers are not aware how the goods are manufacture at all. Customers do not know that product is diluted Styrofan D 623. They only know that Sika Latex and Sika Latex Power are water resistant bonding agent to improve the adhesive and water resistant quality of cement mortar/concrete. The learned AR further contended that input "Styrofan D 623 AP" and "Apcotex TSN 100" cannot be used straight away and these are used for manufacture of various products. The product literature of "Styrofan D 623 AP" indicated that the said goods are aqueous polymer dispersion used in the modification of hydraulic setting systems. Thus the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to cement mortar/concrete/grout provides good adhesion and water resistance. It comes in the form of a milky liquid. It is fully soluble in water and is to be added directly to the gauging water of mortar/concrete/grout.' 'Sika Latex Power is a synthetic multi functional emulsion rubber which when added to cement mortar/concrete/grout, provides good adhesion and water resistance properties. Suitable for old and new concrete bonding, waterproofing screed concrete, waterproof slurry coating for protection against saltpetre action and miscellaneous repairing'. It would thus be seen from the product literature that the appellant is selling his products as water resistant bonding agent. Sika Latex is rubber emulsion while Sika Latex Power is a multi functional emulsion rubber. The Latex power is more suitable for repairing jobs. We have also gone through the product literature of inputs. The product literature of "Styrofan D 623 AP" describes the goods as "aqueous polymer, dispersion used in the modification of hydraulic setting system". Further, the product literature of "Styrofan D 623 AP" indicates the application as under: &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." It would thus be seen from the above judgment that there should be transformations and a new and different article must emerge having a distinctive name, character or use. From the product literature of the appellant there is no clue about the inputs used by them. No one can make out about the manufacturing process. Even if someone is aware of "Styrofan D 623 AP", he cannot make out that the two products are similar or same. The name of the product is changed. The products of the appellants are understood as water resistant bonding agent from the usage point of view. But the inputs are understood as aqueous polymer dispersion used in the modification of hydraulic setting system. From the literature, there can be no doubt that the inputs and final product are having distinctive name, character or use. The inputs are not described/understood as additives or water resistant bonding agent. It also appears from the product literature that while the product of the appellant is meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd after use 'earth' was getting converted into 'spent earth', the question was whether the spent earth can be considered as a different product chargeable to duty again. In the present case, no such use is happening. The inputs are aqueous polymer and dispersion which are being processed to make it suitable as water resistant bonding agent. In our view, Revenue has discharged the burden from the literature of the final product as also that of inputs, the process being carried out leads to transformation of inputs into a final product having distinctive name, character or use. 4.2 In the case of Metlex India Pvt. Ltd. (supra), the issue was whether laminating/metallising of duty paid film will amount to manufacture. Since the input was a film and final product was also a film, the Hon'ble Supreme Court took a view that the process is not amounting to manufacture. Similarly in the case of Hindustan Poles Corporation (supra), the issue was mere joining of three pipes, one with other, of different dimensions to obtain a desired length. This was not considered the process of manufacture. In the present case, there is no such joining. As far as the commercial world as also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to manufacture. It is to be noted that the Tribunal has taken such a view as inputs and final product are known by the same name and are sold with reference to concentration and all that were being done was to reduce the concentration. In the present case, the final product is being marketed as water resistant bonding agent while the inputs are not known and are also not sold as water resistant bonding agent. As noted earlier, the dilution process itself and extent of dilution etc. are trade secrets. 4.6 The learned Advocate has also quoted a number of other judgments. We have gone through the said judgments. In those cases, either the physical shape or some other characteristic was being modified or changed which was well known and its modification had not changed name, use or characteristic. In those circumstances, this Tribunal has taken a view that such activity will not amount to manufacture. In some case, intermediate product was not marketable at all. We do not consider it necessary to discuss each of the case law, as the process of manufacture is to be examined in the facts and circumstances of each case with reference to the guidelines elaborated by the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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