Prima facie case on base paint valuation and non-manufacture by colourant blending secured stay of recovery.

Base paint cleared in non-standard quantities was treated as capable of retail sale declaration under the Standards of Weights and Measures framework, and later inclusion in the Third Schedule supported that treatment. The Tribunal also relied on the Board's clarification that blending base paint with colourant does not amount to manufacture under the Central Excise Act, because the consumer receives no materially different product. On those grounds, the assessee was found to have established a prima facie case, and waiver of pre-deposit with stay of recovery was granted.

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Issues: Whether the assessee had made out a prima facie case for waiver of pre-deposit and stay of recovery in a duty demand arising from valuation of base paint on the footing that the goods were not pre-packed commodities for retail sale and that blending with colourant amounted to manufacture.

Analysis: The assessee had been permitted by the Central Government to clear base paint in non-standard quantities under the proviso to Rule 5 of the Standards of Weights and Measures Rules, 1977, and the permission required declaration of retail sale price on each package. That permission was later followed by an amendment to the Third Schedule including base paint among commodities to be packed in specified quantities. The reasoning also relied on the Board's clarification that blending base paint with colourant did not amount to manufacture under Section 2(f) of the Central Excise Act, 1944. On this basis, the Tribunal found that the product ultimately received by the consumer was not materially different from the product cleared by the assessee, and that the assessee had established a prima facie case.

Conclusion: The request for waiver of pre-deposit and stay of recovery was granted in favour of the assessee.

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