Color mixing in lacquer not manufacturing per Tribunal ruling. Precedents cited. Impugned order set aside.

The Tribunal ruled in favor of the appellant, holding that mixing color in clear Nitro Cellulose Lacquer does not amount to manufacturing. Citing legal precedents like Paulson Polymers and the Supreme Court decision in Chowgule & Co. (P) Ltd., the Tribunal set aside the impugned order and granted relief to the appellant.

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Issues:
1. Determination of whether mixing color in clear Nitro Cellulose Lacquer amounts to manufacture.
2. Interpretation of Section 2(f) of the Central Excise Act, 1944 regarding the process of tinting base enamel/emulsion with a stainer.
3. Comparison of clear Nitro Cellulose Lacquer and colored Nitro Cellulose Lacquer as distinct products.
4. Application of legal precedents regarding the addition of dyes to lubrication oil for color change.

Issue 1:
The main issue in this case is whether the activity of mixing color in clear Nitro Cellulose Lacquer constitutes manufacturing. The appellant argues that this process does not result in a new product emerging, as the clear lacquer remains the same even after color mixing. The appellant relies on Tribunal decisions and a Commissioner's order stating that adding pigment and solvents to the lacquer base does not amount to manufacture.

Issue 2:
The interpretation of Section 2(f) of the Central Excise Act, 1944 is crucial in determining whether the tinting process with a stainer to obtain different shades of paint constitutes manufacturing. The appellant cites Board's Circular No. 247/81/96-CX, which clarifies that tinting base enamel/emulsion with a stainer does not amount to manufacture as per the Supreme Court decisions.

Issue 3:
A key point of contention is whether clear Nitro Cellulose Lacquer and colored Nitro Cellulose Lacquer should be considered as separate commodities. The Revenue argues that these are distinct products in the market and should be treated as a result of manufacturing. However, the appellant asserts that the colorization process does not change the fundamental nature of the lacquer.

Issue 4:
Legal precedents, such as the case of Paulson Polymers v. CCE, Mumbai, are cited to support the appellant's position. The decision in this case established that adding dyes to lubrication oil for color change does not alter the basic character of the oil or create a new product. The Tribunal's ruling in Paulson Polymers is applied to the present case, emphasizing that converting clear Nitro Cellulose Lacquer into colored lacquer does not constitute manufacturing.

In conclusion, the Tribunal, following the precedent set by Paulson Polymers and supported by the Supreme Court's decision in Chowgule & Co. (P) Ltd., ruled in favor of the appellant. The Tribunal held that the process of mixing color in clear Nitro Cellulose Lacquer does not amount to manufacturing, and therefore, set aside the impugned order and granted relief to the appellant.

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