Manufacture test for printing paste failed where standardised dyes were only simply mixed and no contrary Revenue evidence was produced.

Printing paste prepared in the factory from formulated, standardised or prepared dyes by simple mixing with other materials was held not to amount to manufacture under the applicable tariff understanding. The section 37B classification circular clarified that such paste is not classifiable under sub-heading 3204.29, and the Revenue had the burden to show that the dyes were unformulated, unstandardised or unprepared. The assessee's invoices and certificates supported standardisation, short shelf life and non-marketability, while no contrary evidence was produced. The process was therefore not excisable, and duty liability under the disputed classification could not be sustained.

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Issues: Whether printing paste prepared in the factory from formulated, standardised or prepared dyes by simple mixing with other materials amounted to manufacture and was liable to duty under the relevant tariff entry.

Analysis: The classification circular under section 37B clarified that printing paste prepared from formulated, standardised or prepared dyes by simple mixing with other materials does not amount to manufacture and is not classifiable under sub-heading 3204.29. The burden to establish that the printing paste was made from unformulated, unstandardised or unprepared dyes lay on the Revenue. The appellant produced purchase invoices and certificates indicating that the dyes were standardised and that the paste had a short shelf life and was not marketable. No contrary evidence was produced by the Revenue to displace this material.

Conclusion: The process did not amount to manufacture, the goods were not liable to duty under the disputed classification, and the finding of excisability could not be sustained. The issue is decided in favour of the assessee.

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