Manufacture and repacking principles: mixing pigments with diluent was excluded, but smaller-pack repacking was treated as manufacture.

Mere mixing of pigments with silica powder, treated as a diluent, did not amount to manufacture because it did not bring about a new commodity with a distinct name, character or use, and the demand on that count was set aside. Repacking cover coats from 200 kg bulk packs into 20 kg packs, however, amounted to manufacture on the facts considered, so the demand on that count was sustained. The assessee obtained only partial relief, succeeding on the mixing issue but failing on the repacking issue.

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Issues: (i) Whether mixing pigments with silica powder amounted to manufacture; (ii) Whether repacking cover coats from bulk packs of 200 kg into 20 kg packs amounted to manufacture.

Issue (i): Whether mixing pigments with silica powder amounted to manufacture.

Analysis: The process was considered in the light of the settled position that mere mixing with a diluent does not amount to manufacture when the resultant product does not undergo a change in name, character or use. The Tribunal applied that principle to the facts and treated the silica powder as a diluent mixed with pigments.

Conclusion: Mixing pigments with silica powder did not amount to manufacture, and the demand on this count was set aside in favour of the assessee.

Issue (ii): Whether repacking cover coats from bulk packs of 200 kg into 20 kg packs amounted to manufacture.

Analysis: The Tribunal held that the appellant's reliance on the cited precedent was misplaced on the facts. The activity involved repacking from bulk containers into smaller packs, and the reasoning advanced for excluding the process from manufacture was found inapplicable.

Conclusion: Repacking cover coats from 200 kg packs into 20 kg packs amounted to manufacture, and the demand on this count was sustained against the assessee.

Final Conclusion: The appeal succeeded only on the issue of mixing pigments with silica powder and failed on the issue of repacking, resulting in partial relief to the assessee.

Ratio Decidendi: Mere mixing of goods with a diluent, without bringing about a new commodity with a distinct name, character or use, does not amount to manufacture, whereas repacking bulk goods into smaller packs may constitute manufacture where the statutory definition so covers it.

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