Manufacture test for epoxy resin with fillers: no new commercial product where mixing only improves usability

Mixing inorganic fillers with duty-paid epoxy resin was analysed under the settled manufacture test requiring a change in name, character or use. The majority view was that the resin remained the same product because the fillers were added only to improve usability, with no chemical change or distinct commercial identity; the process therefore did not amount to manufacture of a new product under Item 15A(1), and the classification and exemption in the impugned order were sustained. The dissenting opinion considered the filled resin classifiable under Item 15A(1) and treated the mixing process as manufacture.

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Issues: Whether adding inorganic fillers to duty-paid epoxy resin brought into existence a new commercial product amounting to manufacture and attracting duty under Item 15A(1), or whether the product remained the same resin and was not chargeable again.

Analysis: The product was found to be duty-paid epoxy resin mixed with fillers only to make it more usable. The reasoning turned on the settled test that manufacture requires a change in name, character or use. No chemical change or distinct commercial identity was shown to result from the mixing. The Board's circulars referred to in the record were treated as supporting the view that such mixing does not by itself create a new product. The authorities relied on by the Revenue were distinguished on their facts because they involved products that had acquired a different commercial identity.

Conclusion: The process of mixing fillers with epoxy resin did not amount to manufacture of a new commercial product, and the assessee remained entitled to the classification and exemption accepted in the impugned order.

Dissenting Opinion: The President took the view that the product was classifiable under Item 15A(1), that mixing resin with fillers amounted to manufacture, and that the Revenue's appeal ought to be allowed.

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