Manufacture test for pesticidal formulations: dilution and addition of ingredients were held not to amount to manufacture before Chapter 38 Note 2.

Addition of chemicals, inert carriers, solvents, surface active dispersing agents and stabilising agents to highly concentrated pesticidal chemicals was treated as not amounting to manufacture under the then-applicable tariff position. The Tribunal relied on earlier decisions in the assessee's own case and other settled precedent, which had already been followed by the Commissioner (Appeals), and noted that High Court authority supported the same view. It was further recorded that this position applied before the introduction of Note 2 to Chapter 38 of the Central Excise Tariff Act, 1985. The dispute was therefore treated as no longer open for reconsideration, and the Revenue's appeals were rejected.

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Issues: Whether the addition of chemicals, inert carriers, solvents, surface active dispersing agents and stabilising agents to highly concentrated pesticidal chemicals amounts to manufacture, and whether the Revenue appeals could survive in view of the settled precedent.

Analysis: The Tribunal noted that the very issue had already been decided against the Revenue in earlier decisions, including the assessee's own case, and that those decisions had been followed by the Commissioner (Appeals). It was also recorded that the later reasoning was supported by High Court decisions which endorsed the view that such dilution and addition of ingredients did not amount to manufacture prior to the introduction of Note 2 to Chapter 38 of the Central Excise Tariff Act, 1985. In these circumstances, the dispute was treated as no longer open for reconsideration.

Conclusion: The issue was decided against the Revenue and in favour of the assessee; the Revenue appeals were rejected.

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