Concessional exemption for Mixed Xylene failed where repacking was not manufacture and intended end-use condition was unmet.

Mixed Xylene cleared under a concessional exemption remained ineligible where the material was merely repacked into smaller drums and transferred to another factory without any manufacturing process. The notification applied only when the authority was satisfied that the goods were intended for use as a solvent, diluent or thinner in the manufacture of paints, varnishes, lacquers or allied materials, and that essential condition was not met on the admitted facts. The precedent relied on was distinguished because it involved a process that resulted in thinner, whereas here the goods were cleared as such. The concessional exemption was therefore denied, and the demand and penalty were sustained.

---

---

Issues: Whether Mixed Xylene cleared under the concessional notification remained eligible for exemption when it was repacked and sent to another factory without undergoing manufacture, so as to satisfy the condition of use as solvent or diluent in the manufacture of paints or allied materials.

Analysis: The notification granted concessional duty only when the jurisdictional authority was satisfied that the material was intended for use as a solvent or diluent or thinner in the manufacture of paints, varnishes, lacquers or allied materials. The admitted facts showed that the Mixed Xylene received by the appellant was not subjected to any manufacturing process, but was only repacked into smaller drums and transferred to another factory. The record did not show that repacking amounted to manufacture, and the appellant itself accepted that no process was undertaken on the material before removal. The cited precedent was distinguishable because that case involved a manufacturing process that resulted in thinner, whereas here the material was cleared as such. The essential condition of the notification was therefore not met.

Conclusion: The concessional exemption was not available, and the demand and penalty were sustained.

---