Exemption for processed surface-active agents upheld where further chemical mixing created covered wetting-out preparations.

Products made from duty-paid surface-active agents, after further mixing and chemical processing, were treated as distinct preparations eligible for exemption under the relevant notification as emulsifiers, wetting-out agents, softeners and similar products. The reasoning accepted that the additional processing transformed the slurry into material suitable for use as wetting-out agents, so the goods were no longer to be viewed merely as surface-active agents. The revenue's reliance on Rule 9(3) did not change the classification of the final products within the exemption entry, and the exemption was therefore available to the assessees.

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Issues: Whether the products made from duty-paid surface-active agents, after mixing and processing with other chemicals, were eligible for exemption as emulsifiers, wetting-out agents, softeners and other like preparations under the relevant notification.

Analysis: The respondents subjected the slurry to further processes by adding and mixing chemicals so as to make the material suitable for use as wetting-out agents. The resulting products were held to be preparations specifically covered by the exemption notification. On that basis, the objection that the goods continued to be merely surface-active agents was rejected, and the revenue's reliance on Rule 9(3) did not alter the position that the final products fell within the exemption entry.

Conclusion: The exemption was available to the respondents, and the revenue's challenge failed.

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