ORDER
Gowri Shankar, Member (T)
1. Adjournment is requested on the ground that the appellant’s representative has to attend to a very important personal hearing before the Delhi Tribunal. To this Tribunal, each appeal is as important as anything. It is accepted the counsel took up the matter the same day. The date for hearing was fixed for hearing on 23.7.99. It is clear that the Delhi Tribunal has fixed its hearing subsequently. I therefore see no reason to adjourn. Therefore Shri John Creado agreed to represent the respondent.
2. I have heard the departmental representative and Mr. John Creado of the respondent. The respondent is a manufacture of printing ink. Some consignment of printing ink is sold by applicant returned on there being found defective and hence unusable. Such defective ink is added by the respondent in the fresh batches manufactured out of which finally further batches of ink emerges. The respondent took credit on the defective ink which was returned by the customer and utilized credit towards payment of duty on the finished ink. The department was of the view this process did not amount to manufacture and credit therefore should not be taken.
3. The Commissioner (Appeals) was of the view that manufacture takes place and credit was rightly taken. This is being challenged in the appeal. The respondent’s employee agrees that in the process as they take place, the ink of a different colour may emerge out of the defective ink. What the respondent does is to mix small quantities of defective ink with larger quantities of ink being freshly manufactured, in which process the defects in the ink already manufactured is diluted. This process in my view does not amount to manufacture. It is now settled that the criterion to decide that manufacture takes place in whether a new distinct commodity having a different nomenclature and use emerges out of the process under consideration. As I have noted the character and nomenclature of the ink taken up in reprocessing does not change. In fact even the defects present in the ink by reason of which it was returned to the manufacturer, are not removed. It is only that by being mixed with larger quantities of good ink the defects in that ink are so diluted that they do not present an obstacle to its use.
4. In Alcobex Metal Ltd. v. CCE the question before the Tribunal was whether Modvat credit can be taken of the duty paid on rejected power alloy products etc. which were recycled by the appellant before us. The Tribunal held that rejected goods ceased to be final product since they cannot be used for the purpose for which they are intended.
5. It would be valid to draw a distinction between goods which even if defective as such is irreparble which do not cease to be final product. For example fabrics containing some defects continue to be used as fabrics. Other goods cannot be used if they contain defects. The printing ink under consideration falls under this category. It is not as if it can be used as any printing ink for inferior printing job. The printing ink can either be used or not used at all. If it is not used at all, it is not marketable. It is not reusable as printing ink. If by various processes that commodity which we may refer as defective printing ink is made into usable printing ink, manufacture does take place.
6. The departmental representative’s contention that the ink, before arid after removing defect continue to be in the same tariff heading and therefore manufacture does not take place, is not acceptable. In Sriram Refrigerators v. CCE , the Tribunal was of the view the process undertaken by the appellant before it on the compressors did not amount to manufacture. That decision does not lay down any universally applicable test as to what is manufacture and facts has to be limited to goods under consideration. The fact that a separate legal provision exists in Rule 173H does not mean that the respondent cannot avail of the facility, which is available to him under law.
7. The case of the Tribunal of CCE v. Sigma Paints referred to by the departmental representative is prior to the decision in Alcobex Metal Ltd. I therefore see no reason to interfere. Appeal dismissed.