SANDOZ INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The question raised in this petition is whether a formulation of a synthetic organic dye is independently liable to levy of excise due under the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act).

(2.) The petitioners are manufactures of synthetic organic dyes since the year 1963 and those days are then formulated into a liquid solution. This formulation involves the addition of dispersing agents or diluents which, according to the petitioners, does not change the dye already manufactured. In one of the letters addressed to the Deputy Collector of Central Excise, Bombay, on 9th December 1960, the process of formulation has been briefly described. The petitioners informed the Deputy Collector that they were formulating Foron Liquids from imported concentrated dispersible insoluble Azo dyestuffs. According to the petitioners, the process of formulation is only to break the pigment particles for physical and using dispersing agent nd water without any chemical change taking place. The diluents used for the formulation were stated to be (1) Belloid TD, (2) Sodium Lingo Sulphonate and (3) Water. The petitioners also informed the Deputy Collector that the company was manufacturing some of the concentrated dispersible insoluble Azo Dyestuffs locally.

(3.) Now, according to the petitioners, excise duty which is levied on synthetic dyestuff under item 14D of the Central Excise Tariff is being said by them on the synthetic organic dyestuff manufactured by them and, according to the petitioners, no excise duty is payable on the formulation made from dyes, as such formulation did not constitute manufacturing. The organic dues, according to the petitioners, were purchased as such from the market and the formulated dyes were made by the petitioners using either the dyes manufactured by them or dues purchased by them. The petitioners had, however, paid the excise duty on the dye formulation of which the petitioners claimed refund and the petitioners were told that the excise duty paid by them was not paid on the formulations but on the dyes used therein. Later the petitioners asked for the reconsideration of this view of the Excise Department and by letter dated 25th September 1963 the Collector of Central Excise allowed the petitioners to (1) clear dyes manufactured by them after payment of the duty at the concentrated stage and thereafter to formulate them and (2) to claim refund of excise duty as requested by the petitioner. Later, it appears that the petitioners continued to manufacture and purchase dyes and make formulations thereform but no excise duty was ever demanded from the petitioners on the formulations made and sold.