Mixing two articles, even if resulting in a new form, does not amount to manufacture unless it leads to a new and commercially different product with a distinctive name, character, or use.

Mohan, J.,

In W.P. No. 7254 of 1975.

2.In the said writ petition the appellants who are the manufacturers of Furacin Syrup, a resin solution which, according to the respondents, is liable to duty under the Central Excises and Salt Act, 1944

3.The learned counsel for the respondents does not dispute the fact that the question as to whether the end product is excisable at all was in fact canvassed before the learned single Judge. Even otherwise that being a question of law directly arising on the facts put forward in this case, we are of the view that the question as to the applicability of rule 10 will arise only if the article produced by the appellants is excisable, we proceed to deal with the said question even though that question has not been dealt with by the learned single Judge.

4.So far as the applicability of rule 10 to the facts of this case is concerned, though the learned counsel for the appellant questions the correctness of the view taken by the learned single Judge, we are of the view that the conclusion arrived at by the learned Judge cannot be taken exception to. Admittedly, for the period 1-4-1971 to 13-5-1972, the excise duty was levied and collected from the appellants only on the actual resin content for the resin solution produced by them. Thereafter when they became aware of the fact that excise duty is leviable not on the actual resin content but on the total weight of the entire solution, short levy has arisen and that short levy is due to the mistake committed by the initial authorities in the collection of the excise duty. Rule 10 of the Act provides for the recovery of the duties or charges short levied and it provides that if duties and charges have been short levied through inadvertence, error, collusion or through misconstruction on tas part of any officer, the proper authority can require by issuing a notice to the person concerned to show cause as to why he should not pay the amount short levied and sub-rule (2) provides for a determination of the amount actually short levied after hearing the representations if any by the person concerned'. Thus it is seen that rule 10 will come into the picture when (i) there is a short levy and (ii) when the short levy was due to inadvertence, error, collusion or misconception. In this case, there is a short levy. In view of the fact that the levy is not in accordance with the instructions issued by the Central Board of Revenue that the resin solution should be charged to duty not on the basis of the actual resin content but on the basis of the total weight of the solution and that the said levy was due to the mistake committed by the officers in ignoring the Board's instructions. Therefore it should be held that rule 10 has correctly been applied in this case.

5.Coming to the basic question as to whether the process adopted by the appellants to bring into existence the resin solution called 'Fnracin syrup' is a manufacturing process so as to attract duty under section 3 which is the charging section under the Act, and whether the end product which is brought into existence by mixing the synthetic resin imported by the appellants with alcohol is a product different in character, nature and use so as to say that the end product is excisable under the provisions of the Act.

6.According to the learned counsel for the appellants what is done is a mere dilution of the synthetic resin which is ia a solid from the alcohol to bring into existence a solution which the appellants call by name 'Furacin Syrup' and that this process does not amount to in any sense, a manufacturing process. It is also the appellant's case that the end product which is the resin solution is not different from the original synthetic resin and it continues to have the same properties as the synthetic resin which has been used for producing the resin solution. In support of his submission that mere dilution of synthetic resin or the mere mixing of water or alcohol will not amount to man