P.K. Kapoor, Member (T)

1. This is an appeal against the order passed by the Collector (Appeals), Central Excise, New Delhi. The only question that arises for consideration in this case is whether the preparation of Malathion 50%, DDT 25%, Aldrin 30% and Sohnagar 30% E.C. by mainly dilution of basic pesticidal chemicals in highly concentrated form by addition of inert carriers/solvents and dispersing and stabilising agents to make them suitable for either direct use or after addition of water, amounts to manufacture within the meaning of Section 2(f) of the Central Excises and Salts Act, 1944.

2. On behalf of the appellant Shri Somesh Arora, learned JDR appeared before us. He contended that the process of addition of chemicals and other ingredients like inert carriers or solvents and also surface active, dispersing and stabilising agents to pesticidal chemicals in highly concentrated form would amount to manufacture within the meaning of Section 2(f) of the Act since it results in the emergence of a new and distinct product having different properties viz. pesticide/insecticide fit for either direct use or after addition of water. According to the learned JDR the process of conversion of basic pesticidal chemicals carried out by the respondents was analogous to the manufacture of soft drinks out of concentrates. On these grounds it was contended that the impugned order holding that the dilution of pesticides and insecticides in highly concentrated form through addition of solvents, surface active and dispersing agents to render them suitable for use did not amount to manufacture was illegal and not sustainable.

3. On behalf of respondents Smt. Archana Wadhwa, learned advocate has contended that the process carried out by the respondents mainly comprised of dilution to the required strength of the basic pesticidal chemicals which were in highly concentrated form. She added that dilution was carried out to make them suitable for direct use by addition of inert carriers or solvents, surface active agents and dispersing and stabilising agents. She stated that even after such processing the products were marketed as Malthian, DDT and Aldrin. She pointed out that even in respect of 'Sohnagor' which was prepared by diluting 'Diamethoate' the chemical name of the product shown on the containers was 'Diamethoate'. She contended that no duty was chargeable on the products in question since the basic chemicals used were duty-paid and the processing carried out did not constitute 'manufacture' within the meaning of Section 2(f) of the Act, since there was no transformation resulting in the emergence of any new or different article having distinctive name, character and use. On these grounds she pleaded for the rejection of the appeal.

4. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the only question that has to be decided is whether processing of pesticidal basic chemicals in concentrated form, namely, Malathion 50%, DDT 25%, Aldrin 30% and Diamethoate carried out by addition of inert carriers/solvents, surface active and dispersing agents and also stabilisers for diluting them and rendering them suitable for use either directly or after addition of water, amounted to manufacture within the meaning of Section 2(f) of the Act. According to the respondents the process of dilution of basic pesticidal chemicals through addition of solvents, surface active agents and solvents, surface active agents and stabilisers carried out by them did not amount to manufacture since such processing did not result in any new product having distinctive name, character and use. In this regard they also pointed out that even after processing, the products retained the same name as that of the basic chemical with the exception of 'Sohnagor'. They have stated that even in the case of 'Sohnagor) which is prepared by diluting the basic chemical 'Diamethoate' the chemical name 'di-methoate' wa