CESTAT sets aside Central Excise Duty as Thinner is different from Nail Polish remover [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (ITAT) has set aside central excise duty as Thinner is different from nail polish remover.

The appellant manufactures excisable goods, namely, lip-care, eye care, face powder, skin care, and hair care products in the unit situated at Rudrapur (Uttarakhand) and availed the area based exemption under the notification dated 10.06.2003. The appellant added a new product called nail enamel for manufacture in its unit and submitted the option as required under the notification on 30.03.2010. According to the appellant, the sole buyer of the nail enamel manufactured by the appellant was M/s Modi Revlon Pvt. It has also been stated that prior to

For the purpose of manufacturing nail enamel, the appellant claims that it purchased two raw materials, namely, colour solution and thixo lacquer from Fiabila. The colour solution raw material is paint & varnish which is available in 20/50Kg. packages but since it is of high viscosity, it cannot be filled in small bottles in which nail enamel has to be mandatorily sold in the market under the provisions of the Drugs and Cosmetics Act, 1940 read with the Bureau of Indian Standards Act, 2016.

The appellant claims that the colour solution is neither known commercially or to the consumers as nail enamel and they are not marketable as nail enamel. It is only because of the processes that are undertaken by the appellant that the manufacture of nail enamel takes place and the goods are rendered marketable to the consumer.

The coram of Justice Dilip Gupta and P.V.Subba Rao has held that not possible to accept the contention advanced by Department that the only change brought about by the appellant when the colouring matter is mixed to a solvent is to reduce the viscosity and this would not amount to manufacture. It cannot also be accepted that when the resultant product achieves superior quality, a new product marketable to the consumers as nail enamel does not come into existence as in the present case it has been found as a fact that a new marketable product comes into existence.

“The appellant would, therefore, clearly be entitled to the benefit of the area based exemption notification dated 10.06.2003. The order dated 04.03.2020, passed by the Additional Director General cannot, therefore, be sustained and is set aside. The appeal is, accordingly, allowed,” the CESTAT said.

To Read the full text of the Order CLICK HERE

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