Facts:-

• The Appellant, M/s Avon Beauty Products India Pvt. Ltd., located in Uttarakhand, is engaged in the production and clearance of nail polishor lacquers fallingunder Chapter 33 of the First Schedule of Central Excise Tariff Act.
• The Appellant had set up an industrial unit in Uttarakhand which was an exempted area, covered by Notification dated 10.06.2003.
• The Appellant procured base lacquer and colour solution and tested it for their chemical properties. Thereafter it added colours to the mix and in certain cases'pearls', 'glitter' and 'shine' were added too.
• As per the notification, exemption shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labeling or re- labelling of containers, sorting, declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacture in the States of Uttarakhand or Himachal Pradesh.
• According to the Department, the Appellant undertook only basic activities and no other          processes were done which amount to manufacturing.
• Aggrieved, the appellant filed the Appeal.

Issue:-

• Whether the making of nail polishfrom base liquerand colour solutionis excluded from the area based exemption, provided by virtue of part 4 of Notification dated 10.06.2003 of The Central Excise Tariff Act?

Order:-

• The Tribunal relied on GS Pharmabutors Pvt. Ltd. (Unit - II) Vs Additional Director General (Adjudication) in which are based exemption was allowed to the assessee and it was held that a conjoint reading of the definition of manufacture in section 2(f) (iii) of the Excise Act and Note 5 of chapter 33 of the First Schedule to Excise Act will lead to mean that the appellant would render the product to be marketable to the consumeras nail enamel. 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.”
• In the present case, the Tribunal thus observed that the contention made by the Department that mixing of colouring matter doesn't amount to manufacturing and becoming of a new product is not acceptable.
• The Appellant would be covered under the exemption.
• The Appeal is allowed.