JUDGMENT Ujjal Bhuyan, J. 1. This appeal by the State is directed against the judgment and order dated March 15, 2011 (Jyothy Laboratories Ltd. v. State of Assam [2011] 46 VST 308 (Gau)) passed by the learned single judge in W. P. (C) No. 5428 of 2010 allowing the writ petition filed by the respondent holding that the respondent's product "Ujala Supreme" is entitled to be included in entry No. 114 of Schedule IIC to the Assam Value Added Tax Act, 2003 with corresponding rate of duty and quashing the decision of the taxing authority to the contrary. The facts of the case may be briefly noted. 2. The respondent herein as the writ petitioner had filed the related writ petition challenging the order dated August 11, 2010, passed by the Commissioner of Taxes, Assam (Commissioner) under section 105 of the Assam Value Added Tax Act, 2003 (the Act) on a petition filed by the Superintendent of Taxes, Guwahati, Unit-B, seeking clarification on the rate of tax on "Ujala Supreme" manufactured by the petitioner. 3. Case as projected in the writ petition is that the respondent is engaged in the business of making and selling of "Ujala Supreme" (product), which is the brand name for diluted Acid Violate Paste (AVP). It is a dealer under the Act and has been filing returns for the product in accordance with the provisions of the Act and the Rules framed thereunder by classifying it under HSN Code No. 3204 12 94, paying value added tax (VAT) at four per cent in terms of Part C of Second Schedule to the Act and in turn collecting the said amount from its consumers. 4. The respondent was issued an audit assessment notice dated May 21, 2007 under section 36 of the Act asking it to produce documentary evidence in support of the returns filed by it for the period May 1, 2005 to March 31, 2006. It complied with the notice and submitted the necessary documents and details. Thereafter, a show-cause notice dated June 25, 2007, was issued by the concerned Superintendent of Taxes alleging that the respondent had paid VAT at four per cent instead of 12.5 per cent for the sale of the product. In response to the notice, the respondent appeared before the concerned departmental authority and explained as to why the product is exigible to VAT at four per cent. In response to the notice, the respondent appeared before the concerned departmental authority and explained as to why the product is exigible to VAT at four per cent. However, the departmental authority did not accept such explanation and passed order dated August 2, 2007 rejecting the claim of the respondent, who thereafter filed appeal before the appellate authority contending that the product is exigible to VAT at four per cent. The appellate authority by order dated November 27, 2007, upheld the contention and held that the product is taxable at four per cent and not 12.5 per cent. The Revenue filed revision petition against the appellate order before the Commissioner. The revisional authority, i.e., the Commissioner passed order dated June 27, 2008, affirming the findings of the appellate authority holding that the product by addition of water with AVP does not amount to manufacture and that the product retains the original characteristics of AVP. 5. Subsequent thereto, the Additional Commissioner of Taxes, Assam, by his letter dated May 26, 2010, required the respondent to appear before the Commissioner for clarification regarding rate of tax on the product, which was sought for by a departmental Superintendent. The respondent appeared before the Commissioner and the matter was heard. Thereafter, the Commissioner passed an order dated August 11, 2010, under section 105 of the Act. Detail reference to the order dated August 11, 2010 would be made in the subsequent part of the judgment. At this stage, suffice it to say, the Commissioner held that the product cannot be treated as AVP as by dilution it loses the characteristics of AVP and that the product does not fall under any entry in the First, Second, Third and Fourth Schedule to the Act, thus it will be covered under the entry at serial No. 1 of the Fifth Schedule to the Act and therefore taxable at 12.5 per cent. 6. The appellants who were the respondents in the writ proceeding resisted the writ petition by filing counter-affidavit. The stand taken in the counter-affidavit was that the respondent was taking contradictory position. To avail of concessions under the concession scheme framed in terms of the industrial policy it had contended that it had been manufacturing the product by using AVP as raw material. The stand taken in the counter-affidavit was that the respondent was taking contradictory position. To avail of concessions under the concession scheme framed in terms of the industrial policy it had contended that it had been manufacturing the product by using AVP as raw material. Now, it has made a somersault by asserting that the said product does not involve any manufacturing process and is only a dilution of AVP alone. According to the Department, the product marketed by the respondent is understood as a fabric whitener which is distinctly different from AVP, which is known in the market as synthetic organic dye used for dyeing of fabrics of silk wool at elevated temperature in the presence of acid. The Department placed reliance on a judgment of the Kerala High Court in the case of M. P. Agencies v. State of Kerala reported in [2010] 28 VST 44 (Ker) and contended that the product is commercially different from AVP and even assuming that it is diluted AVP, as the product contains 99.02 at of water, it is completely transformed in identity, use and marketability, thus it ceases to be a dye. Therefore, the rate of tax applicable on synthetic organic dye used for dyeing fabrics of silk wool was not applicable to the product. The respondent's classification of the product at entry No. 114 of Part C of the Second Schedule to the Act was disputed as erroneous. 7. The learned single judge [2011] 46 VST 308 (Gau) after due consideration held that the product is nothing but a diluted form of AVP and is entitled to be catalogued in entry No. 114 of Schedule IIC to the Act with corresponding rate of duty at four per cent. In view of the above finding, the order of the Commissioner dated August 11, 2010, was set aside and quashed. 8. Heard Mr. K. N. Choudhury, learned Senior Additional Advocate-General, Assam, for the appellant-State. Also heard Mr. M. P. Devnath, learned counsel for the respondent. 9. Counsel for the appellant-State submits that the product of the respondent is not identifiable with AVP and there is distinction between the two. 8. Heard Mr. K. N. Choudhury, learned Senior Additional Advocate-General, Assam, for the appellant-State. Also heard Mr. M. P. Devnath, learned counsel for the respondent. 9. Counsel for the appellant-State submits that the product of the respondent is not identifiable with AVP and there is distinction between the two. According to him, the product is commercially different from AVP with distinct characteristics and utility and therefore a manufacturing process is undertaken in the conversion of AVP into the product, which in fact was the initial stand of the respondent itself while claiming exemption under the concession scheme. He therefore contends that the commodity having ceased to be a dye, which is lodged in entry 114 of Schedule IIC to the Act, the Commissioner was justified in taxing the product as a residuary item under the Fifth Schedule to the Act. He also places reliance on the decision of the Kerala High Court in M. P. Agencies [2010] 28 VST 44 (Ker). He therefore submits that the appellate court should intervene in the matter and restore the order of the Commissioner. 10. The learned counsel for the respondent on the other hand submits that the learned single judge [2011] 46 VST 308 (Gauhati) had elaborately examined all aspects of the matter and thereafter had arrived at a reasonable conclusion. Asserting that there is no error or infirmity in the view taken by the learned single judge [2011] 46 VST 308 (Gauhati), learned counsel for the respondent supports the judgment of the learned single judge [2011] 46 VST 308 (Gauhati) and prayed for dismissal of the appeal. 11. The submissions made have received the due consideration of the court. 12. The issue involved in this case is as to whether the product of the respondent is substantially the same as its original material AVP or has it undergone a manufacturing process to transform itself into a commercially distinct identifiable end-product. Corollary to that issue is the question of inclusion of the product in entry 114 of Schedule IIC to the Act attracting a lower rate of tax at four per cent. 13. Before proceeding further, reference may be made to entry 114 of Schedule IIC to the Act. The Second Schedule to the Act contains a list of goods which are taxable at four per cent. Part C of Second Schedule furnishes the list of industrial inputs and packing materials. 13. Before proceeding further, reference may be made to entry 114 of Schedule IIC to the Act. The Second Schedule to the Act contains a list of goods which are taxable at four per cent. Part C of Second Schedule furnishes the list of industrial inputs and packing materials. The description of entry 114 of Schedule IIC with corresponding heading No. of 32.04 in the Central Excise Tariff Act, 1985, is as under : Synthetic organic colouring matter, whether or not chemically defined; preparations based on synthetic organic colouring matter as specified in Note 3 of Chapter 32 of the First Schedule of the Central Excise Tariff Act, 1985; synthetic organic products of a kind used as fluorescent brightening agents or as luminophores, whether or not chemically defined excluding catechu or gambiar. 14. All residuary items are placed in the Fifth Schedule attracting rate of tax at 12.5 per cent. 15. The order of the Commissioner dated August 11, 2010 appears to be wholly based on the decision of the Kerala High Court in M.P. Agencies [2010] 28 VST 44 (Ker). 16. In the Kerala case it was held that in the product "Ujala Supreme" acid violet was present in less than one per cent and that the balance 99 per cent was water. The Kerala High Court upheld the finding of the jurisdictional Commissioner that "Ujala Supreme" is a finished product used as a fabric whitener, emerging from the application of the industrial input, i.e., AVP and that "Ujala Supreme" as a product was completely distinct from AVP. 17. We may now refer to the order of the Commissioner dated August 11, 2010, which was based entirely on the decision of the Kerala High Court referred to above. As has already been noticed earlier, the Commissioner passed the order dated August 11, 2010 under section 105 of the Act on an application filed by the Superintendent of Taxes, Guwahati Unit-B, seeking clarification on the rate of tax on the respondent's product referring to an earlier decision of the Commissioner wherein he had held that preparation of "Ujala Supreme" by addition of water with AVP did not amount to manufacture as the product retained the original characteristics. Relying on the decision in M.P. Agencies [2010] 28 VST 44 (Ker), the Commissioner held that "Ujala Supreme" cannot be treated as AVP and in view of such a finding, clarified that since the product did not fall under any entry in the First, Second, Third and Fourth Schedule to the Act, it would be covered under the entry at serial No. 1 of the Fifth Schedule to the Act attracting the prescribed higher rate of tax. 18. The learned single judge (Jyothy Laboratories Ltd. v. State of Assam [2011] 46 VST 308 (Gauhati)) after an in-depth analysis of the matter held as follows (pages 321, 322, 324-329 in 46 VST) : 20. Before adverting to the merit of the contentious projections, the respondents' cavil on the petitioner's bona fide demands attention. The petitioner does not deny to have availed of the benefit of tax/fiscal incentives under the Assam Industrial Policy, 2003 at the relevant point of time. The policy was formulated amongst others to ensure industrial development in the industrially backward regions of the State and to generate more employment opportunities. It offered a package of incentives for promotion and seating up of industrial units and revitalisation of sick industrial units and to promote investment in the State. The eligibility criteria for availing of the incentives offered thereunder visibly envisaged a date of commencement of commercial production of the unit concerned whether existing or new and a finished product was contemplated to mean and include the item manufactured by the eligible units. Raw materials similarly were envisaged to mean and include all industrial components, intermediate goods, substances, consumable stores including furnace oil and light diesel oil used for captive generating sets required in the process of manufacture and packing materials utilized for packing of finished products by an eligible unit. The applications for grant of eligibility certificate and the certificate of entitlement with the particulars furnished therein thus have to be judged in these perspectives. 21. The facts pertaining to the commencement of commercial production and the manufacture of finished products were predominantly for the purpose of determining the eligibility of the units engaged therein to avail of the benefits under the policy. The focus invariably was not on the actual process of manufacture of the goods. 21. The facts pertaining to the commencement of commercial production and the manufacture of finished products were predominantly for the purpose of determining the eligibility of the units engaged therein to avail of the benefits under the policy. The focus invariably was not on the actual process of manufacture of the goods. Though the petitioner's present plea that Ujala Supreme is intrinsically only a diluted AVP is irreconcilable with the amalgam of the raw materials applied for the manufacture thereof as enumerated in its application for obtaining the aforementioned certificates, in the estimate of this court this incompatibility ipso facto, does not render the issue raised herein non-examinable on the ground of lack of its bona fide. Such a contradiction though may expose the petitioner to steps contemplated in law by the appropriate authorities, the consequence of it being non-suited therefor vis-à-vis the present challenge does not ensue. If in fact, the product Ujala Supreme is only singularly diluted AVP to its extreme with no other constituent and thus ought to be included in entry No. 114 of the Act to be assigned the corresponding HSN Code No. 3204 12 94, its prospect would stand jeopardized if the aforenoted anomaly simpliciter is awarded a decisive primacy. There being no estoppel against law, the plea of the respondents against the maintainability of the instant proceeding for want of bona fide of the petitioner does not commend for acceptance. 25. That Ujala Supreme has been determined to be comprised of the following constituents is borne out by the relevant reports referred to in M. P. Agencies [2010] 28 VST 44 (Ker) as well laid before this court as follows:- AV/49 ... .08% Water ... 99.02% 26. The petitioner's product is an extremely diluted form of AVP in the compositional context is also a finding of the Kerala High Court in M. P. Agencies [2010] 28 VST 44 (Ker). 27. The following excerpt of the certificate dated August 30, 2006 of Prof. V. R. Kanetkar, Professor and Head, Dyestuff Technology Department, University of Mumbai, Institute of Chemical Technology (Autonomous), University of Mumbai, deserves to be extracted : The acid violate paste (referred as, "AVP" hereafter) supplied to us confirms to acid violet 49, a synthetic organic classified into acid dye class which is used for the colouration of silk wool at elevated temperatures in the presence of acid. "AVP" is uniform and having standard strength which is formulated and prepared as ready for use. The "AVP" as well as "Ujala" purchased from the market are subjected to instrumental analysis (High Performance Thin Layer Chromatography) that the result are observed as below : 1. The chemical composition of "AVP" and "Ujala" are the same except for the dilution in "Ujala". 2. It can be observed from the chromatogram that "Ujala" is a heavily diluted form of AVP with water. 3. As such "Ujala" cannot be used as a dye or a colouring matter as it is. 4. From the technical literature it can be understood that diluted acid violet 49 is used in the fabric finishing industries for imparting brightness to white fabrics. (The mechanism being the fabric absorbs all the colours in the visible light and transmits the bluish/purplish tint) As per the technical report and the HPTLC report, it can be conclusively said that Ujala is nothing but a diluted form of acid violet dye. The observations of the HPTLC analysis are as follows : a. All the components present in diluted sample of AVP are also present in Ujala sample. b. No additional components are present in Ujala sample. c. The diluted AVP samples and the Ujala sample's spectral scans are super imposable and match exactly, which confirms that Ujala is a diluted form of AVP and chemically they both are identical. From the above analytical and technical data, it can be concluded that "Ujala" is only a diluted form of acid violet 49 with water, which has the inherent characteristics of brightening clothes and does not contain any other additives or optical brightening agents. The brightness of the fabric is increased because it absorbs all the colours in the visible light and transmits the bluish/purplish tint, thus hiding the yellowing of the fabrics. 28. The above extract recites the following features of the analysis of the product : (1) The chemical compositions of AVP and Ujala are the same. (2) Ujala is heavily diluted form of AVP with water. (3) All the components present in diluted sample of AVP also exist in Ujala. (4) No additional component is present in Ujala. (5) Ujala is a diluted form of AVP and both are chemically identical. (6) Ujala is a diluted form of acid violet paste 49 with water and has the inherent characteristics of brightening clothes. (3) All the components present in diluted sample of AVP also exist in Ujala. (4) No additional component is present in Ujala. (5) Ujala is a diluted form of AVP and both are chemically identical. (6) Ujala is a diluted form of acid violet paste 49 with water and has the inherent characteristics of brightening clothes. (7) Ujala cannot be used as a dye or colouring matter as it is. 29. The petitioner in paragraph D. 45 has referred to a report dated October 22, 2007 (stated to be annexure 13 in the appeal before the High Court) of Prof. V. R. Kanetkar as above providing the following clarification : (4) Para 2, point 3 of the report dated August 30, 2006 state that as such "Ujala" cannot be used as a dye or a colouring matter as it is. Ujala will impart permanent colour (dye) in the presence of acid at elevated temperature. 30. On a conjoint reading of this clarification (existence and authenticity of the report dated October 22, 2007 not having been denied by the respondents), the absence of dyeing efficacy of the petitioner's product in absolute terms cannot be inferred. Ujala Supreme assuredly thus is a commodity which is AVP being highly diluted with water possessing dyeing quality in the presence of acid at elevated temperature. 31. Axiomatically, therefore, if Ujala is identifiable with AVP though in a diluted form and is not construed to be a commercially different product therefrom, it is classifiable under entry 114 of the Act and relatable to HSN Number 3204 12 94 for the purpose of excise duty under the Tariff Act. It, however, is regarded as a new product independent of its constituent AVP irrespective of its end-use, in absence of any other entry available to accommodate it, it is liable to be assessed as a residuary item contemplated under Schedule V of the Act. Admittedly, Ujala Supreme is a mixture or combination of AVP and water. Entry 114 of Schedule IIC of the Act is assigned, inter alia, to synthetic organic colouring matter whether or not chemically defined as well as preparation based on synthetic organic colouring matter as specified in Note 3 of Chapter 32 of the First Schedule of the Central Excise Tariff Act, 1985. Entry 114 of Schedule IIC of the Act is assigned, inter alia, to synthetic organic colouring matter whether or not chemically defined as well as preparation based on synthetic organic colouring matter as specified in Note 3 of Chapter 32 of the First Schedule of the Central Excise Tariff Act, 1985. It is relatable to heading No. 3204 in Chapter 32 of the Tariff Act dealing with "tanning or dyeing extracts" tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks'. 32. Note 3 of Chapter 32 as above, extends amongst other the application of heading 3204 to preparations based on colouring matter of a kind used for colouring any material or used as ingredients in the manufacture of colouring preparations. This headnote, however, does not apply to pigments dispersed in non-aqueous media, in liquid or paste form, of a kind used in the manufacture of paints, including enamels or to other preparations of heading 3212, etc. 37. Noticeably, the argument on behalf of the respondents that Ujala Supreme even if a dye, being offered for sale in form or packing for retail sale, is covered by heading 3212 is not based on pleadings. Such a plea is instead opposed to the stance of the respondents that the product is shorn of any dyeing attribute. Be that as it may, as the product is a composition of two constituents as demonstrated by its composition, rule 3(b) of the General Rules for Interpretation of the Harmonized System seems apposite to diagnose with certitude, its classification to ascertain the rate of its exigibility to duty under the Tariff Act. Judged by the percentage of existence of the ingredients of the product, it cannot be gainsaid that the essential characteristics thereof would be decided by acid violet paste (AVP). As it is rule 3(b) stipulates that classification of mixtures and composite goods consisting of different materials or made up of different components as well as goods put up in sets for retail sale and which cannot be classified by referring to rule 3(a) shall be classified as if they constitute the material or component which gave them their essential character. As Ujala Supreme is a highly diluted form of AVP in its essential character, on the application of rule 3(b) it appropriately is entitled to be catalogued in entry 114 of Schedule IIC of the Act and qualified for HSN 3204 12 94 for determining the rate of taxability. 38. The ultimate conclusion of their Lordships in M/s. M. P. Agencies contrary to the above is based on the findings of the report dated August 30, 2006 that Ujala Supreme is incapable of being used as a dye or a colouring matter and it having thus lost that quality due to extreme dilution, can no longer be identified with AVP. The petitioner's contention against manufacture of the product to yield a commodity novel in kind and distinguishable from AVP was not considered in this premise. On the same reasoning, the benefit of classification based on Harmonized System of Nomenclature was refused to its product. This determination with utmost respect for the aforementioned deductions in the present adjudication cannot be subscribed to. Not only the clarification provided in the report dated October 22, 2007 by Prof. V.R. Karnetker neutralizing the earlier observations in the report dated August 30, 2006 that Ujala cannot be used as a dye or a colouring matter, is of definite significance for the ultimate classification of the product, its structural composition as well enjoins its inclusion under entry 114 of Schedule IIC of the Act earning for it HSN Code Number 3204 12 94 to determine its tax liability. 44. On a totality of the above considerations, this court is of the unhesitant view that the petitioner's product 'Ujala Supreme' is entitled to be included in entry 114 of the Schedule IIC of the Act with corresponding rate of duty prescribed by HSN Code No. 3204 12 94. This court, for the reasons recorded hereinabove, is thus in respectful disagreement with the observations and the conclusions recorded in M.P. Agencies [2010] 28 VST 44 (Ker). The impugned order dated August 11, 2010 when judged by the above touchtone is thus unsustainable in law and on facts. It is thus, quashed. 19. We are in agreement with the line of reasoning adopted by the learned single judge. The product "Ujala Supreme" though is a highly diluted form of AVP, as has been rightly held by the learned single judge, it retains the essential characteristics of AVP. It is thus, quashed. 19. We are in agreement with the line of reasoning adopted by the learned single judge. The product "Ujala Supreme" though is a highly diluted form of AVP, as has been rightly held by the learned single judge, it retains the essential characteristics of AVP. Therefore, it cannot be said to be commercially distinct and different from the user product AVP, which is covered by entry 114 of Schedule IIC to the Act. In this respect, we may refer to the views expressed by the honourable Supreme Court in the well known case of Union of India v. Delhi Cloth and General Mills Co. Ltd. reported in [1963] Supp 1 SCR 586, that manufacture signifies bringing into existence a new substance and not merely to effect a change in one. Therefore, we find no justifiable reason to accept the submission of the appellant-State that the product emerges out of a manufacturing process and to place the product in the residuary category in the Fifth Schedule to the Act. 20 In view of the discussions made above, we are not inclined to take a view different from the one taken by the learned single Judge. Accordingly, we find no merit in the appeal. Consequently, the same stands dismissed. No cost. In favour of Department.