TMI Blog1988 (2) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... re either dried and screened to remove fines and lumps. In respect of other type of Ion exchanges, i.e., Anion Exchangers, Co-polymer beads are made from styrene and divinyl benzene ethylene glycol dimethecolate. The process of manufacture of these beads is exactly similar to the one described above for Cation Exchangers. 3. The appellants initially started with paying duty on the co-polymer beads under 15A(1)(ii). Departmental authorities, however, advised them vide Superintendent letter dated 13-2-1979, as stated by the appellants, that they were not required to pay duty on co-polymer beads but the duty burden was required to be discharged on the end product i.e., Ion exchange resins. The duty paid by the appellants on the co-polymer beads is stated to have been refunded. This position was again confirmed in reply to a letter from the appellants seeking clarifications Vide Superintendent s letter dated 28-5-1979. The appellants, however contested the levy of duty on Ion exchange resin under 15A(1)(ii). The Collector (Appeals) allowed their appeal in the following terms :- Since co-polymer product in one form, i.e., co-polymer beads have been produced, the same is classifiabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. He made submissions on the following points : (i) Excisability of the goods; (ii) Classification thereof; (iii) Point of Limitation. He pleaded that the co-polymer beads were manufactured by the appellants for their own use for captive consumption and these were not marketable or capable of sale to consumers. He pleaded that onus was on the Department to prove that the goods, in question, were marketable as such. He stated that the appellants had produced two affidavits before the lower authorities from knowledgeable persons showing that these were not bought or sold in the market. On the other hand, he pleaded the Department had not produced any evidence to show that these goods were sold to the consumers. He pleaded that the co-polymer beads were an intermediary product in the manufacture of Ion Exchange Resins and in the absence of any evidence these could not be held as goods for the purpose of Central Excise duty. He cited the following case law in support of the plea : (1) Union Carbide India Ltd. v. Union of India and Others [1986 (24) E.L.T. 169]; (2) Union of India v. Delhi Cloth and General Mills - 1963 Supp. LS.C.R. 586 - 1977 (1) E.L.T. (3 199); (3) Hin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of plastic as given in the Whitting ton s Dictionary of Plastics, according to which, he pleaded, plastic is defined as a substance which at some stage in its manufacture or processing into finished articles can be shaped by flow. The learned advocate pleaded that the appellants product was not soluble in any organic solvents and also cannot be moulded, cast, extruded or rolled and these were not formed under any external influence into shapes, he pleaded that this plea was taken by the appellants before the Assistant Collector but no finding had been given on the point raised by the appellants. Some tests results, carried at the instance of the appellants at the Central Salt and Marine Chemicals Research Institute, Bhavnagar, have been cited in support of this plea. There is nothing on record to show whether the products tested were the same as manufactured by the appellants nor the departmental authorities appear to have been associated with these tests. 5. The learned advocate pleaded that demands relating to January 1979 to 9th March, 1981 are barred by limitation in terms of Section 11A as the show cause notice demanding the duty was issued on the 10th September, 1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the appellants had not filed any appeal against order Nos. 245-251/81, dated 23-2-1981 and therefore the said order of the Collector (Appeals) had attained finality and the recovery of the differential duty would not attract Section 11A of the Central Excises and Salt Act, 1944. In this connection, he also cited the order of the Collector (Appeals) dated 12-2-1982 as a part of the same proceedings when the Assistant Collector proceeded to recover the demand in terms of earlier appellate order cited supra. According to him, the Collector (Appeals) vide his order had held that the Assistant Collector could not recover the amounts without confirming the demand raised and that Assistant Collector was competent to make adjustments from the refunds claimed by the appellants. 9. The points that arise for determination before us, as pleaded, are in respect of the following : (i) whether the co-polymer beads are goods for the purpose of levy of excise duty; (ii) whether these beads fall under 15A(1)(ii) of CET; (iii) whether the demand raised in respect of these is bit by limitation. We observe that the co-polymer heads are product of polymerisation carried out in a react ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied products and the Hon ble Supreme Court and other High Courts have held those goods as not excisable after considering the nature of the products in question and the stage and status of their manufacture. In this connection, the Tribunal in the case of Kores India Limited v. CCD, Bombay [1987 (27) E.L.T. 292 (Tribunal)] has taken note of the arguments as advanced in the present case and have held as under : Stencil paper consists of stencil skin, carbon paper and backing paper and stencil head. The manufacturer of stencil skin is independent and is complete when the skin is made and becomes a component part of stencil. It is a complete product after processing is done on it. The taxable event for central excise is the manufacture of excisable goods and the mament there is a transformation into a new commodity, commercially known as a distinct and separate commodity having its own character, use and name, manufacture takes place and liability to duty is attracted. The appellants argument that the stencil skin is not bought or sold in the market place appears to be immaterial as it is not a general consumption item but a highly specialised one. It is conceivable that a manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) s order and also the Trade Notice issued in this regard, held that all Ion exchange resins do not fall under this item and only such of these which have resinuous properties will be covered under this item and Others would be assessable under Item 68 CET. Ion exchange resins are modified co-polymerised products. Therefore, what is true for Ion exchange resins is also true for co-polymer beads. Before co-polymer beads can be said to be covered under this item, it has to be first established that these belong to generic of artificial or synthetic resins and plastic materials notwithstanding the fact that these are result of co-polymerisation process. The appellants have all along been maintaining that these do not answer to the criterion set out in the technical books for plastics and resins and as understood internationally. We find that the goods have not been tested to ascertain this position. In view of this we hold that in the absence of any findings that the goods are plastic materials or resins, it cannot be held that co-polymerised beads are assessable under 15A(1)(ii). The Revenue have also not produced any literature to show that these answer to the description of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants, however, took precaution to get clarification from the departmental authorities as to whether in case they were to pay duty on the Ion exchange resins, they were not required to pay duty on co-polymer beads and they therefore stopped paying duty on co-polymer beads. The appellants, however, filed a claim for refund of duty paid on Ion exchange resins on the plea that the same were assessable under Tariff Item 68 as against 15A(1)(ii) CET. The position was also clarified by the departmental authorities when a Trade Notice was issued in this regard that when Ion exchange resins have no resinuous characteristics, the same would fall outside the purview of Item 15A(1)(ii) and will be assessable under 68 CET. It was in these terms that the Collector (Appeals) also passed orders and made observation in his order that the co-polymer beads would be chargeable to duty under 15A(1)(ii). 13. We observe that Ion exchange resins and co-polymer beads are separate products and the levy of duty in respect of each product has to be decided separately and any duty to be paid has to be determined in respect of each commodity separately. As it is, the two products are different. One is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o result in Ion Exchanges. 3. Jan. 1979 Appellants paid duty on DVB beads under Tariff Item No. 15A(1)(ii). 4. 13-2-1979 Superintendent s letter requiring appellants to pay duty on final product, i.e. Ion Exchanges and not on DVB beads. Comp., p. 1. 5. - In view of this letter, Appellants stopped paying duty on DVB beads and paid duty only on Ion Exchanges under Tariff Item No. 15A(1)(ii). 6. 3-3-1979 Appellants letter to Superintendent to clarify whether they should continue non-payment of duty on beats or whether they should resume payment thereon. Comp., p. 2. 7. 28-5-1979 Superintendent s letter reiterating that Appellants should pay duty on Ion Exchanges and not on the interim product. Comp., p. 3. 8. 7-1-1981 Tariff Advice No. 7/81 issued by C.B.E.C. regarding classification of Ion Exchanges : Where Ion Exchanges had resinous characteristics, they should be classified under Tariff Item No. 15A(l)(ii); where such Ion Exchanges do not have resinous characteristics, they should be classified under Tariff Item No. 68. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. 21. 18. 14-12-1983 Order-in-Appeal by Collector (Appeals), rejecting Appeal. On marketability, Collector (Appeals) merely held that beads are saleable articles and have commercial value Appeal p. 16. 19. 6-5-1983 This Appeal before the Tribunal. 20. 14-8-1985 Test Report of DVB beads by Central Salt and Marine Chemicals Research Institute, Bhavnagar, stating that beads are not thermo-plastic or fusable and cannot be moulded. Separate. 21. 7-10-1985 Test Certificate by Central Institute of Plastics, Engineering and Tool (CIPET), a Government of India organisation, stating that DVB beads were cross-linked polymers which are not processable for further converting into mouldable products due to their infusable nature. Separata. 22. 19-8-1986 Application to Tribunal to take on record the above two Test Reports. 15. [Order per : S.D. Jha, Vice-President (J)]. - I have carefully gone through the order proposed by Brother Gulati. As I am only in partial agreement with him and not complete, I consider it proper to record my own views separately. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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