TMI Blog1989 (1) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... is as follows: - 3(i) Mix resorcinol, formaldehyde, caustic soda and water with the solution in continuous agitation and with temperatures strictly within 15.5 C-26.5 C use as soon as possible after 15 hours for final mixing with B stock. (ii) B stock comprising rubber latex, caustic soda and water prepared-Simultaneous with above and kept as 15.5 C-26.5 C under continuous agitation." 4.1 The department contends that the first mixture consisting of resorcinol, formaldehyde, caustic soda and water results into A stage resin known as resol and therefore, falls under Tariff Item 15-A. This contention of the department is based on chemical examiner s report dated nil March, 1977 which reads as follows : - Report : The sample is an aqueous solution of resorcinol formaldehyde (Phenolic resin) Please see note below. Note : The sample as received is a phenolic resin (in resol stage) and would be covered by Tariff Item 15A 1(i) as a condensation product whether or not modified or polymerised. Sd/- (S. Krishnamurthy) Chemical Examiner" 5. In the first instance a show cause notice dated 5-2-1981 was issued to the first appellant. Relevant extracts from the said show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Licence and without taking out a Central Excise Licence and without filing classification list, price-list and without payment of appropriate duty and failed to maintain any accounts, the assessee has not produced the particulars called for by the Department and thereby suppressed the fact with wilful intention to evade payment of Central Excise duty, due on the product. Messrs. Dunlop India Ltd., Madras-33 are hereby required to show cause to the Collector of Central Excise, Nungambakkam High Road, Madras-34 as to why a penalty should not be imposed on them under Rule 173Q of Central Excise Rules and why the duty on the Resorcinol formaldehyde manufactured by the assessee so far should not be demanded under Rule 9(2) in respect of clearances made up to 16-11-1980 and not under Section 11A of Central Excises and Salt Act, 1944 for the subsequent period. The quantity and the duty to be demanded will be communicated in due course, after ascertaining from M/s. Dunlop India Ltd., Madras. Messrs. Dunlop India Ltd., Madras-53 are further directed to produce at the time of showing cause, all the evidence upon which they intend to reply in support of their defence." 6. Later on anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f chemical aqueous solution under consideration is highly unstable and cannot be kept for more than a few hours. If this is not used after this limited period, it becomes a useless jelly like mass which has no application whatsoever. It is, therefore, submitted that the product under consideration is not capable of being marketed. Its only use is for manufacture of further dip solution which in turn is used in the manufacture of tyres for the purpose of adhesion. He submits that refeience to the example of actual marketing of the product in one case has not been disclosed by the Collector either in the impugned order itself nor in the show cause notices. This finding, therefore, of the Collector that the product under consideration is marketable or is marketed should be ignored. In the absence of the goods being marketable these cannot be treated as excisable goods in view of Supreme Court s judgment in the case of Union Carbide Ltd. v. Union of India [1986 (24) E.L.T. 169 SC]. (3) The learned representative also relies strongly on two decisions of Bombay High Court in the cases of (i) CEAT Tyres of India Ltd. [1987 (30) E.L.T. 857 (Bom.) and (ii) Shakti Insulated Wires Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Plast, the learned Representative has submitted that in their case A stage resin (resol) has not yet been manufactured whereas in the two cases cited by the department the A stage resin manufacture has taken placed. (5) The technical literature relied upon by the learned Departmental Representative, namely, Handbook of Adhesives by Irving Skeist, according to the learned Representative, itself makes a distinction between performed A stage which is available in the market and that prepared in situ by mixing resorcinol and formaldehyde in aqueous solution in the presence of caustic soda. He also points out that this literature also supports their contention that the solution is ripened for 2 to 4 hours only and requires careful maintenance at room temperature or the below. Marketability of this product prepared in situ has nowhere been hinted at in this literature relied upon by the department whereas it speaks of precondensed resorcinol resin which are available in the market either in the form of brittle, solid resins which may be dissolved in water or as stable, concentrated solution which may be dissolved in water to be used directly in RFL (Resorcinol Formaldehyde Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well, the appellants therein contended that the dipping solution manufactured by them was neither marketed nor marketable as it hardened only in about 2 hours. 8.2. He submits that goods are defined under Article 366 of the Constitution as all materials, commodities and articles. It is not necessary that they should be marketable or they are marketed. He also submits that in a case reported in AIR 1970 SC 732 (Commissioner of Sales Tax, Madhya Pradesh v. Madhya Pradesh Electricity Board, Jabalpur and vice versa) a question arose whether electricity was goods or not in terms of the provisions of the Madhya Pradesh General Sales Tax Act. He submits that in para 9 of the said Report the Hon ble Supreme Court has held electricity, though intangible as goods. This is how the Supreme Court says about electricity:- ................................................................................ merely because electrtic energy is not tangible cannot be moved or touched like, for instance, a piece of wood or a book it cannot cease to be movable property when it has all the attributes of such property. It is needless to repeat that it is capable of abstraction, consumption and use w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m hydroxide - volatile alkali (c) Mixtures of (a) and (b) (d) Amines The usual practice in compounding this type of adhesive is to prepare an aqueous resin solution about 5 to 15 per cent solids, either by direct reaction of resorcinol with formaldehyde or by reaction of a preformed, partially condensed resorcinol resin with additional formaldehyde. In both cases an alkaline catalyst is used at this stage. The solution is ripened for 2 to 4 hr. carefully maintaining it at room temperature or below." [Exphasis supplied] by learned JDR He observes on the basis of the above extracts that method of preparation of resin adopted by the appellants in this case is one in situ and this has also been described in the aforesaid extract as resorcinol resin. He submits that for the purpose of Central Excise it is immaterial whether the product is prepared by the manufacturers for captive consumption or he takes a product from the market for his use. Merely because a product is produced for captive consumption it does not mean that it is not excisable. He submits that the resorcinol resin prepared by the appellants has the same characteristics and serves the same use as that of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration therein was dipping solution which, inter alia, included the rubber latex. The department s case is the resorcinol formaldehyde solution alone before mixing it with the rubber latex solution converting it into dipping solution is resin. The department has already observed that the dipping solution fall under Tariff Item 68. Therefore, the judgment of Bombay High Court in the case of CEAT Tyres is not relevant to the issue. Similarly, judgment of Bombay High Court in the other case of Shakti Insulated Wires Pvt. Ltd. also relates to another product. In the matter of classification and marketability of various products, the judgment in respect of one product cannot be applied to a judgment in respect of another product inasmuch as their process of manufacture, their characteristics and their uses may differ. Each product has to be considered on its own merits. 10.1. Attempt of the learned Representatives for the two appellants to distinguish their product from the A stage resin referred to in the cases of Jai Enterprise and Flexoplast in our view is not very successful in the face of the authoritative literature on the product relied upon by the Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
