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TMI Blog1989 (7) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... ing themselves of duty exemption under Central Excise Notification No. 83/83. The total value of clearances recorded in the simplified account register for the year 1982-83 was Rs. 6,18,300. On 4-8-1983, excise officers visited the factory and, on verification of the stocks with the recorded balance in the R.G. 1 register, found 30 bags of 50 kgs. each of PF moulding powder, valued at Rs. 13.500/- in excess. This quantity was seized. The officers also recovered one ledger containing entries regarding clearance of the goods during 1982-83 and 1983-84. It was found, on comparison of this ledger with the excise statutory records that goods valued at Rs. 21,63,526/- and Rs. l7,18,645/- had not been brought on the Central Excise records and had been cleared in addition to the clearances recorded in the said records which were Rs. 6,18,300/- in 1982-83 and Rs. 1,32,300/- in 1983-84. It was contended on the basis of these figures that the appellants were liable to pay duty of Rs. 2,90,481.35 in 1982-83 and they were not eligible for the benefit of Notification No. 83/83 in 1983-84 entailing a duty liability of Rs. 2,91,523.84. A show cause notice was issued to the appellants proposing con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t constitute evidence to show that the private ledger entries recorded also the purchase of raw materials. The report also detailed a number of discrepancies between the R.G. 1 register entries and the private ledger entries. It was concluded therefrom that the entries in the two records related to different transactions. 4. A copy of the Collector's report was supplied by the Tribunal to the appellants' representative on 1-3-1988. On 23-3-1988, Shri M.G. Abrol, Consultant for the appellants, submitted that the Collector had issued summons to the above 3 persons without the appellants' knowledge and so the appellants could not take any steps to secure their presence during the proceedings before the Collector. He requested that the Tribunal might itself examine these persons. The request was granted and the appellants were asked to produce them. However, the appellants' representative did not, during the hearing on 28-9-1988 or 10-3-1989, make any reference to the aforesaid order and its compliance. 5. An affidavit dated 27-9-1988 by one Vinod Sangar was filed by the appellants during the pendency of the proceedings before the Tribunal. However, Shri Abrol made it clear during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Item 15A(2) but under Item 68, CET. It was further submitted that some resins emerged as moulding powders. That was the rationale for Explanation III specifying moulding powders. But that would not mean that conversion of resin into moulding powder would attract excise duty under Item 15A. 9. Shri Abrol submitted that the Collector was also in error in stating that the appellants' process of manufacture was a continuous one. Shri A.S. Sunder Rajan, learned DR, submitted that he did not dispute this. The Tribunal might take it that it was a discontinuous process, the resin emerging first and then getting converted to moulding powder. 10. Shri Sunder Rajan, for the respondent, submitted that the amendment of Section 2(f) of the Central Excises & Salt Act by the 1984 Finance Bill was not relevant for the present case which covered a prior period. Both resin and moulding powder fell under Item 15A, CET. Therefore, duty would be leviable on the finished product, i.e., the moulding powder on its value and not on the resin which was not being cleared out of the factory. For this contention, he relied on the Tribunal's decision in the case of Collector of Central Excise, Thane v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I makes it clear that sub-item (1) inter alia covers powders, including moulding powders. In the present case, we are concerned with P.F. moulding powder. Prima facie it would be covered by Item 15A(1) by virtue of the Explanation. But the contention for the appellants is that conversion of resin into moulding powder became "manufacture" within the meaning of Section 2(f) of the Central Excises & Salt Act only with effect from 1-3-1984 when the section was amended. Section 2(f) of the Act reads thus :- "manufacture" includes any process incidental or ancillary to the completion of a manufactured product". By the Finance Bill, a new sub-clause was added to Section 2(f) reading as follows :- "(ix) in relation to artificial or synthetic resins and plastic materials, includes their conversion into moulding powders." It is contended that prior to 1-3-1984, such conversion did not amount to "manufacture". Reliance for this contention is inter alia placed on the "Notes on Clauses" attached to the Finance Bill, 1984. The relevant note reads - "A sub-clause (ix) is proposed to be added to Section 2(f) of the Central Excises & Salt Act, 1944, to include conversion of artificial or synth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be charged to duty? In this connection, it is well to remember that the appellants do not dispute that what they were clearing and selling to customers was moulding powder or bakelite powder, as they call it. No further evidence is required to show that the moulding powder was a marketable commodity and was, in fact, being marketed by the appellants. There cannot be any dispute that resin in its primary form is the same thing as resin moulding powder which, according to the appellants, consists of 20% resin, colour 2%, saw dust 18%, marble powder 55% and a hardening agent Hexamine 5%. The completed manufactured product in the present case is, therefore, moulding powder and not the resin as such, and according to Section 2(f) of the Act, the definition will take in "any process incidental or ancillary to the completion of the manufactured product" i.e. conversion of resin into moulding powder, in the present case. This is despite the position that Section 2(f) was amended so as to, include, in terms, conversion of resin into moulding powder only on 1-3-1984 by the Finance Bill of 1984. 14. In the case of Indian Cable Company Ltd. v. Collector of Central Excise, Calcutta - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Bombay -1986 (26) E.L.T. 936 (Tribunal). That case involved concentrates of disperse dyes which were further formulated to diluted disperse dyes. In a somewhat similar case - Sandoz India Ltd. v. Union of India & Others -1980 (6) E.L.T. 696 (Bom), the Bombay High Court had held that formulation (i.e. addition of dispersing agents or diluents without any chemical change) of synthetic organic dyestuffs did not amount to "manufacture". The Department's contention in the case before the Tribunal was that if concentrated dyes were cleared from the factory as such, duty would be leviable on that basis, but if such dyes were formulated and the formulated dyes were cleared, duty would be leviable on that basis. The Tribunal noted that the assessee was clearing not the concentrated dyes (wet cake) but the formulated dyes. It was held, therefore, that consistent with the Supreme Court's judgment in Union of India & Ors. v. Bombay Tyre International Ltd. -1983 (14) E.L.T. 1896 (S.C.), duty would be chargeable on the value of the dyes in the form in which they were cleared. The situation in the present case is closely analogous. Shri Abrol, however, submits that the India Dyestuff Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X
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