TMI Blog1990 (6) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... d sand as demanded in the impugned order and it could be taken as MODVAT credit towards payment of duty on castings. The appellants, it is also submitted may be permitted to take the duty paid on the castings as MODVAT credit to be utilised on motor vehicles or the parts of the motor vehicles. No prejudice would be caused to the Revenue it is urged by the appellants/applicants, by paying duty on the castings in the manner aforesaid and taking credit of the duty on the resin coated sand. In fact for the period subsequent to 31-8-1986, submits the applicants, this facility has been extended to them by the Collectorate itself by granting exemption under Notification 217/86 dated 2-4-1986 for the resin coated sand used in the manufacture of castings, cleared on payment of duty. It has, therefore, been prayed in the said ground that after 2-4-1986 the benefit of exemption under Notification 217/86-C.E., dated 2-4-1986 may be extended to the resin coated sand. 2.1. Against the aforesaid ground, learned JDR Shri A.S. Sunder Rajan, states that this is a question of fact whether Notification 217/86 dated 2-4-1986 or the MODVAT Scheme is applicable to resin coated sand or not. Any rate he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time barred inasmuch as the notice has been issued on 28-1-1987 provided the first question is found in favour of the Revenue. 9. In order to appreciate the above questions, following salient facts as given in the show cause notice leading to the impugned order are set out below :- 9.1. On collecting the intelligence that the appellants are engaged in the manufacture of resin coated sand and are using the same captively without paying C.E. duty due thereon, the officers of the Preventive Headquarters visited the appellants factory on 24-11-1986. It was noticed that though they were manufacturing the resin coated sand they had not declared so in their classification list effective from 1-3-1986 and were clearing the same without paying C.E. duty due there on and without observing the Central Excise formalities. The stock of 14 MTs of resin coated sand lying with the appellants was, therefore, seized under a panchnama on 24-11-1986 on the reasonable belief that the same had not discharged its duty liability. The said quantity of 14 MTs was released to the appellants provisionally on execution of a bond. 9.1A. On scrutiny of the records maintained by the appellants the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not confiscated and (iii) penalty should not be imposed on them under Rules 9(2), 52A and 173Q of the Central Excise Rules. 9.5. On adjudication, the Collector has confirmed the demand of the aforesaid amount of duty, upheld the liability to confiscation of the 14 MTs. of seized resin coated sand but since that had been released provisionally to the appellants, he has appropriated an amount of Rs. 4200/- from the security of the bond executed by the appellants for provisional release of the goods. The adjudicating authority however, has not imposed any penalty having regard to the facts and circumstances of the case. 10. Learned advocate Shri V. Lakshmikumaran has urged that coating of sand as resin for the purpose of manufacturing cores does not amount to manufacture of any new commodity. Sand remains sand except that its quality is improved inasmuch as there is a greater binding characteristic in such sand than in ordinary sand facilitating making of cores. In support of this proposition learned advocate cites Tribunal s decision in 1985 (22) 128 (Tribunal) [CCE Jaipur v. Fine Marble and Minerals Pvt. Ltd., Makrana]. This decision, submits the learned advocate, has been conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, the learned advocate for the appellants has urged that resin coated sand is not marketable because it cannot be stored for long and it is likely to get hardened if left over after some period. It is also urged that in the cold box process of making cores resin coated sand does not come into existence at all. The cores are directly made from a mixture of resin and sand. 11.2. We have carefully considered the pleas advanced on both sides on this aspect. On a perusal of the two Chapters namely, 3 (Shell Sand Characteristics) and Chapter 4 (Synthetic Resin Binders) put on record by the appellants, we find the following para in Chapter 4:- Stick point or melt point - These terms are often used interchangeably and refer to the heat sensitivity of the resin coating on sand and actually indicate the lowest temperature at which the coating becomes soft or tacky enough to adhere to itself or other surfaces. To some degree, the stick point of a coated sand is related to the softening point of the novolak resin, per se, but is not the same since in a resin coating the cross-linking agent hexa is present. The stick point test is a very useful quality control tool employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat coloured polystyrene would be classifiable under Tariff Item 68 for demand of duty cannot be sustained, the respondent s (appellant s) contention that goods would be classifiable under T.I. 15A(1)(ii) of the Central Excise Tariff (as it stood at the material time) would have to be accepted. The question now to be seen is whether whole or any part of the demand of duty raised against the appellants proposing classification under T.I. 68 can be enforced against the appellants by the Revenue consequent to classification under T.I. 15A(1)(ii) as stated above. While according to Shri Lakshmikumaran, the learned SDR, Tribunal was competent to mould the relief according to the changed situation and demand of justice. Shri Ravinder Narain has strongly contended that the basis of the demand of duty was classification under T.I. 68 of the Central Excise Tariff and that having been set aside demand, if any, consequent to classification under T.I. 15A(1)(ii) ibid cannot be made or sustained. It is to be remembered that the main dispute between the parties was one of classification - whether the goods fall under one tariff item or the other and when goods have been found to be classifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 217/86). 11.9. Opposing the aforesaid submissions of the appellants learned advocate, learned DR, Shri A.S. Sunder Rajan has urged that no positive action was taken by the department to generate a bona fide belief in the mind of the appellants not to apply for licence or not to pay any duty. Unless there is any positive action on the part of the appellants to generate such a belief, the appellants cannot take advantage of their own lapse. He relies for this proposition on 1989 (43) E.L.T. 195 SC Para 8 [Padmini Products v. CCE]. 11.10. In order to appreciate the aforesaid contention of the learned DR it is appropriate to extract the observations of the Hon ble Supreme Court in Padmini Products: - .. .. In order to sustain an order of the Tribunal for a period of more than six months and upto a period of 5 years in view of the proviso to sub-section (1) of Section 11A of the Act, it had to be established that the duty of excise had not been levied or paid or short levied or short-paid or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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