TMI Blog1996 (8) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... rce." 2. The facts of the case, in brief, are that the appellants are engaged in the manufacture of Decorative Laminated Sheets. Intelligence was collected by the Central Excise authorities that the appellants were evading payment of Central Excise duty on the goods manufactured by them. On 25-8-1994, Shri N. Ganguli, Technical Director of the appellants firm, in his statement, stated that the appellants are manufacturing paper based decorative laminated sheets; that the material used in the manufacture of paper based decorative laminated sheets were kraft paper, base paper, barrier paper, tissue paper, BOPP Film, Malamine, Formaldehide, Phenol etc.; that the stages involved in the manufacture are as under : (a) Mixing of chemicals (b) Coating/Dryer Plant (c) Formation-cum-Pressing, and (d) Cutting. Shri Ganguli also stated that the appellants company had started production of excisable goods during the years 1991-92 but had taken Central Excise Registration during August, 1992 when they were likely to exceed the exemption limit from the licensing control; that their unit was a small scale unit; that first classification list was filed on 28-8-1992; that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt s decisions in the case of DCM and South Bihar Sugar Mills Ltd. The appellants also submitted that the Tribunal in the case of Bakelite Hylam Ltd. reported in 1990 (46) E.L.T. 552 had held that the two formulations are not liable to excise duty as they are not capable of being marketed. The appellants also contended that the Apex Court in the case of M/s. Bhor Industries Ltd. reported in 1989 (40) E.L.T. 280 had held that an article is not liable to excise duty merely because of its specification in the tariff schedule unless it is a goods known in the market. It was contended by the appellants that two formulations are not goods, therefore, the question of their classification under Chapter 39 does not arise. They referred to Chapter Note 1 of Chapter 39 and contended that since the above two formulations are not capable of being formed by moulding, casting, extruding, rolling or other processes into shapes which are retained on the removal of the external influence and hence they are not plastics. It was also argued by the appellants that the two formulations are acquous solution of phenolic resins and cannot be considered as resins themselves, therefore, they cannot be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as within the knowledge of the department and the department had approved the Classification Lists for the period and also assessed the RT 12 returns. The ld. Counsel argued that had the department any objection to classification of goods and entitlement to the exemption then they should not have approved the Classification Lists and assessed finally the RT-12 returns; that there was no intention to evade payment of duty inasmuch as other manufacturers were enjoying the exemption and that Supreme Court had categorically held `otherwise . In support of his contentions, the ld. Counsel cited and relied upon the judgments in the case of Cosmic Dye Chemicals v. C.C.E., Bombay reported in 1995 (75) E.L.T. 721 = 1995 (58) ECR 232; Tamil Nadu Housing Board v. C.C.E., Madras reported in 1994 (55) E.L.T. 7 (SC); C.C.E. v. Chemphar Drugs and Liniments reported in 1989 (40) E.L.T. 276 (SC) = 1989 (21) ECR 182 (SC); Lubri-Chem Industries Limited v. C.C.E., Bombay reported in 1994 (73) E.L.T. 257 (SC) = 1994 (54) ECR 514 (SC); and C.C.E. v. Muzzaffarnagar Steels reported in 1989 (44) E.L.T. 552 (Tribunal); Mattel Toys (India) Ltd. v. C.C.E. reported in 1992 (58) E.L.T. 218 (Tribunal) = 1991 (35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the case of C.C.E. v. Jay Enterprises reported in 1987 (29) E.L.T. 288 had held We observe for phenol formaldehyde resin to be used for the laminated sheets, it is essential that `A stage resin should come into existence first and by application of necessary heat and pressure and the use of the required catalysts for further polymerisation the necessary B and C stages are reached in different operations. Thus, the `A stage manufacture of the phenolic formaldehyde resin, which is the case in the present proceedings marks a definite stage of manufacture of resin. Now when the product is required to be used in a particular process it has to acquire a certain capability for that use as otherwise the product will be worthless for the manufacturer. This means that the resol or phenol formaldehyde resin mixture as described by the lower authorities, has acquired a certain definite character as pointed out above. A lot of stress has been laid that the products manufactured are not marketable and not goods for the purpose of levy of duty by the learned Advocate for the respondents and he has cited case law in this regard. As pointed out above, the product manufactured has a definite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing process reaching `A stage of resin and condensation occurring and that since the goods answered to the description of the resin, therefore, they are assessable under TI 15A(1) of the Central Excise Tariff. The Tribunal in that case further held that phenolic formaldehyde resin being an intermediate product falls under TI 15A(1) even if not marketed; that the goods can be deemed marketable for Central Excise levy even though captively consumed. The ld. SDR distinguished the case of M/s. Bakelite Hylam Ltd. that the facts in the two cases are different inasmuch as the assessee in the case of Bakelite Hylam Ltd. was manufacturing three grades of resol and was paying duty on one of the grades whereas in the present case only one grade of formulation is being manufactured. The ld. SDR submitted that having regard to the decision of the Tribunal in the above two cases on merits, the department has fully established the case and therefore, the demand of duty is justified. 7. On the question of limitation, the ld. SDR submitted that in the classification lists, there was no mention that two formulations were coming into existence at the intermediate stage. In that case he sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariff. He further stated that the Tribunal has held the same view in the case of ILAC Limited, Bombay v. C.C.E. - 1985 (20) E.L.T. 5. He amplified that the goods are manufactured in batch process and that the manufacture of resols is the first stage of the resin and this stage of manufacture is over with the formation of the resols. The resol or resin manufactured is taken into use separately for the manufacture of laminated sheets. He pleaded that the fact that the goods have been described as self-reacting mixture does not mean that resol had not come into existence and once resol had been formed, notwithstanding the fact that these were not marketed, these are chargeable to duty. 7. Shri D.N. Mehta, the ld. Advocate by way of clarification added that the Supreme Court has not given a go by to the marketability criteria. He pleaded that at no stage it was brought to the notice of the respondents that their product was resol." 11. We also find under the new Central Excise Tariff, the product can merit classification under sub-heading 39.09 in view of Note 3(e) of Chapter 39. 12. We also observe that once it is established that paper is coated with certain resols which have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the admitted position is that the resols are produced, we also observe that resols are classifiable under Chapter 39, we also find that the paper is coated with resols and then dried and processed further. 15. Having regard to the process of manufacture and the Chapter Notes, we find that the paper is plastic coated and hold accordingly. In this view of the matter, we hold that the demand for Central Excise duty is legal and sustainable in law and on facts; but shall be limited to six months as held in the following paragraph. 16. On the question of limitation, we find that the classification lists were approved for the period upto 31-3-1994. We also find that RT-12 returns were assessed for the period unconditionally. We also find that the process of manufacture of the product was sent to the department. Thus there was no suppression or wilful mis-statement. We therefore, hold that the extended period beyond six months is not justified in the circumstances of the case. Therefore, the demand is confirmed for normal period of limitation and that extended period was not available to the department. 17. Insofar as the question of imposition of penalty is concerned, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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