TMI Blog2016 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... Order No.53675/2015 - Dated:- 17-11-2015 - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND SHRI B. RAVICHANDRAN, MEMBER (TECHNICAL) For the Petitioner : Shri Naveen Mullick, Advocate For the Respondent : Shri S. Nanthuck, Joint CDR ORDER PER B. RAVICHANDRAN: This appeal is against Order-in-Original dated 17.04.2014 passed by the Commissioner of Central Excise, Meerut-II. The appellants are engaged in the manufacture of Plywood, MDF Board, Laminates, Plain Particle Board, Components of Furniture etc. They are availing area based exemption under Notification No.50/2003-CE dated 10.06.2006 for the final products. The appellants are also manufacturing resin/glue in their unit for captive use in the manufacture of final products. 2. The Revenue entertained certain doubts regarding appellant s eligibility for exemption under the above said notification in respect of glue/resin made by the appellant. Plastics and articles thereof falling under Tariff Heading 3909 to 3915 are in the negative list for exemption. Investigations were conducted by the officers; proceedings initiated which resulted in the impugned order. The ld. Commissioner confirmed a demand for ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r demand of duty in this case. Samples of the goods in question were drawn for testing by officers in August, 2010 itself. No report was given to the appellants. No dispute on exemption or duty liability was raised by the Department. The present demand dated 8.5.2012 covered period from November, 2009 to November, 2011 and is substantially barred by limitation. 4. Ld. Counsel for the appellant, Shri Naveen Mullick elaborated each one of the above points in his arguments. He mainly emphasized on the classification dispute and pleaded that the correct classification of glue made by the appellant is under CETH 3506. 5. Ld. AR, Shri S. Nanthuk reiterated the findings in the impugned order. 6. We have heard both the sides and examined case records. The appellants entitlement to exemption on the captively consumed resin/glue depends on the correct classification of the said product. The ld. Counsel for the appellant also mainly insisted on this point though other points regarding validity of test report, marketability of the product and limitation were also stated in their appeal. We find that correct classification of the product is central issue of the dispute. 7. First, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent. The resultant glue is transferred to glue kitchen area in Shed-D. It is noted that this glue at the reactor in Shed-B is the only product which acts as binder that binds the wood fibers to make MDF. 9. In the glue kitchen area, the glue received from reactor/kettle in Shed-B is used along with wax emulsion, water and further ammonium chloride. The role of these products in the overall binding has also been explained by the appellant. 10. With this background, we have examined the scope of correct classification of the product emerging out of reactor/kettle Code named G-10, G-12, etc. We find that the impugned order took BIS standards, marketing literature of some of the manufacturers to conclude the nature of the product as resin, its marketability and classification under CETH 3909. The processes undertaken by the other manufacturers, especially addition of hardener or curing agent (NH4 CL) has not been examined by the original authority. The correctness of comparison very much depends on this. 11. Examining the scope of CETH 3909, we find Note-6 of Chapter 39 states as below:- In Heading 3901 to 3914, the expression primary forms applies only to the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (heading 35.06). 14. On examining scope of CETH 3909 read with Chapter Note 6 and HSN explanation the product in dispute being not in Primary Form of such nature mentioned therein (requiring curing etc.) is not to be classified under such heading. The exclusion note made in HSN adds support to the same. The Revenue s assertion that addition of hardening agent does not take away the basic property of the product being a resin is not sustainable in the present dispute. Addition of NH 4CL as hardening agent in the reactor/kettle before the resultant product is sent to glue kitchen for use in binding purpose has relevance to decide the issue. Prepared glue as it emerges is put into use in the binding section along with other inputs like wax, NHCL and water for final binding. Chapter 35 covers glues. CETH covers Prepared glues and other prepared adhesives, not elsewhere specified or included. CETH sub-heading no.3506 9991 covers synthetic glue with phenol urea or cresol (with formaldehyde) as the main component - Prepared glues and other Prepared adhesives. 15. Based on the above criteria for classification, we find that the appellant had made out strong case for classifying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Prepared Glue containing Ammonium Cloride /Formic Acid etc. in the Kettle installed in Shed B and the glue prepared is transferred to other Sheds-C, D and E where it is used for bonding of their final products. Preparation of glue in Shed-B is a one stage process. They have also contended that the show cause notice itself admits that addition of hardener to the resin reduces the shelf life and brings into existence the glue with reduced shelf life. It is also admitted that use of hardener brings the quick bonding properties to serve as a glue. 19. As stated earlier before comparing the impugned product with the product of other manufacturers and also before applying case laws to the present facts, it is necessary that Original Authority should have examined the processes undertaken and the comparability of the goods in chemical nature. No such analysis or finding to that effect is available in the impugned order. The appellant have categorically submitted that the impugned goods are prepared for specific need and requirement of bonding of wood fibers /wood particles/coating of papers during the manufacture of final product like MDF Board, Particle Board, etc. The fact is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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