1979 (12) TMI 151 - Commissioner - Central Excise

Issues Involved:

1. Classification of nylon rods, nylon tubings, and nylon fishing line under the Central Excise Tariff.
2. Entitlement to exemption from duty under Notification No. 68/71.
3. Rejection of refund claims by the lower authority.
4. Opportunity to represent the case before rejection of refunds and confirmation of demands.
5. Applicability of the Bombay High Court judgment in the case of M/s. Nirlon Synthetic Fibres & Chemicals Ltd.

Detailed Analysis:

1. Classification of Nylon Products:

The appellants manufactured nylon rods, nylon tubings, and nylon fishing line of cross-section above 1 mm. Initially, these products were classified under Item 68 of the Central Excise Tariff, liable to duty at 1% ad valorem. The appellants contested this classification, asserting that these products should fall under Item 15A(2) of the Central Excise Tariff, which pertains to articles of plastics. The Assistant Collector of Central Excise approved their classification lists, indicating that the products were classifiable under Item 15A(2) and exempted from duty under Notification No. 68/71.

2. Entitlement to Exemption from Duty:

The appellants claimed exemption from duty for the said products under Notification No. 68/71, dated 29-5-1971. This was initially accepted by the Assistant Collector, who approved the classification lists. However, the lower authority later rejected the refund claims, arguing that the products, being manufactured from polyamide type nylon moulding powder, were not plastic grade and thus correctly classifiable under Item 68.

3. Rejection of Refund Claims:

The lower authority rejected the refund claims based on the classification of the products under Item 68, relying on the judgment of the Bombay High Court in the case of M/s. Nirlon Synthetic Fibres & Chemicals Ltd. The appellants contended that their products were indeed plastic grade articles, as supported by the Chemical Examiner's report and other expert opinions.

4. Opportunity to Represent the Case:

The appellants argued that the lower authority did not provide them an opportunity to represent their case before rejecting the refunds or confirming the demands, violating the principles of natural justice. However, during the personal hearing, the appellants chose not to pursue this point and requested the appeals be decided on merits.

5. Applicability of the Bombay High Court Judgment:

The lower authority's decision heavily relied on the Bombay High Court's judgment in the case of M/s. Nirlon Synthetic Fibres & Chemicals Ltd., which dealt with the classification of polymer chips. The appellants argued that the ratio decidendi of that case was not applicable to their products, as the polymer chips in question were intermediate products used in manufacturing nylon filament yarn, not plastic articles.

Final Judgment:

The appellate authority carefully reviewed the records, submissions, and expert opinions. It was concluded that the impugned goods, manufactured from polyamide chips (Nylon 6), are indeed articles of plastics falling under Item 15A(2) of the Central Excise Tariff. The evidence, including the Chemical Examiner's report and expert certificates, supported this classification. The authority also noted that the raw material used by the appellants, Ultramid B4/BASF (nylon 6), is suitable for producing plastic articles through injection moulding and extrusion processes.

The authority held that the impugned goods are correctly classifiable under Item 15A(2) of the Central Excise Tariff and not under Item 68. Consequently, the appellants are entitled to the exemption under Notification No. 68/71-C.E., dated 29-5-1971. The 14 appeals were allowed with consequential relief, setting aside the lower authority's orders and granting the refunds due to the appellants.

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