1983 (8) TMI 272 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 122/71 for concessional rate of duty on Phenolic resins under Tariff Item No. 15A1(i) of the Central Excise Tariff.

Analysis:
The case involved a revision application against an Order-in-Appeal issued by the Central Board of Excise & Customs, New Delhi. The appellants declared their goods as Phenolic resins falling under Tariff Item No. 15A1(i) and claimed assessment at a concessional rate of 18% ad valorem as per Notification No. 122/71. The appellants argued that the explanation in the notification entitled them to the concessional rate of duty for Phenolic resins. They referenced the notification's provisions, emphasizing that the term "phenolic resins" includes chemically modified phenolic resins and liquid phenolic resins, excluding blends with other resins. The appellants contended that their product, Phenolic moulding powder, remained a phenolic resin and did not lose its character as such, as confirmed by judgments of Gujarat High Court and Bombay High Court.

The appellants further highlighted a government order stating that Phenol Formaldehyde Moulding Powder, obtained by the chemical reaction of phenolic resins with fillers and additives, still qualifies as a phenolic resin eligible for the benefits of Notification No. 122/71. They argued that the use of the term "including" in the notification expands its scope to cover chemically modified phenolic resins. Despite favorable judgments and government orders, the appellants were denied the benefit of the notification on the grounds that it applied only to "pure resins," a notion disputed by the appellants. The government had withdrawn a similar case from the Orissa High Court, supporting the appellants' position.

On the other hand, the Respondent argued that the product in question, obtained by reacting phenol with Formaldehyde and other chemicals, was physically modified with fillers and colorants, making it akin to plastic material rather than phenolic resin. However, the Tribunal disagreed with this argument, siding with the appellants. The Tribunal found that the product in question, Phenol moulding powder, retained its classification as a phenolic resin, as explicitly stated in the notification. The Tribunal rejected the concept of "pure resins" introduced by the lower authorities and ruled in favor of the appellants, granting them the benefit of Notification No. 122/71 based on the merits of the case and precedents set by various High Court judgments. Consequently, the appeal was allowed, providing the appellants with the consequential relief they sought.