2007 (3) TMI 123 - AT - Central Excise

Classification of Fiction dust as per the report of Chief Chemist phenol-formaldehyde resin when cured would still be a plastic material which could be classified as phenoplast. Further the contention about the final order beyond the scope of SCN is not acceptable

Summary

Issues Involved:
1. Classification of 'friction dust' under the Central Excise Tariff.
2. Applicability of Tariff Advice No. 7/81 dated 7-1-1981.
3. Validity and scope of the Chemical Examiner's and Chief Chemist's reports.
4. Reliance on test certificates from external institutions.
5. Impact of prior judgments and orders on the current classification dispute.
6. Allegation of adjudicating authority exceeding the scope of the show cause notice.

Detailed Analysis:

1. Classification of 'friction dust' under the Central Excise Tariff:
The primary issue was whether 'friction dust' should be classified under Tariff Item No. 15A(1)(i) as a phenolic resin or under Tariff Item No. 68 as "all other goods not elsewhere specified." The product was previously classified under Tariff Item No. 15A(1)(i) based on its composition and manufacturing process, which involved heating Cashew Nut Shell liquid with carbon black, sulphuric acid, and hexamine, resulting in a phenol-formaldehyde condensation polymer. This classification was affirmed by multiple orders and accepted by the assessee for the period prior to 7-1-1981.

2. Applicability of Tariff Advice No. 7/81 dated 7-1-1981:
The appellants argued that the product should be classified under Tariff Item No. 68 based on Tariff Advice No. 7/81, which they claimed was applicable to their product. However, it was determined that this Tariff Advice pertained specifically to ion exchange resins and not to 'other resinuous materials' like friction dust. The Tribunal held that the Tariff Advice was not applicable to the product in question, which was a condensation polymerization product, not a copolymerization product.

3. Validity and scope of the Chemical Examiner's and Chief Chemist's reports:
The Chemical Examiner's initial and subsequent reports classified 'friction dust' as a phenolic resin with resinuous properties. The Chief Chemist's report, obtained upon the appellants' request, confirmed that the product was composed of phenol-formaldehyde type of polymeric substance and carbon black, classifiable as 'phenoplast' under Tariff Item No. 15A(1)(i). The Tribunal accepted the Chief Chemist's technical opinion, emphasizing that the appellants had agreed to abide by the findings of the CRCL.

4. Reliance on test certificates from external institutions:
The appellants presented test certificates from the Central Leather Research Institute (CLRI), University of Bombay, and University of Manchester, which indicated that the product was infusible. However, the Tribunal noted that these findings were consistent with the Chief Chemist's report, which stated that the product did not reflect thermoplastic behavior due to high cross-linking (curing). The Tribunal held that the Chief Chemist's opinion would prevail over other expert opinions in matters of classification.

5. Impact of prior judgments and orders on the current classification dispute:
The Tribunal considered the prior judgment of the Hon'ble Delhi High Court, which dismissed the writ petition challenging the classification of 'friction dust' under Tariff Item No. 15A(1)(i). The Tribunal held that this judgment was relevant and that the appellants could not contest the classification dispute again. The Tribunal also referenced Supreme Court judgments to clarify that a decision is binding for the proposition it decides.

6. Allegation of adjudicating authority exceeding the scope of the show cause notice:
The appellants argued that the adjudicating authority had exceeded the scope of the show cause notice. However, the Tribunal found that the Commissioner's decision to classify the goods under Tariff Item No. 15A(1)(i) was within the scope of the show cause notice, which proposed the same classification and demanded duty accordingly.

Conclusion:
The Tribunal upheld the classification of 'friction dust' under Tariff Item No. 15A(1)(i) of the old Central Excise Tariff, dismissing the appeal. The impugned order was sustained based on the technical findings of the Chemical Examiner and Chief Chemist, the inapplicability of Tariff Advice No. 7/81, and the binding nature of prior judgments.