2018 (6) TMI 1339 - AT - Central Excise

Manufacture - classification - Captive consumption - intermediate product - Benefit of N/N. 67/95-CE dated 16.03.1995 - Resins - It appeared to Revenue that the said Resins were classifiable under chapter heading No.3909 of schedule to Central Excise Tariff Act, 1985 and said Resins were included in negative list, since negative list included said chapter heading No.3909 at Sl.No.20 of negative list of N/N. 50/2003-CE dated 10.06.2003 - Held that - Identical issue decided in the case of M/S. BALAJI ACTION BUILDWELL VERSUS CCE, MEERUT-II 2016 (4) TMI 59 - CESTAT NEW DELHI , where it was held that The fact is that the preparation of impugned goods is in one stage process under controlled temperature and pH and addition of Ammonium Cloride Formic Acid in the processes, the emerging product being transferred to glue kitchen area for final use in bonding. The classification of the product as primary resin is not sustainable - demand not sustainable - appeal allowed - decided in favor of appellant.

Issues:

1. Classification of Resins under Central Excise Tariff Act, 1985
2. Applicability of Notification No.50/2003-CE dated 10.06.2003
3. Interpretation of HSN Explanatory Notes and Chapter Note 6
4. Reliance on precedent decisions by the Tribunal

Classification of Resins under Central Excise Tariff Act, 1985:

The case involved the classification of Phenol Formaldehyde Resin, Phenol Formaldehyde Resin (CPF), and Melamine Formaldehyde Resin under chapter heading No.3909 of the Central Excise Tariff Act, 1985. The Revenue contended that these resins were included in the negative list under Notification No.50/2003-CE dated 10.06.2003, thus not eligible for exemption. The Order-in-Original upheld this classification, leading to a demand for Central Excise duty against the appellant. However, the appellant argued that the products were not primary resins based on the Final Order in a similar case and the HSN Explanatory Notes. The Tribunal analyzed the processes involved in manufacturing the resins and concluded that they were prepared glue, not primary resins, as per Chapter 35 of the Central Excise Tariff Act. The Tribunal found the denial of exemption unsustainable and allowed the appeal.

Applicability of Notification No.50/2003-CE dated 10.06.2003:

The Notification No.50/2003-CE dated 10.06.2003 played a crucial role in determining the eligibility of the resins for exemption. The Revenue argued that since the negative list included chapter heading No.3909, the resins did not qualify for the benefits of Notification No.67/95-CE dated 16.03.1995. However, the appellant contested this assertion, citing the Tribunal's decision in a previous case where similar circumstances led to a favorable outcome for the appellant. The Tribunal, after considering the arguments from both sides and reviewing the relevant notifications, held that the denial of exemption based on Notification No.50/2003-CE was not sustainable.

Interpretation of HSN Explanatory Notes and Chapter Note 6:

The Tribunal extensively analyzed the HSN Explanatory Notes and Chapter Note 6 to determine the classification of the products in question. The Tribunal referred to specific criteria for classification, including the nature of the product, processes involved, and the end use. It was observed that the resins were prepared glue based on the manufacturing processes and the intended use in bonding final products. The Tribunal also scrutinized the test reports provided by the Revenue and the arguments regarding the purchase of resin reactor. Ultimately, the Tribunal found that the classification of the product as primary resin was not sustainable, supported by Note-6 of Chapter 39 and the HSN Explanation. This interpretation led to the allowance of the appeal.

Reliance on Precedent Decisions by the Tribunal:

The Tribunal heavily relied on precedent decisions, specifically citing cases involving M/s.Balaji Action Buildwell, M/s.Shirdi Industries Ltd., and M/s.Greenply Industries Ltd. These previous judgments provided a framework for the Tribunal's analysis and decision-making process in the current case. By aligning with the findings and reasoning from these cases, the Tribunal concluded that the impugned order-in-original was not sustainable and allowed the appeal, granting the appellant consequential relief in accordance with the law.

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