1997 (1) TMI 75 - SC - Central Excise

Whether polymer chips manufactured by the assessees and used by them in the manufacture of nylon yarn can be classified for the purpose of levy of excise duty under Item 15A in Schedule I to the Central Excises and Salt Act 1944 as it stood during the period 1962 to 1972? Held that - Since the technical literature and dictionaries which have been cited have emphasised the conjunction of artificial or synthetic resins with plastics it is not possible for us to ignore this association. Therefore even if the term Artificial or synthetic resin is construed as covering products derived by processes technically described in sub-clauses (i) (ii) and (iii) of Clause (1) of Entry 15A that product must answer the basic description as artificial or synthetic resin . Polyamides in the form of polymer chips of textile grade are not known as synthetic resins. They are also not plastics. Hence Entry 15A does not cover them. The assessee is therefore entitled to succeed. In favour of assessee.

Issues Involved:
1. Classification of polymer chips for excise duty purposes under Item 15A in Schedule I to the Central Excises and Salt Act, 1944.
2. Interpretation of the term "plastics" in commercial and technical contexts.
3. Applicability of the amended Entry 15A post-28-2-1964 to polymer chips.

Issue-wise Detailed Analysis:

1. Classification of Polymer Chips for Excise Duty Purposes Under Item 15A:

The central issue is whether polymer chips (Nylon 6 Chips) used in the manufacture of nylon yarn by the assessee can be classified under Item 15A in Schedule I to the Central Excises and Salt Act, 1944, for the period 1962-1972. The polymer chips, obtained during the intermediate stage of processing caprolactum monomer, are used exclusively for manufacturing textile fibers. The key question is whether these polymer chips fall under the category of "plastics, all sorts" as specified in Entry 15A.

2. Interpretation of the Term "Plastics" in Commercial and Technical Contexts:

The term "plastic" is a commercial classification encompassing various natural or synthetic materials that can be shaped by heat during fabrication. Encyclopaedia Britannica and other technical literature indicate that materials used for manufacturing fibers and yarns, such as polymer chips, are not commercially considered plastics. The distinction between plastics and materials used in the textile industry is significant. The court emphasized that the term "plastic" should be understood in its commercial sense rather than a strict technical or scientific sense.

3. Applicability of the Amended Entry 15A Post-28-2-1964 to Polymer Chips:

The amended Entry 15A, effective from 28-2-1964, reads "Artificial or synthetic resins and plastic materials, and articles thereof." It includes various forms of artificial or synthetic resins and plastic materials, described in sub-clauses (i), (ii), and (iii). The Revenue argued that polymer chips fall under the category of polyamides in sub-clause (ii). However, the court noted that the term "synthetic resins" is primarily used in the plastic industry and not in the textile industry. The court concluded that polymer chips of textile grade are not known as synthetic resins or plastics and hence do not fall under Entry 15A.

Conclusion:

The court held that polymer chips manufactured by the assessee do not fall under the category of "plastics, all sorts" as specified in Entry 15A before 28-2-1964. Post-amendment, the term "artificial or synthetic resins" in Entry 15A is associated with plastic materials and does not cover polymer chips used in the textile industry. Therefore, the assessee's appeal was allowed, and the revenue's appeals were dismissed. There was no order as to costs.

← Previous Next →