2001 (11) TMI 117 - AT - Central Excise

Summary

Issues involved:
Classification of goods under sub-heading 3909.59 as 'Other Phenolic resins' or under sub-heading No. 3909.51 as 'Phenol Formaldehyde Resin'.

Analysis:
The appeal involved a dispute over the classification of goods manufactured by M/s. M.P. Dyechem Industries. The question was whether the goods should be classified under sub-heading 3909.59 as 'Other Phenolic resins' as confirmed by the Commissioner (Appeals) or under sub-heading No. 3909.51 as 'Phenol Formaldehyde Resin' as claimed by the Appellants. The Appellants argued that they manufacture both types of resins using specific raw materials, and the difference lies in the percentage of paraformaldehyde used in each type. They contended that the impugned product should be classified under sub-heading 3909.51 based on the raw materials used. The Appellants also raised the issue of the demand being time-barred and emphasized that they had provided necessary information to the Department regarding the raw materials used.

The Department, represented by Shri A.K. Jain, supported the findings of the Adjudication Order regarding the classification of the goods. Alternatively, it was suggested that the matter could be remanded to the jurisdictional Authority due to the absence of a test report on record to support the classification.

After considering the arguments from both sides, the Tribunal noted that the Appellants had consistently explained the difference between 'Other Phenolic Resins' and 'Phenol Formaldehyde resins' based on the percentage of paraformaldehyde used in manufacturing. The Tribunal observed that the Department had not rebutted this explanation nor provided any test report to support the classification under sub-heading 3909.59. Referring to the Explanatory Notes of HSN, the Tribunal highlighted that Phenolic Resins encompass a range of materials derived from the condensation of phenol with aldehydes. The Tribunal emphasized that the burden of proof in classification matters lies on the Revenue, citing a Supreme Court judgment. Since the Revenue had not provided evidence to establish that the goods were not 'Phenol Formaldehyde Resins,' the Tribunal concluded that the onus had not been discharged. Consequently, the impugned Order was set aside, and the appeal was allowed.