1986 (8) TMI 195 - AT - Central Excise

Summary

Issues:
- Interpretation of whether the product "Modified Short Oil Linseed Oil Alkyd" qualifies as Alkyd resin under a specific notification.
- Disagreement between the assessee and Revenue regarding the classification of the product.
- Examination of chemical composition and modification process of the product.
- Evaluation of technical literature and expert opinions to determine if the product is a chemically modified Alkyd resin.
- Analysis of evidence presented by both parties to establish the classification of the product.

Detailed Analysis:

The central issue in this appeal revolves around determining whether the product termed "Modified Short Oil Linseed Oil Alkyd" falls within the definition of Alkyd resins as outlined in notification 122/71-CE. The assessee claims that the product is a chemically modified Alkyd resin and thus qualifies for exemption under the notification. Conversely, the Revenue contends that the product does not meet the criteria for a chemically modified resin. The lower appellate authority sided with the assessee, prompting this appeal.

The grounds of appeal highlight the chemical composition of the product, emphasizing the presence of synthetic resin based on polybasic acid, polyhydric alcohol, monobasic fatty acid, resin, and formaldehyde. The assessee argues that the addition of paraformaldehyde during the manufacturing process enhances the properties of the Alkyd resin, making it a modified version eligible for exemption. However, the Revenue, supported by the Deputy Chief Chemist's opinion, asserts that paraformaldehyde does not qualify as a modifier based on technical literature, thus challenging the assessee's classification.

The respondent's counsel, in response to the Revenue's contentions, points out discrepancies in the show cause notice and subsequent orders, highlighting the lack of disclosure regarding the grounds now raised by the Revenue. The counsel references technical authorities, specifically citing the book "Alkyd Resin Technology Inter Science Manual by T.C. Patton," to support the claim that paraformaldehyde indeed modifies Alkyd resins. The absence of paraformaldehyde from a specific list of modifiers is countered by the counsel, arguing that other authoritative texts recognize it as a modifier, a stance not effectively rebutted by the Revenue.

Upon review, the Tribunal acknowledges the validity of the technical evidence presented by the assessee, particularly referencing the Encyclopedia of Polymer Science & Technology. The Tribunal notes that the list of modifiers provided in the technical literature is not exhaustive and recognizes that historical conventions influence the classification of modifiers for Alkyd resins. Consequently, based on the technical authority and arguments put forth by the assessee, the Tribunal concludes that the product in question qualifies as a chemically modified Alkyd resin, falling within the scope of the notification and warranting exemption from duty.

In conclusion, the Tribunal rules in favor of the assessee, setting aside the appeal and affirming that the product "Modified Short Oil Linseed Oil Alkyd" meets the criteria to be classified as a chemically modified Alkyd resin under the relevant notification.