1988 (4) TMI 178 - AT - Central Excise

Issues Involved:
1. Whether the goods manufactured by the appellants are a resin or not.
2. Whether these goods are covered under Tariff Item 15A(1).
3. Whether these goods are considered as goods for the purpose of Central Excise levy.

Issue-wise Detailed Analysis:

1. Whether the goods manufactured by the appellants are a resin or not:
The Tribunal observed that the process of manufacturing phenolic formaldehyde resin by the appellants is a standard process as mentioned in the standard literature. The Tribunal cited the case of Jay Enterprises (1987 (29) E.L.T. 288), which describes the different stages of phenolic formaldehyde resin: A-Stage (fusible and soluble in alcohol and acetone), B-Stage (intermediate stage, softens when heated), and C-Stage (fully cured, insoluble, and infusible). The Tribunal noted that the appellants' product had proceeded to the A-Stage, resulting in a condensation product with adhesive properties. Thus, the goods manufactured by the appellants were held to answer the description of the term 'Resin'.

2. Whether these goods are covered under Tariff Item 15A(1):
The relevant portion of the Entry 15A at the material time includes "Condensation polycondensation and polyaddition products, whether or not modified or polymerised, and whether or not linear (for example, phenoplasts, aminoplasts, alkyds, polyallyl esters and other unsaturated polyesters, silicones)". The appellants cited the case of Indian Plastics and Chemicals (1981 E.L.T. 108), which dealt with phenol formaldehyde solution containing not more than 45% of solid resin. The High Court in that case held that the solution of resin was not covered under the said tariff entry. However, in the present case, it was an admitted position that dehydration did take place, resulting in a viscous mass or solid mass. The Tribunal concluded that the process had reached the A-Stage, recognized as phenolic resin for assessment under T.I. 15A(1). The appellants' claim that their product contained 20% water did not alter this classification, as the product was not considered a resin solution.

3. Whether these goods are considered as goods for the purpose of Central Excise levy:
The Tribunal addressed the appellants' argument that the goods were not marketable. It was noted that the product could be stored with a shelf life of 4-5 days and could be shipped under controlled conditions, indicating marketability. The literature on phenolic resin showed that phenolic-based adhesives are stable for 3-6 months. The Tribunal referenced the cases of Geep Flash Light and Union Carbide, where the decision was based on specific facts and circumstances. However, in this case, there was sufficient evidence to show that the goods could be brought to the market, thus qualifying as goods for the purpose of levy of duty. The Tribunal also noted that it made no difference if the goods were captively consumed by the appellants and not sold. The appeal was therefore rejected.

Additional Judgment by Vice-President:
Vice-President S.D. Jha added that considering the admitted shelf life of four to five days and the literature produced, the goods would not cease to be capable of being brought to the market to be bought and sold. Thus, even though the appellants themselves might not be marketing the product, it would still be considered marketable and goods for the purpose of Central Excise levy, agreeing with the principles enunciated in Union Carbide India Ltd. v. Union of India and Others (1986 (24) E.L.T. 169 (S.C.)) and Geep Industrial Syndicate Ltd. v. Central Government and Others (1987 (31) E.L.T. 865 (S.C.)).

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