1989 (1) TMI 256 - AT - Central Excise

Summary

Issues Involved:
1. Classification and valuation of UF/MF moulding powders.
2. Retrospective application of the classification list.
3. Refund of duty paid prior to 26th May 1982.
4. Requirement of storage of resins before manufacturing moulding powders.

Detailed Analysis:

1. Classification and Valuation of UF/MF Moulding Powders:
The appellant, M/s. Nuchem Plastics Ltd., contended that duty should be levied only on the resin content of UF/MF moulding powders under Tariff Item 15A(e), excluding the value of fillers added later. This argument was based on the premise that the conversion of resins into moulding powders does not constitute a manufacturing process. The Assistant Collector accepted this contention, allowing the appellant to pay duty at the resin stage instead of the moulding powder stage. This decision was based on a clarification from the Government of India and the opinion of the Chief Chemist, which stated that the conversion of resins into powders does not involve any chemical change and thus does not amount to manufacture.

2. Retrospective Application of the Classification List:
The appellant argued that the classification list filed on 26th May 1982 should be prospective and not retrospective. The Tribunal agreed, citing the case of Brakes India Ltd. v. Collector of Central Excise, which held that a revised classification list cannot be made retrospectively applicable. The Tribunal set aside the findings of the Assistant Collector regarding refunds for the period prior to 26th May 1982, allowing the appellant to pursue refunds in accordance with the law for that period.

3. Refund of Duty Paid Prior to 26th May 1982:
The appellant sought a refund for the duty paid prior to 26th May 1982, arguing that they had been paying duty on the aggregate value of both resins and fillers under a mistake of law. Both the Assistant Collector and the Collector of Central Excise (Appeals) rejected this claim, stating that the appellant had opted to pay duty at the moulding powder stage before 26th May 1982, and thus, the duty collected was correct in law. The Tribunal upheld this decision, emphasizing that the classification list could not be applied retrospectively.

4. Requirement of Storage of Resins Before Manufacturing Moulding Powders:
The Assistant Collector imposed a condition that the benefit of paying duty at the resin stage would only be available if the resins were stored prior to their use in manufacturing moulding powders. The appellant contested this requirement. The Tribunal referred to the Supreme Court judgment in J.K. Spinning and Weaving Mills Ltd. v. Union of India, which held that the taxing event for excise duty is the production or manufacture of goods, not their removal. The Tribunal concluded that there was no requirement for the storage of resins before their use in manufacturing moulding powders, setting aside the Assistant Collector's findings on this issue.

Conclusion:
The Tribunal allowed the appeal, setting aside the findings of the Assistant Collector and the Collector of Central Excise (Appeals) regarding the retrospective application of the classification list and the requirement for storage of resins. The appellant was permitted to pursue refunds for the period prior to 26th May 1982 in accordance with the law.