1990 (12) TMI 224 - AT - Central Excise

Issues Involved:
1. Classification of "Crown Cork Sealing Compound" as PVC Compound.
2. Eligibility for duty exemption under Central Excise Notification No. 206/77.
3. Validity of proceedings initiated under repealed Rule 10 of Central Excise Rules.
4. Alleged suppression of information and extended period of limitation.

Detailed Analysis:

1. Classification of "Crown Cork Sealing Compound" as PVC Compound:

The primary issue was whether "Crown Cork Sealing Compound," manufactured from Polyvinyl Chloride (PVC) Resin, Plasticizers, and Inorganic Fillers, qualifies as a PVC Compound. The appellants contended that their product was a PVC Compound, while the Collector of Central Excise, Pune, held otherwise, based on reports from the Deputy Chief Chemist and the Chief Chemist. The appellants provided extensive technical evidence, including expert opinions from distinguished authorities and references from technical literature, supporting their claim that the product is a PVC Compound. The Tribunal found the appellants' evidence compelling, noting that the term "compounding" in polymer technology involves mixing PVC resin with additives to achieve desired properties, not necessarily involving a chemical reaction. The Tribunal concluded that the product is indeed a PVC Compound.

2. Eligibility for Duty Exemption under Central Excise Notification No. 206/77:

The notification exempts PVC Compound from excise duty. The Tribunal examined the manufacturing process and the composition of the product, which includes 55-60% PVC Resin, 35-38% Plasticizers, and 2-5% Additives and Inorganic Fillers. The Tribunal noted that the term "compounding" in this context refers to the formulation of PVC with other components to produce a material with specific properties. Given the evidence, the Tribunal held that the "Crown Cork Sealing Compound" qualifies as a PVC Compound and is eligible for the duty exemption under the said notification.

3. Validity of Proceedings Initiated Under Repealed Rule 10 of Central Excise Rules:

The appellants argued that the proceedings initiated under Rule 10, which was repealed and replaced by Section 11-A, were illegal. However, the Tribunal referenced a decision by a 5-Member Bench, which held that proceedings validly initiated under a subsisting rule could continue despite the rule's repeal. Consequently, the Tribunal found no illegality in the adjudication of the show cause notice issued under the repealed Rule 10.

4. Alleged Suppression of Information and Extended Period of Limitation:

The appellants argued that there was no suppression of material facts, and the extended period of limitation should not apply. The Tribunal noted that the Collector did not discuss this aspect in the impugned order. The Tribunal reviewed the extensive correspondence and tests conducted by the Department and found no evidence of suppression or intent to evade duty by the appellants. Therefore, the Tribunal concluded that the extended period of limitation under Section 11-A was not applicable. However, it was noted that the question of limitation was irrelevant for the period from March 1981 to February 1983 due to provisional assessments.

Conclusion:

The Tribunal held that the "Crown Cork Sealing Compound" is a PVC Compound and is eligible for duty exemption under Notification No. 206/77. The appeal was allowed, and the impugned order was set aside.

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