1991 (3) TMI 234 - AT - Central Excise

Summary

Issues: Classification of non-cellulosic lacquers under Central Excise Tariff Schedule, Mis-declaration of goods, Appeal against duty demand, Differentiation between paints and lacquers

Classification of Goods:
The appellants were engaged in manufacturing non-cellulosic lacquers and claimed classification under Item No. 68 of the Central Excise Tariff Schedule for duty-free captive consumption. However, the department contended that the goods should be classified under Item No. 14-1(5) CET. The Collector of Central Excise confirmed the duty demand for a specific period but did not impose any penalty.

Differentiation between Paints and Lacquers:
The appellants argued that non-cellulosic lacquers were not paints as the film formation process differed. They highlighted that lacquers formed films through solvent evaporation, distinct from the oxidation process in paints. The appellants provided expert opinions and industry literature supporting the distinction between paints and lacquers.

Legal Interpretation and Analysis:
The Tribunal analyzed the definitions and characteristics of paints and lacquers based on expert opinions and industry literature. The Tribunal noted that paints typically dry through oxidation or polymerization, while lacquers dry by solvent evaporation, resulting in different properties and uses. The Tribunal emphasized that the onus was on the Revenue to prove that lacquers were known as paints in the trade, which was not demonstrated.

Central Excise Tariff Classification:
The Tribunal examined the Central Excise Tariff Schedule, specifically Item No. 14, which categorizes various types of paints under sub-items. Lacquers were grouped separately under Cellulose Lacquers, indicating a distinct classification from paints. Since non-cellulosic lacquers were not covered under Item 14, the Tribunal concluded that they should be classified under Item 68, which covers goods not specifically described elsewhere in the Tariff Schedule.

Judgment:
Based on the analysis, the Tribunal set aside the Collector's order and allowed the appeal in favor of the appellants. The decision provided consequential relief to the appellants regarding the classification of non-cellulosic lacquers.