1995 (8) TMI 172 - AT - Central Excise

Summary

Issues:
Classification of phenol formaldehyde and melamine formaldehyde under Tariff Item 15A(1) as excisable goods.

Detailed Analysis:
The appeal in this case concerns the classification of phenol formaldehyde and melamine formaldehyde manufactured and cleared for captive consumption in the manufacture of laminated sheets under Tariff Item 15A(1) as excisable goods. The appellants, who are manufacturers of decorative laminated plastic sheets, use these mixtures of chemicals in the manufacturing process. The Assistant Collector initially classified the synthetic resins formed during the manufacturing process under Tariff Item 15A(1) but concluded that as the product emerged in an unstable and non-marketable condition, it cannot be considered excisable under Tariff Item 15A(1). On appeal, the Collector (Appeals) held that the items are excisable and classifiable under Tariff Item 15A(1) but failed on the issue of limitation as the demand was barred by time.

The appellants relied on the decision of the Supreme Court in the case of Moti Laminates P. Ltd., where it was held that resol or A-stage synthetic resin specified in Tariff Item 15A(1) is not dutiable if not shown to be marketable. The Court emphasized that even if the resin produced qualifies as resols under Tariff Item 15A, it cannot be subjected to duty if it is not marketable. The purpose of specifying goods in the Schedule is twofold: determining the duty rate and establishing liability for excise duty. However, if the goods are not marketable, duty is not leviable. In this case, the Assistant Collector found that the synthetic resins were in an unstable and non-marketable condition, a finding not rebutted by the Department. Therefore, following the Supreme Court's decision, it was held that the resins are not excisable goods and not classifiable under Tariff Item 15A(1), resulting in allowing the appeal.

In conclusion, the judgment clarifies the classification of phenol formaldehyde and melamine formaldehyde under Tariff Item 15A(1) as excisable goods for captive consumption in the manufacture of laminated sheets. The decision heavily relies on the Supreme Court's interpretation regarding the marketability of specified goods under the Central Excise Tariff, ultimately determining the liability for excise duty based on the marketability of the products in question.