2001 (1) TMI 377 - AT - Central Excise

Summary

Issues:
Classification of product as Maleic Resin, Misdeclaration of product, Invocation of extended period of limitation, Eligibility for exemption under Notification No. 70/84, Presence of styrene in the product

Classification of product as Maleic Resin:
The appellants were engaged in manufacturing Maleic Resin, which was exempt from Central Excise duty under Notification No. 70/84. The Assistant Collector approved the classification of the product as Maleic Resin under Tariff Item No. 15A/CSH No. 3907.50. However, a subsequent show-cause notice alleged misdeclaration, claiming the product was unsaturated polyester resin. The Additional Collector upheld this view, stating that the product did not qualify as Maleic Resin due to the use of Phthalic Anhydride, which was not permitted under the Notification's definition. The Tribunal found this reasoning flawed, clarifying that Phthalic Anhydride is not a dibasic acid and that the product, obtained by reacting Maleic Acid with polyhydric alcohol, indeed qualified as Maleic Resin under the Notification's explanation.

Misdeclaration of product and Invocation of extended period of limitation:
The department alleged misdeclaration by the appellants, invoking the extended period of limitation to demand duty. However, the Tribunal determined that the unsaturated polyester resin produced by the appellants was, in fact, Maleic Resin as per the Notification's definition. Therefore, there was no misdeclaration, and the extended period of limitation was unjustly applied.

Eligibility for exemption under Notification No. 70/84:
The crucial issue revolved around whether the appellants' product qualified for exemption under Notification No. 70/84. The Chemical Examiner and Deputy Chief Chemist reports indicated the product as unsaturated polyester resin. However, the Tribunal, after consulting chemical literature, concluded that the product, resulting from the reaction of Maleic Acid with polyhydric alcohol, was indeed Maleic Resin as defined in the Notification. Consequently, the product was eligible for exemption, and no Central Excise duty was payable during the disputed period.

Presence of styrene in the product:
The department argued that the presence of styrene in the product disqualified it as Maleic Resin. However, the Tribunal referenced a previous case where it was established that the presence of unsaturated hydrocarbons, such as styrene, did not exclude a product from being classified as Maleic Resin. Therefore, the contention regarding styrene was dismissed, and the Tribunal set aside the Additional Collector's order, allowing the appeal.